www.kickstartall.com
Five Crucial Considerations for Sales Planning
by
Janet Gregory
Sales planning is an annual ritual that tests your courage. When sales planning is done well, however, it can truly be empowering and liberating.
- Prerequisites: Last year's sales plan and historical
sales performance are prerequisites for the sales planning process,
as well as a reasonably good command of Excel and PowerPoint.
- Last year's sales plan is essential to building
this year's plan. Review the assumptions that were
made and the outcomes that resulted. You are a year
smarter and you can learn from what worked, what didn't
and what you missed. If
you can't find last year's plan, locate the targets
assigned to various aspects of the business. Finance
is a great source for this data.
- Question everything. This is the time to
question everything. What's working? Get serious,
what's really working? What
has been done for years that needs to be changed or
retired altogether? This
is your sales plan; accept delivery strategy and plan elements
because they are the right ones for success, not because
"they have always been done this way." Leave the
ego and defense
mechanisms at the door; even question your own past
decisions. What
worked this year may not work next year; it's a different
business environment today.
- Excel is where the plan will be built. Yes,
this is pretty obvious but many companies fail to do
the obvious in a meaningful way. The Excel workbook
should have a worksheet for each structural plan element
(see #4, Nuts & Bolts,
below). PowerPoint
is typically how your sales plan will be presented
to management or the Board of Directors and after approval,
to your sales team.
- Historical sales performance provides context
and trending. You also want to dust off last year's
sales plan and analyze what worked and what didn't.
Yes, this is pretty obvious but many sales leaders
fail to make use of the wealth of information available
to them. Historical
performance trends combined with market knowledge and
a little sales intuition is a powerful combination.
Overlooking historical data quite often results in highly optimistic
plans not grounded in fact.
Best practice tip on variables: In construction of the sales plan there will be a lot of assumptions and variables. Variables that are used for calculation should appear only once in the workbook and should be very visible. Use the one variable entry throughout the workbook for consistency. Changing a single variable also allows for "what if" tests of the plan.
Best practice tip on assumptions: Start with the assumptions from last year; you have had a whole year to test those. This year, as assumptions are made, capture them and write them down. It is impossible to remember all the assumptions that you make in the planning process. A great place is at the bottom of each worksheet (beneath the calculations); set aside an area where you can capture assumptions, notes, sources, questions and thoughts for later reference.
- Last year's sales plan is essential to building
this year's plan. Review the assumptions that were
made and the outcomes that resulted. You are a year
smarter and you can learn from what worked, what didn't
and what you missed. If
you can't find last year's plan, locate the targets
assigned to various aspects of the business. Finance
is a great source for this data.
- Critical Path: The business objectives for
the plan are critical path to sales plan development.
Is this a top-down plan (where you need to determine
how to achieve the stated company goal)? Is this a bottom-up plan
(where you are asked to determine what you can achieve given the
current business factors)?
- In a top-down sales plan you will need to
know the revenue expectations by quarter; this drives
the sales plan. It
is also important to understand additional top down
goals for product/service mix, geographic expansion
or other company initiatives; these are key to the
delivery strategy. Most
sales planning (80%) is done top-down.
- Driving the sales plan in a bottom-up approach is
the company growth mode for your business unit. Is
the expectation for high growth, stable delivery or
managing decline? The
delivery strategy is based on the underlying financial
objectives: top line revenue, increasing profitability,
balanced return or reducing burn. Companies will only
ask for a true bottom-up plan when there is considerable
uncertainty, e.g. start-up companies, introduction
of significant new product lines, end-of-life planning
for a product line, etc.
Best practice tip on plan objectives: Put them in writing. Expect them to change. When elements change make sure that you understand why the change was made; the change will likely affect your delivery strategy (#5 below) and may also affect the structural plan elements (#4 below).
- In a top-down sales plan you will need to
know the revenue expectations by quarter; this drives
the sales plan. It
is also important to understand additional top down
goals for product/service mix, geographic expansion
or other company initiatives; these are key to the
delivery strategy. Most
sales planning (80%) is done top-down.
- Essentials: A partnership with one or
two key peer stake holders ensures success and integrity
for your sales plan. Partnerships can be forged with
marketing, client services, finance, product development
or human resources. The
strongest sales plans are built on successful partnerships
with either marketing or client services, or both.
- Marketing partnership in sales planning
provides the most upside leverage. Marketing is essential
to reaching prospects and customers with the right
message at the right time. The outcome of a successful
partnership with marketing is two parallel plans (one
for sales and one for marketing) that are interlocking on all structural
plan elements. Ask Mike
Gospe about building a marketing plan.
