The role of sales planning in sales management

Sales planning saves time and increases success by helping you target the right prospects and avoid wasting resources on people who will never buy. This crucial sanity check ensures your sales activities are aligned with your revenue goals and confirms you have the resources needed to achieve them.

• Taking time to plan helps you sanity-check what you're doing
• Begin planning in Q4 to prepare for the upcoming year
• Use 90-day planning cycles for regular assessment and adjustment
• Calculate exactly how many sales you need to hit your revenue targets
• Know your conversion rates at each stage of the sales process
• For sustainable business, ensure you have sufficient resources to support sales activities
• A common rule: salespeople should generate 3x their salary in revenue
• Most sales struggles stem from poor targeting, qualification, or resource allocation

I'm a big believer in investing in yourself because, frankly, very few other people are likely to do it. If you found value in this podcast, please consider checking out my online sales course where I go into all of this in much more detail. You can also join my free webinar to get a flavor of what I teach.

Chapters

• 0:24 Introduction to Sales Management Planning
• 2:22 Why Planning Saves Time and Money
• 3:59 90-Day Planning and Goal Setting
• 7:39 Resource Management for Sales Success
• 11:32 Know Your Conversion Numbers
• 17:14 Setting Realistic Targets
• 20:12 Final Thoughts and Call to Action

Transcript

Speaker 1: 0:12

Hello and welcome to another podcast. Now you may well be thinking, having looked at the title of this podcast, that you are not a sales manager, which may be the case if you are pretty much there doing your own sales, and you may also not be terribly excited by the thought of planning. So I am going to encourage you to listen to the end of this particular podcast, and I will also note that I can identify with that, because I'm one of those people who likes to just get on and start doing things. I really sitting down and planning something sort of goes against the grain a little bit for me, so that's my hand up, hand up. However, having made myself sit down and do some planning, I found it has saved me not only a lot of time and avoided me wasting a lot of time on people who will never buy from me, and this is something that I've spoken about at length in other podcasts it also means that I've been more successful in my selling because, having got more targeted, having got clearer about what it is I'm trying to do, what I'm trying to achieve, that means that the time I'm spending selling is, for the most part, being spent in the right places and on the right tasks. So do please hang on in there. Before I go any further, please remember to like subscribe, tell your friends, anybody who would like to know, because that allows me to carry on doing what I'm doing. And also remember that there is the online sales course where I go into all of this stuff in a lot more detail. So if you like the podcast, if you're getting value from it, do please consider investing a little bit in yourself and giving the course a go. And there is the free webinar so you can jump on that, get a flavor of what I teach and go from there. So that's the add over.

Speaker 1: 2:10

Now, why is sales planning and sales management essentially important? Well, the key thing is that when you take a step back and look at what it is you're trying to do, I kind of regard this as sanity, checking what I'm doing. So it's all very well rushing around and running from one client to another and being very, very busy, but is that busyness actually achieving anything? So the key things I just want to cover very briefly in this podcast, because I'm not going to go into a lot of detail, but what I'm going to do is sort of talk through a bit of a template really, and that's a good thing to focus on and really look at this whole aspect of making sure that what I'm doing is actually supporting my overall goal. So if you're a business owner listening to this, I think that's particularly important because you'll probably know better than, I would say, a lot of salespeople that at the end of the day, you've got to make a profit. So where you spend your time and you probably don't have as much time to do selling as somebody who is solely looking at sales because you've got businesses really suck up time and you're running it yourself so let's look at how you do a basic sanity check.

Speaker 1: 3:36

So the place to start is really to back right up and look at let's call it the executive summary, for want of a better term. But what you're looking at is, first of all, the date range you're looking at. So are you looking at the next quarter? Are you looking at the next year? Are you looking at the next half year? You might even go beyond that, but for most of us I think looking at the next year makes sense. But also there are different times of year when that would make sense. So the place to start really with that is as you're coming.

Speaker 1: 4:11

I tend to do it during Q4, because then I've got a pretty good idea of how that particular year is going to unfold. I'll know what worked, what didn't. Maybe I've made mistakes, maybe I was chasing the wrong clients. Yeah, there's still another quarter to go, but at that stage and this does depend on your sales cycle and how long that is but at that stage I've got a pretty fair idea of what's likely to close during that last quarter and it's an opportunity to try, maybe try out some things just to close business. You might have ideas, different ways of drawing clients in, maybe putting an offer on the table, something that encourages them to take action during that last quarter. So that's where a 12-month would sit.

