The Elements of an Effective Sales Plan

Good sales leaders plan. Despite confidence, they never feel safe or comfortable; they remain afraid, terrified even, of not hitting their number. The most successful leaders differ from their less successful peers in how they maintain hypervigilance in good times as well as bad. Even in calm, clear, positive conditions, the successful sales leader constantly considers the possibility that events could turn against her at any moment. Actually, she believes that conditions will, with 100% certainty, turn against her without warning. At some unpredictable moment, at some highly inconvenient time, things will change, and she’d better be prepared. 

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

  • Understand business objectives
  • Build a step-by-step plan
  • Plan for the unexpected
  • Assign the plan to accounts

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.

Understand Business Objectives

When you approach a new selling year, it’s essential that you understand the goals of the business. I doubt your CEO has told shareholders to expect the same results as last year. 

Even if last year was stellar, no two years are the same. When it comes to business goals, most sales leaders only think about sales targets and revenue. If you were to ask your CEO or board of directors to define business goals, you can expect a more comprehensive answer. 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.

Early in my career, I was planning for new selling year where the sales targets were pretty much set for me. The CEO and CFO had signed off on an aggressive revenue target. I didn’t have much say-so in the revenue goals, but what I could influence was the expense budget, the resources (dollars) required to hit the sales targets. It was a time in my career where I was just beginning to build credibility with the investors and with the CEO. I only had a year (a successful one) with the company, and in order for the sales team to hit the targets, I was planning to do something the company had never undertaken. I was asking to create front-line sales managers so that not everyone would report directly to me. This request seemed expensive. On paper, it would add hundreds of thousands of expense dollars to the business. The CFO didn’t see the benefit of the request. In a private meeting with the CEO, he eliminated it from the budget altogether. I learned of this decision during a one-on-one with with the CEO. I needed to educate the CFO on why the expense was necessary. I had to go back and sit down with the CFO and explain to him that it wasn’t possible for me, the leader of the team, to hit the numbers that the business needed and have all 24 people report to me. The team had grown like crazy the year before, and I just wasn’t going to be able to launch into new markets, secure some of the high-level business contracts that they needed me to secure, and manage 24 direct reports. 

A detailed budget review with finance can be a difficult process. Good sales leadership requires that you build a plan and educate the rest of the management team about what you need to be successful. Building a budget is a negotiation. You’re not going to get everything you want. 

While I wasn’t able to get a reduced target, I was able to get additional dollars to help me hit those sales goals. Ultimately, we ended up hiring two sales managers and the business was willing to spend a little bit more money to hit that target. But it was important for me to understand how the business goal affected my team.

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

  • Does the business have goals of expanding into new markets? 
  • Is this year’s growth planned from selling a new product to the accounts we already have vs. acquiring many new accounts for your existing markets?
  • Maybe the business is maturing and this year’s plan is focused on improving earnings over aggressive revenue goals. How does your plan support this objective?

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

  • If the business plan shows growth from a new product, then do you need to consider building a speciality sales team for the new product OR is your existing sales team capable of selling the new product, too?
  • If the company plans to enter new markets, then do you need to hire additional salespeople OR can the existing team maintain both existing accounts and the new markets?
  • Will you need new resources to be successful this year? Perhaps you need to attend a conference that wasn’t in last year’s budget? Will you need to invest in data that wasn’t required last year?

Spend time with the executive team to learn what success looks like in the upcoming year. Schedule a series of meetings with the finance and operations teams to participate in creating the annual budget. You must know the route the business will take in the next year, three years, and five years. If you don’t have a copy of the strategic plan, then get one. If a formal plan doesn’t exist, then challenge the executive team to create one.

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.

Once you know what needs to be accomplished in the upcoming selling year, and how the business plans to accomplish these objectives, then you can start mapping out your annual, quarterly, and monthly sales plans.

Build a Step-by-Step Plan: the 20 Mile March

In Great By Choice, Collins introduces the concept of the 20 Mile March — dissecting a huge goal into incremental steps, and committing to taking those steps consistently, just as Amundsen broke his team’s journey into 15–20-mile daily legs. A 20 Mile March has these requirements:  

  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

It’s important to remember that a 20 Mile March isn’t just for sales targets and forecasts. You can have a creative march, a learning march, staff turnover march, or any type of march, as long as it has these characteristics.

Here’s how a 20 Mile March might look for a field sales rep trying to establish a new market:

I’m committed to having 1,000 face-to-face meetings with new accounts. For the next year (50 of 52 weeks), I will conduct 20–25 face-to-face meetings with accounts that have never purchased from our company. 

  1. 20–25 face-to-face meetings is a clear performance standard.
  2. 25 is the self-imposed constraint.
  3. Since the purpose of this march is to establish a new market, the only thing the rep needs is new accounts; she won’t need to meet with existing accounts to support this march.
  4. Setting meetings is largely within her control.
  5. A year is a time frame that is long enough to manage, yet short enough to provide a challenge.
  6. She set the thresholds for this march, not her manager.
  7. Assessing performance weekly will determine how consistently she is achieving the performance markers.

