Approach sales planning is a headache for any executive, regardless of how banal that statement may sound.
There are some businesses that are dissatisfied with the performance of their sales department. This assertion is supported by the findings of a study that was carried out by consultants from various companies. Participants in the study included Chief Executive Officers, Executives, and Commercial Directors of various companies. According to the findings of the survey, 87 percent of sales companies are unhappy with the performance of their active sales departments and are looking to hire new staff members.
Let’s make an effort to understand why this is taking place.
The findings of the same study revealed, with regard to the organisations under investigation:
- 9 percent are willing to look for reasons in both the organisation of their own business processes as well as other factors;
- Seventy percent are positive that their strategy for constructing an effective sales department is the only viable option;
- 21 percent of respondents think that the head of the department is responsible for designing the model that should be used to build active sales.
It is apparent from these data that the majority of domestic companies are looking, in the first place, for problems in the incompetence of their sales managers.
And there is only one factor that can be connected to this issue, and that is the fact that managers do not fulfil the sales plans that have been presented to them. You have to admit, however, that plans do not always turn out the way they are intended to. As a result, my plan is to figure out how to approach sales planning in the most effective manner.
Approach the process of sales planning.
There are three different approaches to planning sales:
Planning from the top down, planning from the bottom up, planning based on goals first, and planning based on plans first
In the first scenario, the management of the company determines the sales department’s objectives and formulates plans for the department on its own.
The second scenario involves the sales department coming up with its own objectives and plans, which are then submitted to management for approval.
In the third scenario, the management of the company formulates objectives and key performance indicators for the expansion of distribution. This information is used by the sales department to develop a strategy, as well as a list of the resources that are necessary to implement the strategy. Management looks over the plans and resources and then gives their approval.
The results of previous tests indicate that the third approach is the most successful.
Despite this, the vast majority of businesses still employ the first approach.
What could possibly be causing this?
The answer is fairly straightforward: the investor is always the top management. In the same vein, in light of the fact that the average interest rate on deposits is known, the management anticipates that the company will expand at a rate that is at least twice as high as the average rate. Aside from that, the deposit is a more appealing and lucrative investment, similar to how investing in the best online pokies in Australia would be. Because lower-level managers almost never consider the value of money, senior management almost never delegates sales planning responsibilities to those managers.
What are the typical steps involved in planning top-down sales?
The majority of the time, top-down sales planning leads to a transfer of responsibility among sales managers as well as the development of protest thinking. That is to say, once managers have seen their monthly sales plan, they immediately begin searching for reasons and arguments as to why this plan is unrealistic and exaggerated.
Any expansion of the plan is interpreted by them not as an opportunity to increase their income, but rather as a wish on the part of management to bring about a decrease in the amount that they are paid.
The manager, however, is only comparing the sales plan of the previous month to the plan for the current month, which is missing an important piece of the puzzle.
In the event that the figure of the current plan is higher, the manager will view this as nothing more than a caprice on the part of the management. And yet, he keeps working mindlessly, without giving any consideration to the steps that must be taken in order to carry out the plan.
Believe me when I say that very few managers take this kind of planning approach and actually try to figure out how they can increase sales. They will never stop waiting for the management to establish plans, supply the necessary resources for implementation, and explain how the plan can be carried out in order to satisfy their requirements.
At the same time, if any of the actions that have been suggested by management turn out to be ineffective, then the manager will automatically have an alibi for why he did not carry out the plan. After that, it is only natural that the manager will request that changes be made to the plan.
As a result, I do not believe that this strategy for planning is successful. On the other hand, if sales planning is left entirely up to managers, there is a high probability that managers will simply underestimate their performance. This can have serious repercussions for the business. Which, in turn, will naturally not be liked by the management, and it will send its plan to the sales department in order to implement its strategy. The goal-down, plan-up method is utilised so that interminable issues with planning can be avoided.
Which in turn enables you to conduct the following analyses:
The percentage of retail locations that do not stock top-tier products. The addition of the items that are currently performing the best in these retail locations will unquestionably result in an increase in both the average order and, consequently, sales. Personalized assortment matrices for each individual customer. However, very few managers actually perform this analysis, despite the fact that it is very important for distribution companies.
To begin, this analysis is useful for determining which positions have a high turnover rate. They should be the primary focus of any marketing efforts that are initiated.
Second, it identifies positions with low turnover, which can have an impact on the assortment’s total turnover. After all, customers demand postponed payment on the basis of the total turnover of the assortment.
The rotation of low-turnover positions is the top priority for the manager, which, in turn, affects the improvement of the overall assortment turnover and enables you to make additional sales.