- Client Services partnership in sales planning
provides lifecycle leverage. Client Services is essential
to delivering satisfying results to customers for repeat
business and market reputation. The outcome of a successful
partnership with client services is an effective process
for project handoff and on-going customer relationships.
Another outcome is effective workflow, skill and staff
planning within client services to meet customer demand projected
in the sales plan. Ask Andy
Cadwell about the Strategic Delivery Framework (SDF).
- Methodology. Whether you select marketing,
client services or both as your partner the methodology
is similar. If
you have a strong working relationship the job is easy;
involve them in every aspect of building your sales
plan, ask them to review assumptions, openly discuss
risks, brainstorm on how to capture upside opportunities,
and conduct collaborative working sessions to develop key plan
elements together.
- A respect-based relationship. If the relationship
is less than stellar or even contentious this process
will help to build a respect-based relationship that
will ensure the success of your plan. Make the involvement
a little more formal with regular reviews right from
the start. Start with discussions based on structural
plan elements and as mutual trust builds ask for review and input
on underlying assumptions, risks and upside opportunities.
- Marketing partnership in sales planning
provides the most upside leverage. Marketing is essential
to reaching prospects and customers with the right
message at the right time. The outcome of a successful
partnership with marketing is two parallel plans (one
for sales and one for marketing) that are interlocking on all structural
plan elements. Ask Mike
Gospe about building a marketing plan.
- Nuts & Bolts: The structural plan
elements are the adjustable levers that you fine-tune
for desired results. They are also the nuts & bolts that
hold together the sales plan. This is where your sales
plan comes to life.
- Structural plan elements are like facets
of a gem. Each facet is whole and complete. Each
facet reflects on the entire plan. Said more plainly...each
structural element of the sales plan must add up
to 100% of the plan.
- The structural plan elements will be unique
to your business. No two sales plans are ever
alike. The structural plan elements will include some
combination of the following:
- Product / Service Mix (including new products versus existing products)
- Channel (consider direct sales, resellers, VARs, 2-tier distributors, retail, online)
- Customer status (sales to new customers and sales to existing customers as well as customer retention)
- Market segments (industry verticals, departmental horizontals)
- Account segments (global, national or major accounts versus basic)
- Geographic theater (North America, EMEA, APAC, CALA, regions, territories)
Best practice tip on plan elements: Review every structural element. It is equally important to state in your sales plan what you are going to do and what you are not going to do. It shows the thoroughness of your planning and prioritization of plan elements.
- Structural plan elements are like facets
of a gem. Each facet is whole and complete. Each
facet reflects on the entire plan. Said more plainly...each
structural element of the sales plan must add up
to 100% of the plan.
- Action Tests: The action test for the
sales plan looks at the ability for an individual sales
person to deliver. Specific to your business this is
where the essential relationships with marketing and/or client services
(#3 above) must be woven into the sales plan. You can't go it
alone.
- Staffing is the first test. Every
structural element of your plan needs to be assigned
to someone who will ensure its success.
- How many sales people are required? What quota will they carry?
- Are sales specialists required? (Quota carrying sales specialists dedicated to particular plan segments) How many? What quota will they carry?
- Is sales support staff required? (Sales engineering,
inside sales, sales operations, other) How many?
What impact will they have on sales? Will they
share or carry quota? Will
they have measurable objectives motivating them?
- Estimating sales pipeline requirements is
a great acid test for any sales plan. Work this backwards
from the number of sales people carrying quota.
- How many average deals must a rep close? (Use ASP to calculate.)
- How many proposals must a rep deliver to customers? (Estimate win rate.)
- How many prospects must a rep have in their pipeline given sales cycle time?
- How many leads or suspects need to be generated to fuel this activity?
- Can one rep do all of this? Are there
ample supporting efforts from marketing and inside
sales?
- The Company's ability to deliver is another great test for the plan. Closed sales are customer projects. Is the organization ready to deliver on customer promises for product and service delivery? Processes need to be in place to ensure smooth hand off of orders and projects. Work backwards from the monthly or quarterly revenue to test delivery mechanisms for product availability and project delivery.
- Staffing is the first test. Every
structural element of your plan needs to be assigned
to someone who will ensure its success.
Sales planning is an essential element of sales success. It is a process that forces you to question everything, clean the cobwebs out of the corners and establish a fresh approach for the year ahead. A good sales plan provides the basis for the year ahead. Priorities will be established, personnel will be assigned, quota will be allocated and incentives will be put in place.
Happy planning.
About the Author
Janet Gregory is a veteran sales executive and co-founder of KickStart
Alliance. For assistance with sales strategy, sales planning, training,
compensation or any aspect of sales operations, contact Janet.
Janet leads the sales readiness practice at KickStart Alliance. For
help in aligning sales & marketing for results contact any member
of the KickStart Alliance team.