What Is Sales Planning? Why is sales planning important?

Sales planning sets sales targets and defines the steps a company takes to reach those targets and meet the goals set by the plan. A sales plan is the document that outlines the strategies employed to achieve success. Effective sales planning addresses a variety of markets and evaluates the product or service needs of the consumer. In this article, we define sales planning and provide tips and a template to begin the sales planning process.

What is sales planning?

Sales planning is the process of defining sales targets and creating a strategy that meets goals and achieves sales and marketing results. The sales plan works in collaboration with the marketing plan and the business plan. The marketing plan details the strategies while the business plan sets the initial intentions for the company. Annual or quarterly sales plan updates ensures the plan stays on course and allows for changes.

Like marketing and business plans, sales plans are living documents that evolve over time. Past experience often dictates the desired achievements of the sales plan, allowing for alterations as the plan is put into action. Ideally, sales planning addresses six factors that encompass a winning sales strategy:

1. Create a situational analysis

By gathering data and analyzing trends, sales plans assess the current situation to outline strategies based on historical data. Data and trend analysis can identify obstacles and build on the strengths of the sales plan. These actions provide the blueprint for designing new strategies.

2. Identify objectives and goals

Effective sales planning defines company sales targets to include the interests of both the consumer and the business. Sales goals aim to increase revenue, launch a new product or increase brand awareness. Examples of sales goals are:

• Increase monthly or annual revenue

• Lower costs and increase profit margin

• Boost customer value

• Increase sales leads

3. Set a strategy

When setting a strategy, sales teams outline individual roles and responsibilities based on team member strengths and abilities. For example, assign the team member who excels at social media posts to oversee that sales channel. Strategies should integrate with finance and operations to set and achieve targets and improve sales forecasting.

4. Set a sales budget

Sales planning defines the budget(s) for the project and outlines how and when revenue is spent or generated. Setting and adhering to a budget allows sales teams to use resources effectively while keeping the company within its financial constraints.

5. Develop communication and engagement

Effective sales teams understand the objectives of the company and the goals of the sales plan to carry out tasks according to expectations. Communication provides clear direction for sales teams and engages team members to meet their specific goals or milestones. Involve stakeholders in the sales planning process to ensure sales plans are comprehensive and integrate relevant departments.

6. Set controls and measurements

Controls and measurements determine the direction a company is moving, or whether it's time to change strategies and consult past sales data for insight. Controls determine the metrics used to gauge success, while monitoring the progress of the sales plan promotes strategic improvement.

Related: How To Implement Strategic Planning (With Examples)

Why is sales planning important?

Sales planning is an important aspect of business that identifies current issues, such as a lack in sales, and seeks to find solutions or develop strategies. Sales planning takes advantage of new opportunities, such as when a company develops a new product, to create brand awareness or interest. Sales plans address various sales opportunities and the plan's objectives may vary depending on whether the company sells directly to the consumer, or to another business.

Ideally, a sales plan:

• Define targets

• Creates strategies

• Identifies tactics

• Motivates teams

• Sets budgets to achieve targets

• Reviews goals and suggests improvements

Tips for sales planning

Writing a successful sales plan begins with perspective, advances to insight and progresses to action. Below is a list of tips for future sales planning:

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

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.

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.

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.

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

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.

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.

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. For example, if your industry's average email open-rate is 27%, sales planning might set a goal to increase your company's open rate by 10% overall with milestones of 2% in the first quarter, 3% in the second and 5% in the third.

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. For example, a company that sells ice cream products may also sell ornate ice cream sundae glasses, or offer demonstrations on how ice cream is made to engage customers and encourage sales.

Identify strategic partners

A sales plan organizes strategies to increase sales; this includes naming resources that achieve goals and boost product awareness. These resources might originate inside the company, or similar businesses work together to cross-promote products. Sales planning determines incorporates strategic partners who can:

• Provide product demonstrations

• Give informative speeches or product presentations

• Host webinars to promote sales

• Develop mastermind groups for further strategizing

Template for a sales plan

Below is a template for a sales plan that you can adapt to begin effective and comprehensive sales planning:

Mission
[Define company's mission and/or vision. Include a brief history that provides background information]

Team
[Determine teams and assign team members. Draw on member strengths and assign roles to achieve targets.]

Target market
[Describe your target market in detail. Include: demographic, likes, dislikes, needs and wants. Explain how the sales plan serves the market]

Tools, software and resources
[List all available resources: collaboration software, training, documentation, sales tools, sales contests, budgeting tools]

Positioning
[Identify competition in detail. Include: price variants, product comparison, market trends and influences]

Market strategy
[Discuss promotions, advertising and actions that generate leads, interest or awareness.]

Prospecting strategy
[Determine how to follow up on leads and assign sales methods that correspond to the lead.]

Action plan
[Define how to implement the sales plan. Include objectives for sales, referrals or leads.]

Goals
[Set goals for each objective in the action plan]

Budget
[Determine costs of the sales strategy. Include: salary, training, tools, contests, team activities, travel, food]