- The Sales Plan identifies where future revenue will come from. It answers the question, 'how much revenue will be sourced from which customers and products?'
- It then communicates the revenue goal, identifies the actions to achieve the goal, and mobilizes resources to execute the actions. Prescriptive objectives, methods and resource allocation collectively create more favorable outcomes that would occur otherwise.
- The sales plan is the precursor to everything that comes after. Great execution won't get you very far if your plan is wrong. But a solid plan jump starts the right performance and leaves the remaining journey to be tackled with clarity of focus, measured execution and the realization of targeted objectives.
There are five ways to grow company revenues. You can acquire more customers, sell more to existing customers, keep customers longer, increase prices or make acquisitions. Your sales plan will arrange some combination of these factors to forecast revenue growth.
Unfortunately, many plans are one-and-done paper exercises and don't really aid performance. That's a missed opportunity. When done well, your plan shows the most efficient route to your revenue goal. A good plan applies laser focus to the activities that will achieve the revenue target.
Here are the 4 steps to produce a sales plan that works.
Set the Right Revenue Target
Data is your most powerful tool to create a realistic revenue target. Start with industry data to identify market size and growth rates. Chances are you compete in multiple markets so understanding the growth rates of each will better align your plan to the most attractive growth markets. You will need to consider not just the total addressable market but also market penetration. Saturated markets offer little upside.
Then examine your sales history. Factors such as trends in deal size, win rates, velocity, margins and cost of sales can be extrapolated and further projected. These factors also reveal how each effect total revenue generation so managers can prioritize actions and process improvements that will yield the biggest impact.
A historical review may also suggest whether it's time to suspend or shift resources from declining or low profit products or lines of business to higher margin areas. Reviewing market share progress over multiple years may show whether achieving a market share leader position is even possible or if not, a different customer and product market should be considered.
Finally, perform qualitative analysis with your sellers. They're in the trenches and hold valuable insights. Engage them to understand what factors most influenced market coverage, lead generation, pipeline amount, forecast accuracy and quota attainment.
If you are a startup or otherwise without data, you will need to adopt an experiment and iterate approach. Based on experience or industry benchmarks, speculate the factors that most contribute to performance, isolate a set of assumptions, develop hypothesis' and conduct fast paced test cycles to figure out what methods and measures most drive revenue growth.
The quality of your plan is commensurate with the quality of your data.
Plans built on data will always outperform plans built on intuition.
Align Markets and Products
Next you need to align markets and products.
Markets cannot be targeted based on market data alone. It's essential to assess each market segment for accessibility and fit with your company and products. For example, which market sectors most align with your unique value proposition and core competencies? Which segments have the least competition and are the most easily reached? What's the customer lifetime value (CLV) for each prospect in a market segment?
Even better, which market segments align with your best customers? That is, those customers that close the fastest and deliver the most profits. To answer this question, you should first document your ideal customer profile (ICP).
You want to select markets where the odds are in your favor. Where you have a track record, quantifiable customer results and preferably some brand recognition.
You can then answer the question, 'where does growth come from?'
The two dimensions to grow your business are product growth and market growth. Expanding your products or customer markets in various combinations will reveal up to four choices.
Here are the options to explore and compare.
- Sell more of your existing products to your existing customer markets (a market depth strategy)
- Take your existing products to new markets (a market growth strategy)
- Expand or create new products to sell to exiting customer markets (product growth)
- Create new products for new markets (disruptive growth). For new market expansion, be sure to examine not just if there is a gap in the market, but if there is a market in that gap.
Each option offers different levels of risk and revenue impact. Every company's appetite for risk and reward is different. But for most companies a balanced mix of options will make the most sense.
Timing must also be considered. For most companies, over 60 percent of margin, and sometimes revenue, comes from about 20% or fewer customers. Existing customers will deliver the shortest sales cycles and the lowest cost per sale. New products, territories or customer markets will incur longer sales durations and higher cost of sales.
Design the Go-To-Market Plan
Next you can then answer: How will we make it happen? This answer will be a combination of sales strategies and tactics.
Strategies are pretty consistent and include your customer strategy and selling methods such as your sales process and sale methodology. Marketing will have a direct impact on selling success so it's important to show integration of the sales and marketing plans.
Tactics are less consistent. For example, they show how to allocate your resources among target markets.
A sales plan best practice is to double down on your Ideal Customer Profile (ICP). Ill-defined customers are the enemy of sales performance. Pursuing the right customers will improve marketing campaigns, accelerate velocity, lower cost of sales, extend CLV, improve win rates, get more referrals and make revenue generation more predictable. Chasing the wrong customers will degrade every sales performance metric and frustrate sellers.
A good ICP clearly identifies the customer who will most benefit from your product. It is quantifiably measured so your CRM software can be configured to identify these prospects automatically and at scale. Good ICPs go beyond demographics and show how your product improves the customers' business.