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 20 Mile March for the selling year. 

Plan for the Unexpected

Disruption is going to happen. Unforeseen circumstances will arise. How are you going to prepare and respond? If you deplete yourself and run your team to exhaustion, and adversity comes, you will be in serious danger. Don’t let your team push so hard to close business at the end of a quarter that they become run down, burned out, and exhausted at the start of the next quarter. Hitting a quarter’s sales target at the expense of the next quarter is dumb. Remember that virtually nothing goes according to plan; we can’t possibly predict the things that will go wrong. Assume the plan will take longer and cost more than you expect.

Consistency over time is key. By sticking with your 20 Mile March in good times and bad times, you reduce the chances of getting crippled by a big, unexpected shock. Instability favors the 20 Mile Marcher. This is when they really shine.

Have you ever pushed too hard when things were going well? What happened? Did you get burned out at exactly the time when you needed discipline and focus the most? Did your eagerness ever cost you dearly?

In a setting characterized by unpredictability, with both threat and opportunity, you can’t afford to leave yourself exposed to unforeseen events. Like Amundsen and his team, you, too, can use 20 Mile Marches as a way to exert self control. When you’re struggling to hit plan, or when you’re tempted by a new opportunity, having a clear 20 Mile March focuses the mind. When you know the objective and understand its importance, you will be able to stay on track and win.

Assign the Plan to Accounts

Now that you have dissected your larger, annual sales goal into smaller incremental chunks by quarters and months, the next task is to assign the results to the team and the accounts that help you accomplish the goals. When you assign your sales target at the regional or team, rep, and account level you will have confidence in the team’s ability to deliver. If you are thinking this step is excessive, remember that it will help you as you position the plan with the team. When you can assign the sales results to the account level, it becomes more believable to the team. (If this is a new idea for you and your team, then consider jumping to the Tend chapter, where you will learn the advantages of account management vs. territory management.)

Account management isn’t a new tactic. One of my favorite books on the subject, New Successful Large Account Management  by Robert Miller and Stephen Heiman was written in 1994. Sales teams that implement account management have deeper relationships with their customers (in fact, many customers will view your business as an extension of theirs), have a better understanding of where the business is being generated, and more consistently deliver at or above forecast.

In its simplest form, the sales territory is an area of responsibility for an individual or team of sales people by which sales are expected. Not Los Angeles. Not mid-market. Not the Midwest. So why do we build sales plans based on geographies? Is that the best way to realize and measure opportunities for the business? The geographical territory model is no longer the optimal structure for planning sales results. More important, it doesn’t create value for customers. Many companies have moved away from a geographical territory model because it no longer places the sales team in a position to win the most market share. It confuses the team and it confuses the customers. Eliminate the imaginary geographical boundaries and assign the sales results from your plan to accounts. Once you shift away from a geographical territory model to an account management model, your team’s performance will improve. 

If your company still utilizes a territory model, then let this be the year you break away and start to see powerful sales growth. The territory model limits a leader’s ability to develop new business, which diminishes scale and traction at the rep level. Territory management is also one of the most common barriers to your ability to deliver the results expected in the plan, because some reps (and teams) end up with too few opportunities, some reps (and teams) have too much opportunity to manage. The leader thinks the rep (territory) is performing well (or poorly) without any insight into how much business is being lost, overlooked, or undercapitalized.

  • Territory management is often a sign of lazy or poorly thought out management control.
  • It skews a manager’s ability to measure a salesperson’s true abilities.
  • Customers outside the defined territory are missed, don’t get developed, and the business suffers as a result.

Look at last year’s results by account:

  • Can you expect last year’s top accounts to buy even more this year?
  • Which accounts’ sales volumes were surprising (higher or lower than expected)? How does that affect your plans?
  • How many more new accounts do you need to hit the growth goals?
  • If you have a new product to sell, how many existing accounts can you expect to buy the new product? Or, do you need a new type of account to buy the new product?

We will do a deeper dive on account management in the Tend chapter. For now, it’s important to take your sales results and assign them to your accounts. By month, by quarter, and by year, assign believable sales quotas to the accounts that you can rely on to hit your targets.

A poor sales team structure makes good performance impossible, no matter how good the sales leader or sales plan may be.

Would You March?

In the next post, we will discuss positioning the plan. Positioning is about: 

1) creating buy-in on the plan, and 

2) moving resources (including people) into the best position for success in the selling year 

Before we talk about you positioning your 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?

This post is a summary of the first principle, Plan,  from my book Revenue Harvest. Since the beginning of time, farmers have been using these same seven principles to feed generations. Sales leaders who apply these principles will produce results, regardless of the market’s conditions.

Nigel Green helps investors, executives, and sales leaders of quickly-growing companies eliminate chance and create predictable sales growth.


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