Sales planning is a combination of both strategies and tactics necessary to achieve sales revenue growth within the company. The purpose of sales planning is to determine the expected volume of future sales to support business operations. A sales plan should be based in part on historical performance, but also factor a stretch or performance goal that considers new products, new territories, and changes in the marketplace.
A sales plan is direct and straightforward and focuses on how to identify and develop new customer sales opportunities as well as how do grow revenue opportunities from existing customers. Typically, the following four steps are used to frame the sales planning process:
- Establish a realistic revenue goal (What do you desire to achieve?)
- Identify sales opportunities (To whom are you selling?)
- Determine outreach approach (How will you engage and what will you say?)
- Set clear and measurable metrics (What will you measure and how frequently?)
Establish a realistic revenue goal
Sales planning must begin with a revenue goal. The annual revenue goal is this segmented and assigned to broad customer segments, such as new acquisition vs. existing or returning). Among the factors considered when determining how to apportion the revenue goals are historical sales performance for new customers vs. existing customers as well as customer satisfaction and customer churn rate (Gallo, 2014). Factors such as new product launches, the lifetime of a product, product or service pricing, and other similar things will often influence which segment gets the most substantial proportion of the revenue goal.
Identify sales opportunities
Once the revenue goal is established and the segmented by new vs. existing customers, the next step would determine how to identify sales opportunities within those segments. For both segments, an analysis of the customer’s needs, values, and expectations (NVEs) are essential, as is a review of the competitive landscape. The outcome of the analysis will shape the products and services offered, as well as the price position of those offerings.
With existing customers, the goal is to create deeper customer loyalty and increase retention. To do this, start with how to strengthen the relationship by meeting or exceeding the customer’s NVEs. Often this involves creating new insights for customers that support long-term goals and objectives. Usually, this means brainstorming new ideas and identifying new solutions and projects before the customer realizes or understands the need (Selling Power Editors, 2014). Determine if there are cross-sell (offering similar products) or upsell (offering an add-on or next-level product or service) opportunities with existing products or services, or if something different needs to be provided to strengthen the relationship. Then, create a sales goal for each customer based on those identified opportunities. These customer sales goals should roll up into the existing customer sales revenue segment.
For new customers, first, determine what an ideal customer might look like using the parameters of the current best and most profitable customers. Sometimes it’s helpful to create “buyer profiles” or “personas” to help identify what that best customer will look like in the marketplace. Then, identify prospective customers that align best with the products and services offered. Next, consider what would cause those potential customers to switch and whether the products and services provided will create enough value. Finally, establish realistic sales goals for new customers considering the market conditions and competitive landscape. These sales goals should roll up into the new customer sales revenue segment.
Determine Outreach Approach
Also known as the strategies and tactics of the sales plan, the outreach approach defines when, how, and the message used to reach each of the target customers and prospective customers. Given social media and online engagement have changed prospecting, some argue an excellent way to connect with potential customers be present in their communities (Haden, 2017). Identify the company first, if the prospective customer is a company, and then identify prospective buyers within the company. According to Inc.com contributing editor Jeff Haden, questions to consider when determining outreach approach include:
- Are they on social media?
- What’s their network of choice?
- Are they involved in social media groups (e.g., LinkedIn or Facebook)?
- Do they ask questions on Quora or Reddit?
- Do they listen to podcasts? Which ones?
- What blogs are they reading?
Gaining a better understanding of the prospective customers and their media consumption habits will help to define the strategies and tactics used to engage those prospects.
For example, considering the lists above, a strategy might be to provide value to prospective customers by becoming a trusted resource. Then, the tactics might be to engage in non-selling activities (i.e., conversation and Q &A) in social media groups, and answer questions on Quora and Reddit. Other tactics might be to develop a sponsorship program for the target prospects that includes the blogs they are reading (if possible) or the podcasts to which they listen. And, of course, some prospective customers do not engage with online media or do so sparingly.
