A formal sales plan is probably the most important activity that you should engage in during the economic challenges we are facing now and through the rest of the year. I am talking about a realistic, documented plan that lists the specific activities required to accomplish the objectives set for targeted accounts with identified growth potential. A sales plan is a schedule of events and responsibilities that details the actions to be taken in order to accomplish the goals and objectives necessary to be successful during these turbulent times. The plan ensures everyone knows what needs to get done, coordinates their efforts and keeps close track of progress.

A sales plan must define the objectives, timeline and resources required to meet the growth objectives of the business unit, department, branch or specific territory. It should also detail how the company will achieve growth, profit and product objectives.

Business planning is an essential offensive strategy recognizing market transition in creating competitive advantage. But overall business planning alone is not enough. Sales drive the company’s success. Consequently, a sales plan is mandatory if you are to succeed in this economic environment.

Analysis of opportunities is useless unless the result is taking action or assigning specific tasks that address the results of the analysis to capitalize on the opportunities. Sales planning, by definition, results in action plans for individual territories outlining specific target accounts with defined goals and initiatives.

Territory Planning

The success of an individual territory in its own market may depend upon the business segments it services and their willingness to compete within these segments. This segmentation is often defined by the buying habits and the individual needs of its members. A critical factor in developing the individual territory sales plan is understanding and differentiating activity based on this market segmentation. Understanding local market segmentation starts with profiling your customer base. Demographics and customers’ “rules of engagement” are typical criteria.


Forecasting is an important part of the planning process as it becomes the platform for developing target account action plans. Historical data is essential to predictability, but forecasting is exactly what the term suggests - predicting what is going to happen over the course of the next 12 months. This is a critical function of the planning process that is often taken much too lightly. Using the Pareto Rule - 20% of your customers will account for 80% of your business - is a good starting point. That 20% must be looked at closely. True potential must be examined at every account that makes up the 20%. The initial forecast starts with the sales representative but it is up to branch management or ownership to demand documented reasons for the numbers at each of the accounts that make up 80% of the business. This is not an email communication or a passing conversation; this is a detailed territory review with every sales rep. This is critical during tough economic times.

This review includes gross margin forecast discussions. A clearly defined action plan aimed at achieving specific results at each targeted customer should be documented.

These action plans should include:
  • Clearly defined objectives by product, by segment.
  • Clearly defined rules and responsibilities of all employees involved in accomplishing the defined objectives.
  • Identified risks and opportunities.
  • Development of a scorecard for achievement listing key indicators of success.

  • Establishment of regular monthly plan review meetings.

Margin Impact

Margin management is not rocket science. Improving gross margin is simple. You must either raise prices or reduce the cost of goods sold. But there is a little more to it than that when you consider net profit. There may be a lot of hidden profits waiting for you to find them, lurking within your pricing system itself. The good news is that this can produce tremendous gain with little pain. Go look at what you are doing and how you are doing it. Also, take advantage of opportunities on the buy side that are a result of the current economic conditions.

Margin Implications: Small changes in margin produce large changes in the sales breakeven point. Sales reps tend to be afraid of raising prices in soft markets. Some fear is real; most of it is chasing ghosts. They don’t realize the consequences of failure, i.e., layoffs, lower service levels.

Margin Actions:Is every customer buying off of the current price sheets? Are you charging freight out and other fees to the small accounts? Do all the inside and outside sales reps know that charging the last price paid is easy but wrong? That practice ignores small price increase opportunities.

Characteristics of an Effective Annual Sales Plan

There are three important attributes to a good sales plan:

1.An appropriate level of detail - enough to guide the work, but not so much that it becomes overwhelming, confusing or unnecessarily constrains creativity.

2.A format that allows for periodic reports on progress toward the specific goals and objectives.

3.A structure that coincides with the company plan (whether it is strategic or a contingency plan). The goal statements for the company plan and the sales plan are one and the same.

Just as monthly financial statements often present a budget for revenues and expenses and then report actual figures for a given time period, so should sales plans allow for the same type of comparison. The plan declares the “forecasted revenue” work in terms of goals and objectives for each targeted account and reports the actual progress on a monthly, or perhaps a quarterly, basis. This budget-to-actual report gives a clear reading on how the territory is performing.