Unit-2

Sales Planning
o A sales plan is like a specialized business plan, but it specifically
focuses on your sales strategy. It outlines how you’ll achieve your sales
goals, who your target audience is, and the tactics you’ll use to get
there. I directs how you’ll make those goals a reality.
Importance of sales planning
o Guiding Growth: An effective sales plan provides direction for
business growth. It ensures that your sales efforts align with your
overall objectives.
o Customer Acquisition: By identifying target markets and
understanding customer needs, you can tailor your approach to attract
new customers.
o Revenue and Profit Boost: A well-executed sales plan directly
impacts revenue and profits by optimizing sales processes and
resource allocation.
What Goes into a Sales Plan?
o Objectives: Clearly define your sales goals. What are you aiming for?
Revenue targets? Market share? New customer acquisition?
o Tactics: Outline the specific steps your sales team will take to achieve
those goals.
o Target Audience: Who are your ideal customers? Understand their
pain points and tailor your approach accordingly.
o Obstacles: Anticipate challenges (competition, market shifts, etc.) and
plan how to overcome them.

o Budget: Allocate resources wisely to support your sales efforts.

Goals of an Effective Sales Plan:
o Communication: Your sales plan communicates company goals and
objectives to everyone involved. It’s like giving your team a shared
GPS for success.
o Strategic Direction: The plan guides your sales process, providing
actionable steps for your reps to follow.
o Roles and Responsibilities: Clearly define who does what. Clarity
prevents confusion and ensures smooth execution.
o Progress Monitoring: Regularly track progress against your plan.
SALES PLANNING AND BEHAVIORAL CONSIDERATION
1. Understand your customer
For a company to effectively sell a product or service to a consumer, it's crucial to
understand the needs of the consumer. Companies often conduct market
research or host focus groups to target customers and understand how to fulfill
expectations or solve a problem. Send out surveys to customers to get feedback
on products or services and incorporate those ideas into the next sales plan. Use
all responses and data to build a profile of your ideal customer. Your customer
profile, or persona, determines:
 Where to find customers
 Consumer preferences
 Consumer spending habits

2. Define the obstacles

Sales plans analyze the competition to determine how they are successful or where
they lack direction. Understanding how the competition works adds to sales
planning to create innovative solutions or improve current practices. List the pros
and cons of your competition to strategize how to improve on their strengths while
outlining how to avoid negative impacts.
3. Consult with key people and encourage feedback
While marketing and sales are the primary drivers of a sales plan, consulting with
other departments or key personnel helps to complete the sales plan and address
all contingencies. Finance personnel may have input on budgets, while upper
management can provide feedback for current or past sales or revenue
expectations. Sales plans are a conglomeration of ideas and concepts from a
range of sales and marketing team members. Once it's complete and prior to
implementation, review the sales plan with teams or personnel and encourage
feedback to improve the plan.
4. Set realistic goals
It may be a lofty goal to increase sales by 150%, but not always a realistic one. A
sales plan's success should be measurable, so that companies have a detailed
record of what worked and what did not. Use the SMART method to set sales
goals and consider celebrating each success with team members to encourage
success.
5. Use your own experience
Calling on past personal experience can shape a sales plan by providing insight on
what customers ultimately want from a product or service. When forming a sales
plan, keep your own experiences in mind. Think back to when you purchased a
product or service and use your experience to analyze:
 How you heard about a product
 Where you bought the product
  How and why the product appealed to you
 How you evaluated the product
 How you approached the purchase
 What factors led to the final decision

6. Trust assumptions
Data often gives an accurate estimate of how a past sales plan worked or how to
improve the plan. Sales forecasts make assumptions about future sales or activity
based on historical trends or buying practices. When writing a sales plan, rely on
assumptions to guide the strategies. Remember that sales plans are flexible and
subject to change as conditions warrant.
7. Define the value
Consumers choose products for the benefit, rather than the features. Sales plans
define the value of a product or service and what it will do for the consumer. Sales
planning seeks to define the company's competitive advantage and how the
company differs from its competitors.
8. Define milestones
Sales plans may have an ultimate goal, but also set milestones to make sure the
plan is on the right path. Milestones motivate teams and encourage healthy
competition to meet them. To define milestones, make comparisons between the
business and standards of the industry.
9. Focus on your niche
A niche is not only a specific product or consumer, it includes company culture,
branding and messaging. A niche defines the company's current market position
and identifies its competitors. Focusing on a niche guides the sales plans so it
builds on the strengths of the business, overcomes obstacles and increases
visibility. Effective sales plans consider how to expand the niche.