Speaker 1: 4:58

The quarterly target is really something to do at the end of a quarter, at the very beginning of a quarter, and that, I think, is this is the 90 day planning, and I think there's a lot to be said for it. Because really, if you are running a business which is what we're doing as all salespeople, we're basically running a business you need to be very clear on what your objectives are for the next 90 days, because then you can break them down into that three month period, what you need to achieve every month and obviously from the monthly breakdown you can look at what has to happen each week, and from the week, obviously, you then plan your week. You're now looking at daily activities, and one of the most important things you can do is to set objectives, to start looking at what your goals are, and where this is really important and where this sanity checking business comes in is to achieve the revenue target that you set yourself. And let's just talk on the 90-day plan, because that's the one that you're going to be visiting four times a year. How many sales do you need to make? What is your average sale value? What's the average order value? How many products are you selling? So you might have one product that you sell, or you might have dozens. So how do you prioritize? Which of these products are first of all going to hit your revenue target, and then, the chances are, you've got a profitability target as well which products are going to deliver that and if they require an active sales process what I mean by that is something that requires face-to-face sales.

Speaker 1: 6:39

So here I'm excluding your marketing activities. I'm excluding online sales, for example, that happen without you having to personally get involved? So I'm talking face-to-face activities, and what do those require? So what's the? The sales journey? What's the journey for the client? They see an ad, they make an inquiry, they get a call from the salesperson to qualify them in or out. They may require a demonstration or a loan over a period and then at some point there will be a closing activity. Now the demonstration and the loan activity may not apply to what you do, but obviously, if they do, you have to schedule all of that in as an activity that you have to support.

Speaker 1: 7:27

So it will take time, it may take preparation, you might need access to certain resources. So if you have demo equipment, how much equipment do you have? Because all of that is an overhead to the business. It's essentially dead money because you're not going to convert it into a sale every time. In terms of that particular hardware, you might do a next demo sale, maybe once a year or more often, but again it comes back to what are the resources that you need to have available?

Speaker 1: 7:58

So what I mean by that another way of looking at this, which hopefully it is clear. But if it isn't, then let's say that you have to do three demonstrations a week of two particular product types. That means you need to have enough demo units I'm going to call them that because that's the phraseology I'm used to using and you need to have enough of those to support that level of demonstrations. If you're looking at multiple salespeople, if you are in a management situation, do you have enough units or do you make them available to certain people for certain periods? How do you manage all of that? Because the worst thing to do is suddenly have to invest, to spend your money in getting these units so that they can be used, and then find that that's just not doable. You just don't have the resources to manage that.

Speaker 1: 8:50

So this is what I mean by sanity checking. This is one aspect of it. What are the physical resources? And this could be software equipment, demo gear as well. It could be maybe an online package that people jump on and log on to and try it. That way, there are many ways of selling product, but the bottom line is do you have enough gear to allow you to respond quickly? Because when somebody makes an inquiry remember this is one of the times when they're hot so they've made the inquiry, because they're feeling the pain. They're coming to you for a solution and they want an antidote to that pain as quickly as possible, which means that if you are relying on some sort of hardware or demonstration, or maybe if you're doing I don't know a gym, for example, you might bring someone in for just a free coaching session, something like that Do you have the resources available to cope with the demand, assuming that your marketing is creating sufficient demand? So I'm hoping this is making sense. But this is where we may well identify straight away that there's not sufficient resource to do the number of demonstrations that you need to perform in order to hit your revenue goal. So you've got to then. So this is the sanity checking part. So it's then a question of revising that goal. Is that a goal that you need to hit? Are you being too ambitious? Or if that is a goal you need to hit, what other? What can you do? How can you manage the resources that you have available in order to allow you to service that number of clients? So this is one aspect of it.

Speaker 1: 10:37

Another one is to really go back to basics. You know how many sales you need to make at a certain profitability level, and it might be you might get a bit of a shock and find that instead of, let's say, five a week, you've actually got to make 15 a week. Now that is clearly a very significant difference in the number of sales that is needed. So here again, you can look at your numbers. This is so important that you know your numbers and it's something I dive into in the sales course quite a bit, because this is really fundamental. If you don't know your sales numbers, if you don't know your conversion rates and how many inquiries you need to receive in order to make one sale so that's looking from the start of the client journey to the end of the client journey, and obviously there are variable steps in between if you don't know what those numbers are, you already have a major problem, because it's impossible to sanity check what you're doing without knowing what your conversion rates are at each stage of the sales process.

Speaker 1: 11:47

So, for example, of every inquiry that you get in. So let's say somebody inquires you as a salesperson, you pick up the phone and you qualify them. If you find you are taking one in three people through to the next stage, that's probably a reasonable number to have in in. This will depend on your industry, but the sort of industries I'm used to working in, I would expect a one in three, and probably one in three at each step, just as a rough guideline. So for every person who inquired, I'd qualify them one out of three of those people. I would take to the next stage, which be which is probably a sales visit of some sort. It might be a demonstration, it might be the start of the valuation, but whatever it is, that's a sales visit. Of those demonstrations, maybe one in three of those people will go on to buy.

