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Planning for Success: How to Empower Your Sales Team

Your sales budget is a critical part of your Financial Planning and Analysis (FP&A) activities. It forms the bedrock of the entire budget and business for the upcoming year. It also sets clear and achievable sales goals and revenue targets. But when last have you considered how you, as an organisation, are approaching your sales planning?

Specifically, is the sales budget something handed down from the finance department ivory tower to be mindlessly followed? Or are you empowering non-financial managers with knowledge and authority to nurture a team that feels involved and accountable for hitting the sales targets?

This article considers the spectrum of approaches to sales planning, ranging from automated and arithmetic to granular and hands-on. The article ends with a methodology that could give you the best of both worlds in a modern business environment that suffers from a lack of time and a glut of data.

Automated and Arithmetic Approaches to Sales Planning

1. Pure arithmetic

Given the need for real-time data in decision-making today, you could take a purely arithmetical approach to sales planning. Start with your organisation’s target for revenue growth in the upcoming year and multiply last year’s number by that amount. Quick, simple and easy, right? Unfortunately, it is also a blunt instrument and a problematic approach because it is so high level.

2. Smart arithmetic

To make sales planning more nuanced, you could bring in a bit of granularity while still being quick about things. First, break your budget down into each product and customer, and then multiply that by the amount you want to see your revenue target grow by. Again, quick, simple and easy.

The first main problem with this high-level, top-down approach is that the revenue growth amount is likely purely arbitrary and has little relationship to what is happening at the coal face of your organisation and in your market. Second, because you haven’t looped in the people responsible for making the sales, you miss out on important insight and are unlikely to receive much buy-in from the sales teams for these targets. That does not set the scene for an empowered and motivated sales team energetically chasing targets, does it?

Let’s consider a more granular approach.

Granular Approach to Sales Planning

3. Granular and somewhat trend-driven

Another approach to sales planning would be to pull the data for all the sales you’ve done in the last decade, and, say, extrapolate that forward and work out what sales should be for the upcoming year. Based on this trend analysis, you’ll arrive at a percentage growth that you can now plug into your spreadsheet or finance system to calculate your new sales targets for the next year.

While it is a bit better than the previous ones, it is still top-down, with little to no input from your sales teams.

4. Granular, trends-driven and hands-on

The next step could be to share this sales forecast with your sales team for their input and fine-tuning. But, depending on your organisation’s business, you could be dealing with thousands or millions of line items.

For instance, an FMCG company with 1,000 customers that sells 5,000 products has five million items to consider. Now multiply this by 12 months, and you’ve quickly reached 60 million items to capture or review. This level of detail is unmanageable, and it will be impossible to see the wood for the trees. You’ll miss trends and large market shifts, so the insights you hope to achieve won’t be possible.

5. Hands-on from the get-go

Instead, you could loop in the sales managers and their teams from the get-go. But you will have the same problem – there are just too many individual line items for this to be feasible. It will be too time-consuming and distracting for your sales team to review and comment on this number of items, pulling them away from their day job of actually making the sales.

Best of Both Worlds

At this point, it is worth reminding ourselves that the perfect budget is unachievable. A budget is ultimately a best guess of what you think may happen the following year and is not intended to be accurate to the last penny. Simultaneously, it is important to achieve buy-in from the people responsible for hitting these numbers and bringing the revenue into the organisation.

6. The 80/20 principle

A smart approach that balances getting the budget done quickly with looping in your sales managers and teams for their insights starts with the 80/20 principle. Whatever sales category is crucial for you – let’s say customers and product lines for this discussion – it is likely that your top 20% of the category drives 80% of your revenue. Likewise, the top 20% of your customers, or the top 20% of your products, deliver most of your revenue. Identify your top 20% and put the remaining 80% into the “other” category.

Spend your time and energy focussing on the top 20%. You now have manageable volumes to work with, which ensures a quality forecast. And you can reasonably loop in your sales teams to get their input. This could include what they see happening at the coal face of the business and how they see trends and preferences may shift in the upcoming year. In addition, they can also highlight anomalies in historical data. The COVID-19 pandemic is the most obvious recent anomaly, but other examples may include unpredictable weather, the way holidays landed in the year, or one-off national events such as the coronation.

Your “other” category can be treated purely arithmetically – just multiply this year’s sales figures by next year’s target, and you’re good to go.

The Importance of Collaborating with Your Sales Teams

An important benefit of the 80/20 approach to sales planning is that it allows for meaningful, non-onerous collaboration with the people at the coal face of the business, especially your non-financial managers. This gives you invaluable insight into what is achievable next year, where the opportunities are, and makes the sales teams feel ownership and accountability for hitting the numbers.

Recommendations for Optimising Your Sales Budget Process

1. Don’t rely on an automated, arithmetic approach: the time and effort you save don’t make up for the insights you miss out on and the impact of an engaged sales team.

2. Don’t get so bogged down in detail that you can’t see the bigger picture and broader trends.

3. Be intentional about where you go granular: make sure it’s on data points and categories that can significantly impact your sales numbers.

4. Be strategic about bringing your sales team into the process. Tap into their knowledge without over-burdening them, and ensure you nurture ownership and accountability.

5. Consider how you can apply these principles to other FP&A activities throughout the year.

Ultimately, empowering non-financial managers with financial knowledge and decision-making authority creates a financially literate and actively engaged workforce. This empowerment allows them to make valuable contributions to the financial success of the organisation. In today’s world, can you afford not to do this?


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