Sales Planning during Economic Crisis
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Free PDF Download Sales Management --Unmask the Confusion of Territory Account Assignment - By Dr. Rick Johnson |
A formal sales plan for 2010 is probably the most important activity that you should engage in during the economic challenges we are facing now and throughout the year. I am not talking about the typical DREF, (Delusional Rectal Exaggerated Forecast) that many of us have become accustomed to. I am talking about a realistic, documented plan that lists the specific activities required to accomplish the objectives set for targeted accounts with identified growth potential... 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 necessary to be successful during these turbulent times. 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, branch or specific territory. It should also detail how the company will achieve growth, profit and product objectives.
The market, like most markets, has not avoided transition. Business planning is an essential offensive strategy recognizing market transition in creating competitive advantage. But, the overall business planning alone is not enough. Sales drive the company's success. Consequently, a sales plan must become mandatory if you are to succeed in this economic environment.
Analysis of opportunities is useless if it doesn't degenerate into work. Sales planning, by definition, results in action plans for individual territories outlining specific target accounts with defined goals and initiatives.
The individual territory may find that its success in their own market depends upon the business segments they service and their willingness to compete within these segments. This segmentation is often defined by the buying habits and the individual needs of its members. A critical factor in developing the individual territory sales plan is understanding and differentiating activity based on this market segmentation. Understanding local market segmentation starts with profiling your customer base. Demographics and customers "Rules of Engagement" are typical criteria.
Forecasting is an important part of the 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 12 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 Branch Management or ownership to demand documented reasons for the numbers at each of the accounts that make up 80% of the business. This is not an email communication or a passing conversation; this is a detailed territory review with every sales rep. This is critical during tough economic times.
This review includes gross margin forecast discussions. A clearly defined action plan aimed at achieving specific results at each targeted customer should be documented.
These action plans should include:
- Clearly defined objectives by product, by segment
- Clearly defined rules and 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
Margin Implications
- Small changes in margin have large changes in the sales breakeven point.
- Sales Reps tend to get afraid of raising prices in soft markets. Some fear is real; most of it is chasing ghosts.
- They don't realize the consequences of failure, i.e. layoffs, lower service levels.
Margin Actions
- Is every customer buying off of the current price sheets?
- Are you charging freight out and other fees to the small accounts?
- Do all the inside and outside sales reps know that charging the last price paid is easy but wrong? It ignores small price increase opportunities.
- An appropriate level of detail - enough to guide the work, but not so much that it becomes overwhelming, confusing or unnecessarily constrains creativity
- A format that allows for periodic reports on progress toward the specific goals and objectives
- A structure that coincides with the company plan (whether it is strategic or a contingency plan)- the goal statements for the company plan and the sales plan are one in the same
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Free PDF Download Sales Management --Unmask the Confusion of Territory Account Assignment - By Dr. Rick Johnson |
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About the Author: Dr. Rick Johnson RSS for Dr. Rick's articles - Visit Dr. Rick's website www.ceostrategist.com - Sign up to receive "The Howl" a free monthly newsletter that addresses real world industry issues. - Straight talk about today's issues. Rick Johnson, expert speaker, wholesale distribution's "Leadership Strategist", founder of CEO Strategist, LLC a firm that helps clients create and maintain competitive advantage. Need a speaker for your next event, E-mail rick@ceostrategist.com. Dr. Rick Johnson has over 35 years of experience in distribution sales and operations. Rick�s career can be broken down by decades. The first ten years of his distribution career were spent with the largest steel-processing distributor in the world (Joseph T. Ryerson). The second ten years began with Rick starting his own processing distribution center from scratch. In the first year, sales reached $1 million dollars and had grown to $25 million in its tenth year when Rick sold the business to one of the major national chains. The third ten years of Rick�s career dealing with financially troubled Turn-A-Round companies. After completing ten years of TAR work, Rick decided a decade of acting like Darth Vader was enough and became a consultant to the Wholesale Distribution Industry in 1999. Rick received an MBA from Keller Graduate School in Chicago and a Bachelor's degree from Capital University, Columbus Ohio. He also served six years in the United States Air Force as a survival instructor. Rick completed his dissertation on Strategic Leadership and received his Ph.D. in 2005. Rick is frequently published in numerous magazines including a column in Supply House Times, with over 250 different articles published to date. He�s also a published author with eight books to his credit. Click here to visit Dr. Rick's website. Average Performance Isnt Good Enough Selling is a Profession that Requires Professional Leadership Family Succession The Final Challenge Winning Organizations Where is This Countrys Integrity Navy Seals |
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