Most of Your Reps Are Underperforming: Should You Increase, Maintain, or Decrease Sales Headcount?

Should you increase, maintain, or decrease sales headcount in the immediate term? If more than half of your sales reps are below quota, the answer is, "Although it may feel scary, decrease for now."

If 50% or more of your sales reps are below quota, you need to reduce your sales headcount in the immediate term, even if you know your infrastructure and processes are the fundamental things that need to change and you are working on them! Fix underlying issues first. Scale the sales team second. Salespeople don’t respond well to promises that things will be fixed soon. After all, their quota clocks are ticking now, not soon.

You need to regain momentum. Your existing salespeople have lost trust in the organization, and many have lost confidence in themselves. You need to fix both before you even think about scaling sales headcount again.

In low rep attainment environments,

Morale deteriorates (and not just among salespeople).

Whether you realize it or not, you likely don’t have many (if any) top-of-the-line industry sellers. You certainly have some top producers in your organization, but any truly top performers have likely already left for greener pastures in less depressing environments.

You've likely lost many key performers in other areas of the company, too. Top performers, more than anyone else, do not stick around in dreary environments. They are better positioned to find new employment than anyone else because, well, they are top performers.

Sales Reps lose their edge.

Winning deals is like any other competitive endeavor. The more often a sales rep sees the ball go in the basket (winning a deal), the more confident she is that the next one will go in, too. Belief shows through very clearly to Buyers, just like a lack of it does.

Think of the famous scene in Tommy Boy when he explains to the waitress how he gets too excited when he finally finds a real deal to work, and he kills it because it simply means too much to him. He hasn’t had regular enough opportunities to keep his skills in tip-top shape.

When reps don't hit quota often enough, they lose deals your organization is well-positioned to win if someone in selling rhythm works those deals instead.

For some reps, the goal becomes keeping their jobs as long as possible rather than closing business.

They “game” leading indicators in your CRM, which makes accurate forecasting nearly impossible. There is not a sales rep alive that, if you tell them they need to have a pipeline of 3x-4x their quota, is not capable of always doing just that – keeping a 3x-4x pipeline. Unfortunately, that pipeline can end up having absolutely nothing to do with what deals they ultimately close.

If the stages in your CRM are aligned with your Seller’s activities rather than the Buyer’s, reps can “game” the entire process. They can present a demo to anyone who will listen, qualified or not. They can send a proposal when the Buyer is not ready for that at all. And so forth. Beware the stages you are using in your CRM as leading indicators of deals that are progressing.

Sales Reps lose their sense of urgency and do not stretch themselves.

If a rep is going to miss her quota anyway, why go the extra mile to find and close those one or two last deals for the month or quarter?

Accounts go unworked when they have closable opportunities if someone would just take the time to ferret them out.

Upsell and expansion opportunities can go unfound because it’s easier to waste time shooting the breeze with colleagues for thirty minutes than to hunker down and make a few more phone calls.

An inbound lead that came in at the end of the day can get left until tomorrow, because after all, management doesn’t care about us salespeople anyway, so tomorrow will be just fine.

Cost of sales can skyrocket.

If you expand your sales team at the wrong time, it can multiply inefficiencies instead of revenue. Sometimes adding more reps just creates more mouths to feed, not more revenue.

Each AE in your organization costs real money, including base compensation, benefits, and sales tool stack licenses, not to mention manager bandwidth. Reps who aren't producing efficiently increase your CAC, lengthen payback periods, and deteriorate EBITDA. It can become a repeating cycle to the bottom.

So, what is the correct approach?

Fix the underlying issues first.

1. Make sure you are not just setting quotas as wishful thinking. Everyone wants to double revenue every year, but is that realistic given your historical performance and territory definitions? Work bottom-up from real data to define both before you increase your headcount.

2. If your product-market fit has weakened, step back and re-evaluate your product messaging. Has it evolved with the times? Relying on your technology team to fill product gaps is critical, but in the meantime, focus your selling efforts on the niches where you can win. Keep your sellers focused on those things they can control.

3. Make sure your ICP is accurately defined. Be aware that this can change over time as competitors and economic environments evolve. Communicate to your sales team where they should be focusing based on where they are most likely to win.

Stabilize Sales Headcount now. Scale once you have hard data on quota accomplishment.

In the immediate term, keep your sales headcount a bit thinner than you might want. Retain your top-producing reps by openly sharing everything you are doing to right the ship. Let them succeed so you can leverage their wins to attract top performers from other organizations. Ideally, you want several of your existing reps to crush their new quotas. Nothing attracts new top talent better than publicizing the successes of those already on your team.

Once attainment stabilizes at 60% – 70%, then expand AE headcount.