Market Potential
Market potential analysis is a way to estimate how much a company can sell of a
product or service in a specific time period. It takes into account the company's
marketing efforts, market conditions, and the expected performance of their
product.
o It considers two key factors:

 Market Size: How many potential customers are out there?

Think of it as the crowd at a music festival—some might buy
your cool gadget, while others just want to dance.
 Demand: How badly do people want what you’re offering? Are
they craving it like a midnight snack or just mildly curious?
 o Formula: To calculate market potential by value, use this simple
equation:
 Market Size × Unit Price = Market Potential

Importance
o Financial Planning: Knowing market potential helps you budget
wisely. You don’t want to overspend on confetti cannons if the party’s
small.
o Strategic Moves: It guides your expansion plans. Should you go all-in
or dip your toes?
o Reality Check: It prevents you from daydreaming about billion-dollar
sales when the market might be more like a cozy café crowd.
o Keep an eye on trends, competitors, and customer behavior.

sales forecast
A sales forecast is an estimate of a company's future sales revenue and the timing of
those sales. It's based on an analysis of past sales data, economic conditions,
consumer trends, and other factors.

Sales forecasts help businesses:

 Anticipate demand: Plan for future demand to optimize inventory levels,

production schedules, and staffing

 Identify opportunities and risks: Spot potential problems and adjust strategies
accordingly

 Make spending decisions: Use sales forecasts to guide short-term spending

decisions and key deal decisions

Sales forecasts are created by answering two key questions:

 How much: What is the projected amount of revenue from each sales
opportunity?
 When: When is the sales team expecting to receive the revenue?

There are several methods for creating sales forecasts, including:

 Time series forecasting

Uses past sales trends to project future sales

 Regression forecasting
Uses historical data and linear regression techniques to predict future sale

Sales Forecasting estimate how much revenue a company will generate during a
specific time period—whether it’s a month, a quarter, or a year. Think of it as
predicting the future sales performance based on historical data and market trends.
 Sales forecasting isn’t just about guessing; it involves both art and science. Here’s
the lowdown:
1. The Basics:
o Revenue Estimation: Sales forecasting estimates the amount of
money your company expects to earn from selling products or services.
o Past Meets Future: It relies on historical sales data, market insights,
and performance metrics to project what lies ahead.
o Time Frames: You can forecast for short-term (monthly), medium-term
(quarterly), or long-term (annual) periods.
2. Why Is It Important?
o Strategic Planning: Imagine you’re steering a ship. Sales forecasts
are your navigational charts—they guide your business decisions.
o Resource Allocation: Should you hire more sales reps? Invest in
marketing? Knowing future sales helps allocate resources wisely.
o Setting Targets: Sales teams need goals. Forecasts provide those
juicy targets to aim for.