Speaker 1: 12:43

And this is grossly simplifying the whole thing. But this, equally, these stages might apply to you. So if I've got two lots of one in three, basically, for every nine inquiries I get at the very start of the process, I know that one of those will buy. So, in other words, for every sale I need to make, every client delivery I need to make, I need nine inquiries coming in, because that's how my figures are tending to work out. So if you know those numbers, you can make that kind of a statement. Also, you can look at where your conversion rates could could be better, because if I'm getting one in two, if let's say my marketing is really spot on and for every inquiry I get, for every two inquiries I get, I take one person to the next stage. So I'm now converting one in two and for every demonstration that I do, one out of two will buy. That means I only need four inquiries at the front end in order to get a sale. I can be pretty confident about that. So this is why, understanding your sales process, the stages that you go through, your conversion rates at each one this is why it's so important to understand and know what they are.

Speaker 1: 14:04

Alternatively, if your marketing isn't very, if you're not targeting your target clients, clients very well, then it may be that for every 10 inquiries that come in, you're only getting one demonstration. You're finding that most of the people who inquire don't understand the product or they're the wrong sort of people or, for whatever reason, they're not the people that you can move forward with. So if that's one in 10 and then when you do a demonstration, you're only converting one in 10 of those people to a sale, that basically means to get one sale you've got to have 100 inquiries and obviously there's all that overhead, the time spent qualifying people, the time spent demonstrating to people. So I would say, unless your business, unless your products are extremely profitable, that sort of conversion rate is completely unsustainable. So this is again what I mean by sanity, checking what you're doing situation, or 100 inquiries to get one sale, then it highlights that there are definite, there's definitely room for improvement at probably every stage of what you're doing, certainly starting with the marketing.

Speaker 1: 15:20

Your marketing message is wrong you're, you know nine out of ten people that are equally when you get to demonstrate. Probably the qualification process is wrong as well, if you're, if people are coming through that and you're still only converting one in ten at the demo process. That tells me that first of all, your qualification process is wrong, because the time that you're the people you're spending more time with so let's say, a demonstration takes three hours you really want to be spending that time with someone where there's a very high probability that they are going to buy and not 10%. That's just wasting your time. So this is the kind of thing that I'm talking about and really at this point I guess I just want to back the track up a little bit.

Speaker 1: 16:11

So what I mean by sales management is certainly, once a year, taking a look at your target for the new year or whether you're setting it yourself or somebody else's, and then, based on what your current experience is, if you're selling the same products that you've been selling, what is your current experience? And this is where you have to know your numbers. And if you have to know your numbers and if you don't know your numbers for the previous year, you can definitely work them out, or I would hope you can, because you need to be keeping track of the number of calls you have coming in, how you're converting those calls. So how, the how well the qualification process is going when you get to demos evaluations, if you go through that stage, how well they're going, how many of those are resulting in orders, and then you get your final order value at the end. And then, once you've got that uh, you can work out just how profitable that whole system is, because you need to obviously work in your overheads.

Speaker 1: 17:08

Um, it's not just about um what you are buying, if you're if you're buying a particular product, or what it costs you to make it against what you are buying. If you're buying a particular product, tell what it costs you to make it against what you're selling it. You've also got a whole load of overhead in there, which includes your time as a salesperson, your time as a manager, all of that kind of thing. So it's a sanity check. And if you are a sales manager, then this really is a big part of your role, where you are looking at the sales people who work for you and this is where you would set targets to make sure that what they are bringing in as revenue and revenue that goes in the profit and loss, so what comes out as profit is sustainable.

Speaker 1: 17:51

So, as a basic rule of thumb, what I used to use was the salesperson's revenue as in their bookings, their sales orders that they bring in needs to be three times their salary, and that salary included any add-ons, which might be a car allowance, might be pension payments, that kind of thing. So that'll depend on the business you're in and how you've structured everything. But these are just rough rule of thumbs and obviously your own circumstances may well be different. But it gives you an idea of perhaps a starting point. I would say this is a starting point of where you need to be Okay.

Speaker 1: 18:30

So is there room for sales management in your process? Is there room for planning? I would say emphatically yes. If you think the answer is no. Well, look, you might be lucky. You might be doing well and that's all good if if you are well, you're probably not listening to this podcast. But if you're struggling a little bit, then this could well be one area where you're struggling because you don't know your numbers, you are setting unrealistic targets, you don't have the resources to meet those targets and you really need to start looking at all of your sales process, because I would hazard a guess that your initial messaging is wrong. In your marketing, you are definitely not qualifying people correctly and then you are spending too much time, too many resources, with the wrong people. So, on that rather gloomy note, but hopefully an eye-opening note, I'm going to leave it there.

Speaker 1: 19:29

Thanks very much for listening to the podcast. Please like, subscribe and please do have a look at the free webinar. It doesn't cover everything, but it gives you a flavor of the course and I'm a big believer in investing in myself because, frankly, very few other people are likely to do. It is my experience. So every now and again you've got to bite the bullet and invest in yourself. And, yeah, it's the only way to fix a lot of these problems. So you know, every now and again you've got to bite the bullet and invest in yourself and, um, yeah, you know, it's the only way to fix a lot of these problems. Okay, have a great day. Good selling. Speak to you soon. Bye for now.