Another strategy might be to incent the sales staff or offer customer incentives to increase sales. If a strategy is to increase sales by 20% during a calendar quarter using incentives, for example, tactics might include referral programs, price discounts or promotions, sales team bonus, or increased commissions for the period (Frost, 2018).
While the outreach tactics will depend upon the nature of the offering and the engagement preferences of the customers and prospective customers, ideally the engagement should include multiple channels. Creating a continuity of contact campaign or program that defines the frequency of contact, the channel of engagement (online, email, phone call, personal visit, trade show, podcasts, blogs, etc.), and the message strategy can be very useful in moving a customer through the sales cycle to purchase. Technology, such as sales force automation systems or CRM tools can be beneficial for tracking and keeping up with engagement campaigns and programs.
Set clear and measurable metrics
The sales plan must establish metrics and milestones against which to measure performance progress. Moreover, that progress needs to be measured frequently to ensure the plan is on target, and if it is not on target, what needs to be done to ensure any shortfalls are made up before year-end. While many things can be measured, the most important thing to measure in a sales plan is total sales because it provides the top-line cash flow for the business.
For example, let’s consider, and sales goal is 1 million dollars. Based on the historical sales seasonality of the business, $200 thousand is expected during the first quarter, $400 thousand is expected second quarter, $300 thousand third quarter, and $100 thousand in the fourth quarter. Because of the seasonality of sales, the majority of the sales come during the first three quarters of the year. If sales are off during any of those quarter, it becomes harder to make up sales to meet the goal. Therefore, monthly milestones should be established to monitor performance and enact new programs as may be necessary if sales fall short.
Sales planning is as much an art as it is a science. While revenue targets can be established that are built on a solid foundation of research, customer and market needs, product and service offerings, and historical performance, there remain many variables that can affect the ability to achieve those targets. Market conditions, new competitors, pricing and delivery factors, and sales team staffing are just a few of the factors that are difficult to predict and may influence sales performance. Regular performance monitoring will allow for quick plan corrections and revisions and minimize variances from the plan.
Supplemental Articles Resources
In addition to the references and links within, here are a few more supplemental resources that might be of use to you as you consider how to develop your sales plan:
The Value of Keeping the Right Customers by Amy Gallo
What is Sales Strategy by Hubspot Staff
The Hubspot.com Staff provides a good overview of sales strategy and planning and offers case studies of sales strategies for Hubspot, Salesforce.com, and Shopify.
How to Create a Sales Plan in 7 Steps by Allison Potts
Allison Potts offers a step-by-step approach to developing a sales strategy and plan, covering everything from the benefits of developing a sales plan, to examples and ideas for execution. The article also provides guides and templates to use in developing your own plan.
Frost, A. (2018, January 9). How to Create a Sales Plan: The Ultimate Guide. Retrieved October 25, 2018, from hubspot.com: https://blog.hubspot.com/sales/ultimate-guide-creating-sales-plan
Gallo, A. (2014, October 29). The Value of Keeping the Right Customers. Retrieved October 25, 2018, from hbr.org: https://hbr.org/2014/10/the-value-of-keeping-the-right-customers
Haden, J. (2017, July 12). How to Create a Profitable Sales Plan for Your Business: 10 Steps. Retrieved October 25, 2018, from inc.com: https://www.inc.com/jeff-haden/how-to-create-a-profitable-sales-plan-for-your-bus.html
Selling Power Editors. (2014, August 21). The True Purpose of Account Planning. Retrieved October 26, 2018, from sellingpower.com: https://blog.sellingpower.com/gg/2014/08/the-true-purpose-of-account-planning.html
Last Updated on July 31, 2019 by David Harkins
David Harkins is a business strategist, speaker, and teacher.
He is the founder and executive consultant at David Harkins Company. In his spare time, he writes hikes, explores, and creates art. Although, not necessarily in that order.
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