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Sales Planning --- A Critical Component of Sales Success

Guest post by: Dr. Rick Johnson

Article Overview: A sales plan is a schedule of events and responsibilities that details the actions to be taken in order to accomplish the goals and objectives identified during the contingency - recovery - strategic planning process. The plan ensures everyone knows what needs to get done, coordinates their efforts and keeps close track of progress. Sales plans must define the objectives, time line and resources required to meet the growth objectives of the business unit, department or branch. This level of detail is unnecessary in the overall initial planning process.

Sales Planning --- A Critical Component of Sales Success

A sales plan is a schedule of events and responsibilities that details the actions to be taken in order to accomplish the goals and objectives identified during the contingency - recovery - strategic planning process. The plan ensures everyone knows what needs to get done, coordinates their efforts and keeps close track of progress. Sales plans must define the objectives, timeline and resources required to meet the growth objectives of the business unit, department or branch. This level of detail is unnecessary in the overall initial planning process. The sales plan should now detail how the company will achieve growth, profit and product objectives. The sales plan is especially critical to the contingency or recovery planning process. The basic sales planning process includes several elements:

• Individual territory plans outlining specific target accounts with attendant action plans identifying the steps necessary to meet objectives

• Realistic forecasts

• A definition of services to be provided and the objectives quantified as revenue growth and profitability

• A commitment to timing and sequence of major steps

• An agreement to measurement criteria and targets

• Assigned accountability

Sales Initiatives should meet the following test. They should:

1. Be in Alignment with overall plan

2. Be Actionable

3. Focus on Market Share Growth

4. Focus on Margin Growth

5. Incorporate New Products/Services

6. Be Short term with Measureable Milestones

7. An Agreement to Measurement Criteria and Targets such as:

• Market Share Growth

• Margin Growth

• Company Growth in Revenue

• New Product or Service Sales

• New Account Development

• New Business Segments

Forecasting

Forecasting is an important part of the sales planning process as it becomes the platform for developing target account action plans. Historical data is essential to predictability but forecasting is exactly what the term suggests; predicting what is going to happen over the course of the next twelve months. This is a critical function of the planning process that is often taken much too lightly. Using the Pareto Rule, 20% of your customers will account for 80% of your business, is a good starting point. That 20% must be looked at closely. True potential must be examined at every account that makes up the 20%. The initial forecast starts with the sales representative but it is up to management or ownership to demand documented reasons for the numbers at each of the accounts that make up 80% of the business.

Action plans should include:

• Clearly defined objectives by product, by segment

• Clearly defined responsibilities of all employees involved in accomplishing the defined objectives

• Identified risks and opportunities

• A scorecard for achievement listing key indicators of success should be developed

• Regular monthly plan review meetings must be established

Once sales management has reviewed all the forecasts and the action plans submitted, it must be determined if current resources will allow achievement of the plan. In other words, if the plans indicate a 30% growth in market share with a fair amount of certainty then determination of resource allocation becomes significant. If the plan does not show enough growth to maintain acceptable profitability, then individual territory discussions must occur in search of ways to close the gap between the forecast and minimum acceptable levels of profitability. The following questions help determine this process:

• Have we adequately listed individual territory opportunities?

• Has our new business development program played a role in our forecast?

• Is the forecast too pessimistic or too optimistic?

• Can the individual sales representative and the regional manager justify the forecast with rational discussion and data?

• Can existing staff handle the increase or will we have to hire additional employees?

• Do we need to consider cost reductions including an additional RIF?

• Will current inventory levels support this growth or will we have to significantly increase our inventory investment?

• Will we require an increase in storage space or handling equipment?

• Are there any other capital expenditures necessary to support this increase?

• What other cost increases do we anticipate with this growth rate? (i.e. increased service costs, phone, fax and other administrative support costs)

Characteristics of an Effective Annual Sales Plan

There are three important characteristics to a good sales plan:

1. An appropriate level of detail - enough to guide the work, but not so much that it becomes overwhelming, confusing or unnecessarily constrains creativity

2. A format that allows for periodic reports on progress toward the specific goals and objectives

3. A structure that coincides with the corporate plan (Contingency - Strategic - Recovery) - the goal statements for the corporate plan and the sales plan are one in the same

Just as monthly financial statements often present a budget for revenues and expenses and then report actual figures for a given time period, so should sales plans allow for the same type of comparison: the plan declares the "forecasted revenue" work in terms of goals and objectives for each targeted account and reports the actual progress on a monthly or, perhaps, quarterly basis. This budget-to-actual report gives a clear reading on how the territory is performing.

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Article Tags: goals and objectives, growth objectives, sales planning, sales success



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