3. Tools and Techniques:

o CRM Systems: Customer Relationship Management (CRM) software
helps track leads, opportunities, and sales pipelines. It’s like having a
digital sales assistant.
o Historical Trends: Analyzing past performance helps predict future
outcomes.
o Market Insights: Understand customer behavior, industry shifts, and
economic factors.
o Collaboration: Sales, marketing, and finance teams huddle up to
create a robust forecast.
Here are some steps to set effective sales objectives:
1. Evaluate Company Goals:
o Start by understanding your company’s broader vision and objectives.
What’s the big picture? Align your sales objectives with these
overarching goals. If the company aims to expand globally, your sales
objectives should support that expansion.
2. Assess Your Team and Sales Process:
o Take a close look at where your sales team stands. What are their
strengths? Where are the gaps? Understand your current sales
process—the steps from lead generation to closing deals. Identify
bottlenecks or areas for improvement.
 3. Create SMART Goals:
o SMART stands for Specific, Measurable, Attainable, Relevant, and
Time-bound. Let’s break it down:
 Specific: Be crystal clear about what you want to achieve.
Instead of saying, “Increase sales,” say, “Increase monthly
revenue by 15%.”
 Measurable: Define metrics to track progress. How will you
measure success? It could be revenue, conversion rates, or
customer acquisition.
 Attainable: Set realistic goals. Don’t aim for the moon if you’re
still building your rocket.
 Relevant: Ensure your objectives align with your business
context. If you’re launching a new product, focus on related
sales targets.
 Time-bound: Set deadlines. “Increase revenue by 15% within
the next quarter” is more actionable than a vague goal.
4. Assign Objectives and Incentivize Reps:
o Communicate these objectives clearly to your sales team. Each rep
should know their individual targets. Consider incentives—bonuses,
recognition, or career growth—for achieving or exceeding goals.
5. Measure Success and Iterate:
o Regularly track progress. Are you on track? If not, adjust your sails.
Maybe you need to tweak your approach, provide additional training, or
realign priorities.
Let’s dive into the steps for effective sales territory allocation:
1. Understand Your Business Context:
o Before you start drawing territorial boundaries, grasp your company’s
overall strategy. What markets do you serve? What are your growth
goals? Consider factors like product lines, customer segments, and
geographical reach.
2. Segmentation and Valuation:
o Market Segmentation: Divide your market based on relevant criteria.
It could be geography (traditional), industry, customer type, or product
category.
o Territory Valuation: Assign value to each segment. Some areas might
have higher revenue potential, while others are emerging markets. Use
data to assess their worth.
3. Balance Workload and Potential:
 o Equitable Distribution: Ensure territories have a similar workload. No
one wants an overloaded sales rep while another twiddles their
thumbs.
o Sales Potential: Allocate resources where the sales potential is
highest. High-value accounts deserve focused attention.
4. Leverage Historical Data:
o Analyze past performance. Which territories consistently
outperformed? What made them successful? Learn from history.
5. Match Talent to Opportunity:
o Sales Rep Skills: Assign territories based on reps’ expertise. If
someone’s a tech guru, put them where tech clients thrive.
o Growth Opportunities: Align reps with territories that offer room for
expansion. A hungry rep can turn a small market into a goldmine.
6. Collaborate Across Teams:
o Sales Ops and Marketing: Work together. Marketing insights can
guide territory decisions.
o Customer Success: They know client pain points. Pair them with the
right territories.
7. Technology and Tools:
o CRM Systems: Use Customer Relationship Management tools to
manage territories, track leads, and monitor progress.
o Sales Territory Mapping Software: These tools visualize territories,
helping you spot gaps and overlaps.

Sales Quotas: These are individual contributions expected from each sales rep. If
most reps achieve their quotas, the overall sales goal is met. Imagine dividing the
workload among your sales team—each person’s share becomes their sales quota.
Setting Effective Sales Quotas:
Understand Business Goals: Start by aligning quotas with your company’s broader
vision. What’s the big picture? Are you expanding globally? Launching new
products? Your quotas should sync with these goals.
Market Research: Explore opportunities and challenges. Where are the growth
pockets? What obstacles might your team face?
Analyze Historical Data: Dive into past performance. What worked? What didn’t?
Learn from history—it’s like reading the playbook.
Choose a Method: There are different ways to set quotas:
Top-Down Approach: Start with the overall sales goal and divide it among reps based
on capacity and performance.
Bottom-Up Approach: Involve reps in the process. Let them contribute insights—
they’re the ones in the trenches.
Motivate with Incentives: Quotas should be challenging but achievable. Tie rewards
(part of their compensation) to hitting those targets. Maybe it’s a bonus, recognition,
or a celebratory dance (virtual or real).
Remember the SMART Criteria:
Specific: Be crystal clear about what you want reps to achieve.
Measurable: Set metrics—whether it’s revenue, deals closed, or new clients acquired.
Attainable: Realistic goals prevent burnout.
Relevant: Align quotas with your business context.
Time-Bound: Set deadlines—monthly, quarterly, or annually.

