How to Develop an Annual Sales Plan

How to Develop an Annual Sales Plan

Someone once said that “success is a well-planned event.” This statement most definitely applies to success in sales. Having examined the inner workings of dozens and dozens of sales organizations, the highest producing organizations have a well thought out (and executed) annual sales plan. This results in a sales organization that runs like a well-oiled machine. Their best-in-class sales production comes from recognizing that there are very controllable factors that can lead to a high probability of achieving their annual sales plan.

So, how do we create this well-oiled, predictable sales machine? Here are the key components in a good sales planning process:

1. Examine Your Key Performance Indicators (KPIs)

Let’s first start by taking a deep dive on your sales performance for the past 2 to 3 years. Your own sales process and KPI’s may vary, but in this short list below I’ve outlined some key indicators that will help in your planning process.

Not having ready access to many of these indicators could also be a warning sign. Developing processes to collect and track your KPIs should be a key component of your annual plan going forward. Certainly, your systems and processes should support the collection and tracking of your KPIs, otherwise you’re flying blind and that could get ugly.

KPIs to track could include:

  • Sales increase year to year, quarter to quarter and month to month
  • Three year sales trends
  • Sales per sales rep with trends
  • Sales by product/service line; growth trends of each offering
  • Sales by industry/target market and sales territory
  • New customer sales growth vs. existing business
  • Customer retention statistics; customers ranked by % of sales
  • Cost of marketing & sales efforts, trends and productivity

2. Target Market Status

Now we should evaluate the state of your current target markets. Are the market trends showing growth or contraction? How will your firm respond? How can you gain more market share? Are there any other trends affecting your markets on which you can capitalize? Have you defined a complete list of your industry-based targets? What is your current market penetration in each market? Should you consider entering adjacent or complimentary markets, or develop new sales territories?

3. Evaluation of Product and Service Offerings

Be sure to evaluate your offerings by looking at a number of dimensions. For example, are you seeing healthy growth trends across your mix of offerings? Do you need additional offerings or a discontinuation/sunset of some offerings? Are your products/services concentrated in a few clients or industries? How should you respond if there are risks present?

Also, is your sales team adequately trained on all your offerings and is there a healthy mix of your offerings in their sales results? What new products/services are coming soon? How will you develop a go-to-market plan for those offerings, enable your sales efforts and support your sales team?

4. Evaluate Your Customer Base

Your current customers are a wonderful source of new revenue. Do you have clear offerings to cross-sell to other potential buyers in existing accounts? What products/services should you be up-selling to your current customers. Definite plans must be clearly defined for the further development of your customer base as a great source of new revenue.

Also, the percentage of your revenues ranked by client should be evaluated. Are your revenues concentrated in a few clients? Are you overly focused on one market? If so, what are your diversification plans to alleviate this risk?

5. Competitive Analysis

Beginning a new sales year is the perfect time to make a realistic evaluation of your business performance against that of your competitors. Be sure to evaluate your strongest competitors and plan how you will respond. Should you perform a market survey of your customers to know what they really think about your company and the competition? We find these surveys are absolutely invaluable to making course corrections, validating assumptions and understanding the needs of customers.

Also, be sure to gather data on the offerings and performance of your competition from your sales and marketing teams. Their experiences will prove invaluable to understanding what’s happening in the marketplace.

A SWOT analysis of your business, if done thoroughly, is an easily digestible way to evaluate the strengths, weaknesses, opportunities and threats to your business. From this, definite plans can be put into motion to capitalize on your strengths/opportunities and shore up your weaknesses/threats.

6. Revenue Plan

Let’s assume you grew sales at 4% last year and want to grow at 8% next year. What specifically must be accomplished to double your growth rate:

  • Have you reviewed your go-to-market strategy and updated it?
  • Do you need to upgrade your sales team and selling process?
  • Can you increase the price/fee for your offerings and still compete?
  • Are there promising new territories or industries you should consider?
  • Should you launch a new product or service, or enter a new market?
  • Have you budgeted for additional marketing and sales expenses to fund your growth goal?
  • Have you developed your sales support materials and trained your staff adequately?

Be sure to accurately portray your goals by market segment, product/service mix, repeat business and new business. Of course, allocating your sales and marketing resources to achieve this goal will be paramount to success. Closely monitoring your progress from month to month will be key to making adjustments and modifications that will be required for success.

7. Resource Requirements

Once you’ve adequately evaluated the above criteria, now you must plan for and allocate the resources required to achieve your sales goals. For example, some of the key resources you should review are:

  • Marketing resources such as defined target market lists/data, campaign results, lead generation resources and results
  • Sales resources and their performance by product/service mix, monthly quota attainment, win/loss ratio, pipeline metrics, etc.
  • Sales support and enablement materials
  • Sales training and product/service familiarization

By gathering the proper data, you will be able to evaluate your performance against a number of important criteria. But remember to look at the data through a number of dimensions. This will give you a much more accurate reflection of your business, help maximize opportunities and mitigate risks.

Then, your annual sales plan will be grounded in fact, not assumption, and you can properly allocate resources to achieving success.