The typical approach to sales planning — a simple and direct one — leaves a lot to be desired. What I see most often are sales leaders who take the projected sales growth and directly apply that number to their sales forces.
For instance, let’s say your CEO determines that next year’s sales must grow from $1billion to $1.1 billion, or 10 percent. You figure that you then need to add 10 people to your 100-person sales team to make the number — an even 10 percent. But what if the CFO says you can boost head count by only 5 percent?
You may tell your salespeople they all have to sell 5 percent more to make up the difference. Are you done with the sales plan then? Not quite. You should resist the urge to respond quickly to the revenue-increase request with a matching head-count request until you can answer these questions.
If your revenue target requires you to grow faster than the market, you’ll have to address that.
Do You Understand the Market?
The simple, direct, and common approach is configured in a vacuum — without acknowledging how the external market impacts what you can accomplish. You also must answer these questions before you proceed: How fast is the market growing? Are we growing faster or slower than the market?
Where Will Added Revenue Come From?
Obviously, if your revenue target requires you to grow faster than the market, you’ll have to address that. Simply giving someone a higher quota and a pat on the back is not likely to support the organization’s goals. Before handing out new quotas to your team, ask yourself:
Where is this added revenue coming from? Possible sources include:
- More deals to existing customers
- Bigger deals to existing customers
- New customers and markets
- More sales of existing products
- New products
Can You Boost Productivity?
You must also study your team, products, and processes to find efficiencies first. Simply translating sales-increase goals to head count and quotas also means you are less likely to address last year’s inefficiencies. If you ask for and get more heads, you don’t have to increase productivity. If you boost productivity, on the other hand, you may be able to meet or beat that sales increase without adding to your own costs.
Here’s a better way: Use the request for more sales to power your request for more resources.
If you’re asked to generate 10 percent more sales with 5 percent more salespeople, that’s a perfect time to ask for more leads from marketing, additional tech solutions, a reconfigured bundle, or new products to help you sell.
When you begin preparing an actual budget request in response to the sales mandate, you may use zero-based budgeting, activity-based budgeting, or some combination thereof. You’ll need to identify and set up key performance indicators (KPI). And once you have a plan, you can turn it into a strategy with tasks and responsibilities. Sales planning is just one step — though an important one — of making your numbers.
Do it well and you’ll be placed in a prime position to meet and maybe even exceed expectations.
How to Slay Your Number in 2016
Are you going to make your number in 2016?
If you are not sure but would really like to know, turn to page 46 and read our feature titled “How to Make Your Number in 2016.” Here, we summarize the primary findings from SBI’s ninth-annual research project, which captures what the best of the best are doing to exceed their revenue targets.