If you serve multiple markets, you will have multiple ICPs. Each will enable specific and impactful communication, collaterals and UVP. Vague ICPs cause salespeople to pursue customers who are not a good fit, and waste valuable time for both sellers and customers.
Your Go-To-Market (GTM) plan should show how sellers will reach customers. It usually begins with sales force structure and how you organize selling resources. Sales cycle complexity, duration and average deal size will influence the design of inside and/or field sales, hunters and/or farmers and indirect channels such as alliances or partners. Selling capacity can be increased with tiger teams, big deal teams or market maker teams.
The GTM plan should identify your account penetration strategy. For example, you may choose a simple named account program which is popular with enterprise sales and Account-based Marketing (ABM) programs. Or you can elect a territory alignment program which may stand alone or be integrated with other customer concentration programs. Or you may pursue an account cluster strategy which consist of a small group of like customers anchored with a top account and surrounded with comparable target accounts. The goal here is to increase customer relevance and go deep on specific accounts.
Other sales motions may include additions or changes to the product mix, such as new offerings, new product bundles, new up-sell or cross-sell models. You may consider new revenue streams or monetization methods, or cross-pollinating products across lines of business or geographies. This later program is especially effective for companies that make acquisitions.
Another best practice is to embed your sales motions in a Sales Playbook. This improves clarity for the sales force. It reinforces strategies and tactics, and integrates planning actions to individual sales pursuits. Even better, you can creates context by using your CRM software to inject or recommend sales plays at each opportunity based on defined variables (such as customer type and sales step.)
Strategic pricing is another lever to consider. Most companies apply uncounted hours to cost management but invest little more than infrequent guesswork to strategic pricing. That's unfortunate as price and demand elasticity models create powerful levers to confidently change prices and increase revenues. Small changes to product prices can create big changes to company revenues.
No plan is complete without assumptions. These are part of the foundation for revenue projection and should be split among company and market factors. Company assumptions include the marketing plan (i.e. the volume of expected qualified leads), the budget, competing priorities or changes to the company during the period.
Market assumptions are more difficult to project. Customer demands are changing. Markets are in motion. Industries incur trends. You will need to identify the highest impact market factors, which will likely include things like customer demand, seasonality, competitors, and raw material or labor costs. Precise assumptions provide risk mitigation and give leaders the data to quickly model and adjust tactics in response to a changing environment.
The tactics and actions flow into a GTM Plan. The plan is supported with a time-boxed schedule, resource allocation, milestones and SMART goals. Some GTM Plans include leading metrics that show progress while others show only period-based success metrics.
The more frequent the milestones and measurement periods, the more time and opportunity to double down on what works, eliminate what doesn't and make swift course corrections. A good roadmap will help the company stay the course when confronted with the inevitable competing interests.
The biggest challenge with the GTM plan is combining near limitless routes to market in a constraint-based model. There are many actions, methods and tactics that you may pursue. However, you have limited budget and resources so it's critical to prioritize and orchestrate those resources with the highest impact actions. According to Michel Porter, "The essence of strategy is choosing what not to do."
The roll-out is where planning turns to execution.
Now that you know the revenue goal, target markets, product mix and methods to allocate resources, you need to delegate performance management plans and revenue quotas.
Nothing demotivates a salesperson like receiving an unrealistic quota. So, taking the time to share how the data-driven revenue target was created will gain understanding and increase acceptance. It's okay to have stretch goals, but they too should be achievable pursuant to some basis. Pie in the sky goals serve no constructive purpose.
Reps should understand how their individual efforts roll-up to the company's goal. Each seller and their manager should determine the measures and actions to achieve those goals. For example, based on average deal size, how many won deals are needed? Based on close rate, how many sale opportunities are needed? Based on qualification scores, how many leads are needed? Solidifying these goals and measures in a CRM dashboard maintains top of mind awareness.
It's a good idea to create the 30-60-90-day sales plan with leading indicators and interim milestones to demonstrate early progress toward longer-term goals. These period-based thresholds should include debriefs with managers.
Salesperson enablement also includes coaching, content and assets such as offerings, customer insights and collaterals. These items should be the CRM system so they can be accessed or contextually delivered to each sale opportunity at the right time.
The Point is This
The Sales Plan is all about making choices and trade-offs. It is about choosing to do fewer things better. As Peter Drucker wisely said, "Doing the right thing is more important than doing the thing right." That's why the plan is so critical. Pursuing the wrong markets and customers is futile even if you find a way to make it work.
Without a data-driven, documented plan, the forecast is just wishful thinking. And without interim measurements, inspections, adaptations and accountability, execution is aimless, and progress is blind.
Sales plans bring understanding and consensus to shared priorities and common goals. Clear direction drives visibility and orchestrated execution. You can only move the mountain if everybody is pushing on the same side.