Participative sales planning is an approach that involves actively involving sales

teams, managers, and other stakeholders in the planning process. Instead of a top-
down directive, where decisions are handed down from management, participative
planning encourages collaboration, input, and shared ownership.
Collaboration and Trust:
o Participative planning builds trust. When sales reps have a say in
shaping strategies and goals, they feel valued and invested.
o It’s like a jam session where everyone contributes their musical
talents—the result is harmonious and dynamic.
2. How It Works:
o Inclusive Decision-Making: Sales managers involve reps in setting
targets, defining territories, and choosing sales tactics.
o Brainstorming Sessions: Gather the team to discuss challenges,
opportunities, and creative solutions. It’s like a sales think tank.
o Feedback Loops: Regularly seek input. What’s working? What needs
adjustment? Reps on the ground have valuable insights.
3. Benefits:
o Ownership: When reps actively participate, they take ownership of
goals. It’s not just “management’s target”; it’s “our target.”
o Motivation: Reps are more motivated to achieve goals they helped
set. It’s like playing a game you helped design.
o Adaptability: Sales environments change. Participative planning
allows quick adjustments based on real-time feedback.
4. Challenges:
 o Time-Intensive: Involving everyone takes time. But the payoff is worth
it.
o Balancing Perspectives: Different reps have different viewpoints.
Finding common ground is essential.
5. Tips for Effective Participative Sales Planning:
o Clear Communication: Explain the purpose and benefits. Reps need
context.
o Structured Sessions: Set agendas for planning meetings. Keep them
focused and productive.
o Celebrate Collaboration: Recognize and appreciate contributions. It’s
a team effort.
SALES TERRITORIES
Sales territories are defined areas or groups that businesses identify to distribute to
their sales team. Companies assign their salespeople to specific territories to assign
sales responsibilities evenly. Typically, sales territories are geographical locations,
but may also include categories of customers.
Sales territories are geographical divisions assigned to distinct sales teams. They help
companies allocate their resources more effectively and coordinate their efforts. If
you work in sales management, it might be helpful to learn more about creating sales
areas for your team.
Advantages
 Fair opportunities for each team member to make sales and earn commission
 Coordinated efforts between team members to capture every customer and
avoid targeting the same leads
 Even workloads between sales representatives and less burnout
 Improved accountability for each individual's performance in their territory
 Customized service for clients based on the needs of their demographic
 Lower travel expenses and less time traveling because of physical territory
boundaries
Methods:
1. Geographic location
Creating territories based on the physical location of customers is a straightforward
method for identifying sales areas and distributing them to sales reps. Some
examples of geographic territories include:
 Country: Assigning sales reps to serve a country or group of countries
 Region: Dividing a sales area into north, south, east and west
 State: Making each state or group of states into territories
  Store radius: Assigning all customers within a certain distance from each store
to its own territory
2. Population
Split your target audience by population to ensure a fair distribution of customers and
leads for your team. Companies combine the population method with the geographic
method to use the number of people in an area as a guide instead of boundaries on
a map.
3. Account size
If you have a sales team of people with different experience levels and skills, you can
develop sales territories based on the size of each customer account. This works
well if you have a team that qualifies leads to confirm their interest and gather details
about the prospect, then sends them to a salesperson to manage the account. With
account size territories, experienced, senior salespeople usually serve the category
of large, high-value accounts, while newer salespeople manage the territory of
smaller accounts.
4. Niche
When selling products and services that apply to multiple industries, try creating
territories based on the client's niche. Assigning sales reps to serve a particular
category of client enables them to develop extensive knowledge in their niche, create
targeted marketing materials and provide highly relevant customer service. This
method is ideal for businesses that sell to multiple market segments that have
minimal overlap.
5. Products
Companies that sell multiple product lines may distribute sales assignments based on
the product category. Having each salesperson specialize in a product line
encourages them to become experts in its features and applications. Using product
territories simplifies the assessment of sales data because each salesperson has a
direct impact on the sales of their product line.
6. Client name
Some businesses assign sales territories alphabetically, meaning each salesperson
handles a group of letters from the alphabet. One sales representative could work
with clients whose names start with A through M, while another serves clients with
names in the N through Z category. Using client names is an easy way to assign
responsibilities and limits confusion about who manages which accounts.