What Is The Number One Reason Sales Leaders Are Fired?

May 3

Most sales leaders will tell you that sales plans are useless. Reality hits and the plan can be thrown out the window. Then why bother? Because sales planning is indispensable. Ask anyone that went through a planning exercise at the start of 2020. The plan they wrote for the 2020 selling year was useless by April because of the global Covid pandemic. But, the process of sales planning enabled them to pivot quickly when the market changed in unprecedented ways.

57%, of most sales teams don’t hit their sales targets. One of every two teams will fail.

This is the leading reason why the average tenure of a sales leader (Chief Sales Officer, VP of Sales, Director or Manager) is less than three years. Executive teams, boards of directors and private equity investors expect immediate results–success starts with effective sales planning. When more than half of sales teams don’t hit their target, the leader’s inability plan is typically the problem.

For many sales leaders, they don’t know where to start. Despite these truths, you are expected to know how to architect and execute a fail-proof sales plan. A plan that has considered the unexpected, accounted for worst and best-case scenarios, is aggressive, and, most importantly, achievable.

You need a sales plan if you want your team to hit its targets. Good sales plans have three essential elements.

The Elements of an Effective Sales Plan

Despite confidence, you should never feel safe or comfortable. The most successful leaders differ from their less successful peers in how they maintain hypervigilance in good times as well as bad. Actually, you should expect that conditions will, with 100% certainty, turn against you without warning. At some unpredictable moment, at some highly inconvenient time, things will change, and you’d better be prepared.

Let’s explore the elements that contribute to effective sales planning:

Understanding business objectives
Building a step-by-step plan
Planning for the unexpected

Many sales leaders have a view of planning that is too narrow in scope, and that can create massive problems for the business. A good plan is comprehensive and looks at the selling year from a variety of perspectives.

Understanding Business Objectives

When you approach a new selling year, it’s essential that you understand the goals of the business. When you think about business goals, it’s important to have a perspective broader than just sales targets and revenue. Most companies have stated goals for these common metrics, among others:

Revenue per employee
Cost to acquire a customer
Employee turnover
Offering/product expansion
Earnings before interest, taxes, depreciation, and amortization (EBITDA)
Debt-to-income ratio

Sales leaders must align their team’s selling efforts with the short- and long-term business goals of the company. If you don’t adjust your sales plan to mirror the business goals, expect trying times in the future. It’s not enough to build your annual plan around sales targets. Other important factors that influence the how of your sales plan must be included.

You need to know how the business plans to be successful in the selling year.

You need to know what your team needs in order to achieve success as the business plan defines it.

Spend time with the executive team to learn what success looks like in the upcoming year. You must know the route the business will take in the next year, three years, and five years. When you engage with the executive team during the budget and planning season, they will see you as more than just “sales.” It will build your credibility as a leader, a team player, and a strategic thinker.

Building a Step-by-Step Plan

Good sales plans dissect a huge goal into incremental steps, and detail what needs to be accomplished at each step. In order for your plan to be successful it needs:

1. Clear performance markers

2. Self-imposed constraints

3. Assess your available resources, only keep what you need

4. Largely within your control to achieve

5. A time frame long enough to manage, yet short enough to have teeth

6. Imposed by yourself, upon yourself

7. Achieved with high consistency

Take your annual sales targets (revenue and expense) and start breaking them down into smaller tranches. How granular can you get? Can you establish a quarterly target? Monthly targets?

Then assign your sales targets to each offering and different teams (even down to the rep level). Take your annual revenue (sales) goal and expense budget, break them down by month, and assign these targets to products and selling teams — this is your team’s sales plan for the selling year.

As you create your plan, pay special attention to the following traps:

Accounting for Seasonality

Does your business have slow periods during the summer or around certain holidays? If so, then take that into consideration when setting sales targets. Don’t sign off on a forecast that calls for the most sales in December, if you expect (and the data shows) that the holiday season has an adverse effect on sales. Commit to lower targets. This isn’t a sign of weakness, this is prudent and professional.

Be Aggressive, but Be Realistic

Don’t sign off on a 40% revenue growth if you don’t have the resources to achieve it. If you need additional budget dollars to hire more sales reps or upgrade systems in order to achieve a 40% growth, then fight for the resources. The planning phase is the time to ask for what you need. Don’t get halfway through the year and find out that you need more capacity on the team. This will erode your credibility.

Building a Buffer

Before you communicate the plan to the team, add some margin. You want to build a buffer between what the executive team or board expects and what you expect from the sales team. This isn’t being dishonest; this being prudent.

Planning for the Unexpected

Disruption is going to happen. Unforeseen circumstances will arise. How are you going to prepare and respond? Consistency over time is key. By sticking with your sales plan in good times and bad times, you reduce the chances of getting crippled by a big, unexpected shock.

Consider these unexpected scenarios:

A top performer takes an unexpected leave of absence. You can’t back fill the position, so how will your existing team fill in the gaps?
A top performer leaves unexpectedly? Do you have a good pipeline of candidates?
Due to unforeseen circumstances you need to significantly increase or reduce the size of the sales team. What do you do?
You lose one of your biggest accounts? How do you account for the loss of revenue?

At this point you should have confidence in your sales plan. Before you present your annuals sales plan to the team, make sure that the executive team has approved it.

Equally important, ask yourself: Is this plan believable?

Look at it from every possible angle. If you were a sales rep, would you be excited or scared? How will your sales managers react when they see the plan for the first time? Try to anticipate what each role’s perspective will be on the plan. Here are some questions to consider:

Is the monthly distribution of results attainable? Are you being too aggressive in early months when you have too many new sales reps who aren’t yet well-established in the business?
Conversely, are you exposing the team to really aggressive goals late in the year, that could be more attainable by shifting some results to earlier in the year?
How does your cost per sale trend over the year? Does it get better or worse? How does this metric compare to last year’s? How does the trend align with the company’s financial goals?
How does revenue per employee trend over the selling year? How does it compare to last year?
What key business goals will be accomplished as a result of successfully executing this plan? Will any business goals be adversely affected or overlooked?

Once you master the four elements of sales planning, you become unstoppable. The Sales Planning Simplified Kit walks you through the process with step-by-step instruction so you can consistently hit your sales targets.

GET THE KIT

Additional Reading: Many CEOs are forced to make a tough decision: should I fire my sales leader? Before you reach that decision, here’s a resource that might bring you some clarity.

Bryan Royals