As trite as it sounds, approach sales planning is a headache for any executive.
Not all companies are happy with the results of their sales department. This fact is confirmed by a study conducted by representatives of the consulting companies. The study involved CEOs, executives and commercial directors of companies. The survey results showed that 87% of sales companies are dissatisfied with the performance of their active sales departments and are looking for new employees.
Let’s try to figure out why this is happening.
The results of the same study showed that of the companies surveyed:
– 9% are ready to look for reasons in their own organization of business processes along with other factors;
– 70% are sure that their model of building an active sales department is the only correct one;
– 21% believe that the model of building active sales is the responsibility of the head of the department.
Based on these data, it becomes clear that most of the domestic companies are looking, first of all, for problems in the incompetence of their sales managers.
And this can be connected with only one factor – managers do not fulfill the sales plans set before them. But you must admit that plans cannot always be correctly drawn up. Therefore, I propose to figure out how to correctly approach sales planning.
Approach Sales planning
Sales planning can be done in 3 ways:
– top-down planning
– bottom-up planning
– goals down-plans up planning
In the first case, the management of the company independently sets goals and develops plans for its sales department.
In the second case, the sales department develops its own goals and plans, which are sent to management for approval.
In the third case, the company’s management develops goals and indicators for the development of distribution. Based on this data, the sales department draws up a plan, as well as a list of resources required to fulfill the plan. Plans and resources are reviewed and approved by management.
Practice shows that the third method is the most effective.
Although, unfortunately, most companies use the first method.
Why is this happening?
The answer is simple enough: top management is always the investor. At the same time, knowing the average interest rate on deposits, the management expects its business to grow at least 2 times more than the average rate. Otherwise, the deposit is a more attractive and profitable investment like investing in best Australia online pokies. Lower-level managers almost never think about the value of money, so senior management rarely entrust them with sales planning.
What usually happens when planning top-down sales?
In most cases, top-down sales planning stimulates a shift in responsibility and the development of protest thinking among sales managers. That is, having seen their monthly sales plan, managers begin to look for reasons and arguments why this plan is overstated and impracticable.
Any increase in the plan is perceived by them not as an opportunity to increase their income, but as a desire by the management to reduce their salaries.
But the root of the problem lies elsewhere: the manager is only comparing the sales plan of the last month with the current plan.
If the figure of the current plan is greater, the manager perceives it as a whim of the management, and nothing more. And he continues to work carelessly, without thinking about what is needed to fulfill the plan.
Believe me, only a few managers, with this approach to planning, try to figure out how they can increase sales. They will always wait that once the management sets up plans, then it should provide resources for implementation, as well as tell how the plan can be fulfilled.
At the same time, if any action proposed by the management turns out to be ineffective, it will automatically turn into an alibi for the manager why he did not fulfill the plan. Naturally, after that the manager will demand that the plan be adjusted.
Therefore, I find this planning approach ineffective. On the other hand, if sales planning is completely at the mercy of managers, there is a high probability that managers will simply underestimate their performance. Which, in turn, will naturally not be liked by the management, and it will send its plan to the sales department. To avoid eternal planning problems, the goal-down, plan-up method is used.
Which, in turn, allows you to analyze:
– The number of outlets that do not have a top assortment. Entering the best-selling items in these outlets will definitely increase the average order, and, accordingly, sales.
– Assortment matrices for each client. This analysis is very important for distribution companies, but very few managers do it.
First, this analysis helps identify high-turnover positions. They should be the focus when launching marketing activities.
Secondly, it shows low-turnover positions that affect the overall assortment turnover. After all, based on the total turnover of the assortment, customers demand a deferred payment.
The top priority for the manager is the rotation of low-turnover positions, which, in turn, affects the improvement of the overall assortment turnover, and allows you to get additional sales.
Like for like sales
This indicator is very important for strategic planning and allows you to correctly calculate the sales plan. For the manager, this is an excuse to understand the reasons for the fall, as well as determine the potential for sales growth.
– Managers plan the necessary resources for sales growth.
Knowing the potential and needs of their customers, managers can draw up a list of effective measures aimed at increasing sales and distribution indicators. Possessing the data on the effectiveness of previous promotions, the manager can correctly predict in which month it is better to hold events and what increase they will give to sales.
Based on this data, the manager can also draw up an approximate marketing budget for the year, which will help management assess the effectiveness of investments in sales development.
The main elements of strategic planning.
Sales data for each product group for each month for the previous 2 years.
This data is necessary so that the manager, firstly, can see the growth or fall trends for each product group, and, secondly, he can correctly draw up a sales forecast for each month of the next year.
Market expectations and trends.
Market expectations can adjust sales plans, both upward and downward.
Information about the seasonality of production.
If the product has a pronounced seasonal character, then naturally the manager needs to know how much sales grow during the season, and, accordingly, how much they fall in the off-season.
Marketing activity plan.
Any marketing activity has its own performance indicators. The sales manager needs to draw up a marketing calendar based on the performance indicators of previous promotions to maximize sales growth.
The emergence of new products in the company’s range.
Of course, new products can increase the company’s sales. They must be taken into account from the moment they appear in the company’s portfolio in order to correctly draw up a sales plan. For example; some companies like real money online casino offering new games and bonuses for it’s customers.
Clients’ business development strategy.
In strategic planning, it is important for each manager to consider the development of their clients in the coming year. Opening branches (stores), entering new markets, changing owners – all these factors can influence the increase in sales, or decrease due to the deterioration of the financial condition of customers.
Information about the planned price increase.
Very often, sharp increases in prices have an impact on sales growth in the month when prices increase and on further declines in sales in subsequent months. It is important for a manager to have this information in order to predict personal sales volume as accurately as possible.
Having filled in the data, the manager receives a detailed sales plan for the year for each product group in the context of each month. A key feature of this planning approach is that managers take into account all the factors that can affect both the growth and the decline in sales.
In most cases, managers find many new opportunities to increase sales and develop distribution. Also, how correctly and competently the plan will be drawn up will be an indicator of the professionalism and competence of this manager.
To ensure that plans do not remain just numbers on paper, each sales manager needs to compare the actual sales results with the planned monthly. This will help you see deviations from the plan for each product group. Thus, each manager will be able to quickly understand the reasons for the failure in any of the areas and improve their performance.
Quarterly plan adjustments.
With the help of monthly analysis, the sales department will be able to understand which customers are experiencing an increase or decrease in sales, as well as determine the factors influencing these deviations. It is important to understand that no planning is perfect.
How to motivate the entire sales department to fulfill the annual plan?
Having disassembled the stages of strategic planning, we are left with the last question: how to motivate the entire sales department to fulfill the annual plan?
Achieving a strategic sales plan is undoubtedly a more important and priority result for a company than fulfilling plans in the context of each month. That is why it is important that each sales manager is additionally motivated to fulfill his annual plan.
Motivation can be both tangible and intangible.
Many companies use the “13 salaries” system as incentives for their managers, which is equal to the average monthly salary and is paid as an additional bonus for fulfilling annual obligations. An effective example of non-financial motivation is a trip abroad for employees of the entire sales department, provided that the annual plan for the department is fulfilled.
It is important to remember: no matter what type of motivation you use, the size of the bonus should be serious enough and stimulate all managers to fulfill their annual sales plan at any cost.