You are able to accurately calculate the sales plan with the help of this indicator, which is very important for strategic planning. This provides the manager with an opportunity to investigate the factors that contributed to the decline in sales and evaluate the scope of any future expansion opportunities.
Managers will plan the necessary resources to support the expansion of sales.
When managers are aware of the potential and requirements of their clientele, they are better able to compile a list of efficient measures that are geared toward increasing sales and distribution indicators. When a manager has access to data on the efficacy of previous promotions, they are able to make accurate projections regarding the optimal month for holding events as well as the percentage increase in sales that these events will produce.
On the basis of these numbers, the manager can also prepare an approximate marketing budget for the upcoming year. This will enable management to better evaluate the efficiency of investments made in sales development.
The fundamental components of a successful planning strategy
Information regarding the number of products sold in each category during each month over the course of the previous two years
The manager needs to have access to these numbers for two primary reasons: first, so that he can observe any upward or downward trends for each product category, and second, so that he can accurately project sales for each month of the following year.
Expectations and current trends in the market
The expectations of the market have the potential to either increase or decrease sales plans.
Particulars concerning the cyclical nature of the production.
If the product has a discernible seasonal pattern, then it is only natural that the manager needs to be aware of the degree to which sales increase during the season and, consequently, the degree to which sales decrease during the off-season.
A plan for marketing activities.
Every single marketing endeavour has its own unique set of performance indicators. In order to achieve the greatest possible increase in sales, the sales manager needs to develop a marketing calendar by analysing the key performance indicators of previous sales campaigns.
The introduction of brand-new items into the catalogue of the company
There is no question that the introduction of new products can boost overall company revenue. They need to be taken into consideration as soon as they are added to the company’s portfolio in order for the sales plan that is being created to be accurate. For instance, some businesses, like real money online casinos, provide their customers with access to brand new games and additional free in game bonuses.
Strategy for the expansion of the client’s business
When it comes to strategic planning, it is essential for each manager to take into account the growth of their customers over the course of the upcoming year. Opening new locations (branches or stores), expanding into new markets, or changing ownership are all examples of factors that have the potential to affect either an increase in sales or a decrease in sales due to a deterioration in the customers’ financial situation.
Details concerning the planned increase in purchase price
There is a high probability that sudden price increases will have an effect on the growth of sales during the month in which the prices increase, as well as on further declines in sales during the months that follow. It is essential for a manager to be in possession of this information in order to make the most accurate projections possible regarding personal sales volume.
After completing the data entry, the manager is provided with a detailed sales plan for the year, broken down by product group and presented within the context of each month. The fact that managers take into account all of the factors that have the potential to affect either an increase or a decrease in sales is an essential component of this planning strategy.
The majority of the time, managers discover a large number of fresh opportunities to expand distribution and increase sales. A further indicator of the professionalism and ability of this manager will be how accurately and skillfully the plan is drafted by this manager.
Analysis performed every month
Each sales manager is responsible for conducting a monthly comparison of the actual sales results with the planned sales results. This will ensure that plans do not remain nothing more than numbers on paper. You will be able to see where each product group deviates from the plan as a result of using this. As a result, every manager will be able to quickly comprehend the factors that contributed to their performance falling short in any of the areas, and they will be able to improve their work.
Adjustments to the plan every quarter
The sales department will be able to understand which customers are experiencing an increase or decrease in sales, as well as determine the factors that are contributing to these deviations, with the assistance of the monthly analysis that will be performed. It is essential to have the realisation that there is no such thing as perfect planning.
How can we best motivate the entire sales department to ensure that we meet our annual goals?
After tearing apart the stages of strategic planning, the final question that remains is: how can we motivate the entire sales department to fulfil the annual plan?
It is without a doubt more important and a higher priority for a company to realise their strategic sales plan than it is to fulfil their plans on a monthly basis. Because of this, it is essential that every sales manager have an additional incentive to meet his or her annual quota.
Motivation can come from both concrete and abstract sources.
There are a lot of businesses that use a system called “13 salaries” as an incentive for their managers. This system is equivalent to the typical monthly salary, and it’s paid as an additional bonus for managers who meet their annual responsibilities. A trip overseas for all of the sales department’s employees, on the condition that the annual plan for the sales department is successfully completed, is an efficient illustration of the type of motivation known as non-financial motivation.
It is essential to keep in mind that regardless of the method of motivation you choose to implement, the size of the bonus should be substantial enough to motivate all managers to meet their annual sales quota at any cost.