Revenue is the lifeblood of any company and the foundation of the annual budgeting process. When sales people are asked to come up with their plans for the year, it should be more than a revenue number they wish, hope and pray to deliver. It should be a SMART plan that will lay out a clear roadmap to follow. I learned about SMART work plans when I first started my sales career with Ralston Purina. I’ve carried the idea of STRATEGIC, MEASURABLE, ACTION oriented, REALISTIC and TIMELY sales plans with me ever since. Before a sales person turns in their forecast, budget, or plan they need to ask themselves, “Is this plan a SMART one?”. Before the sales manager signs off on the plan but need to ask, “Is this plan as SMART as it can be?” SMART plans eliminate confusion on the part of the sales person about what they should be working on. SMART plans make it easy to for a sales manager to hold people accountable and propel them to greater satisfaction and success.
Sales plans should roll out of the strategic plan and the numbers and should roll up into the budget. This assumes that the company has a clearly written strategic plan that is shared throughout the organization. Part of the role of the sales manager is to share the strategic plan and make it clear how each sales person contributes to the plan. If the sales plan doesn’t contribute to the company strategy there’s an alignment problem-someone doesn’t understand the big picture or the strategy doesn’t represent where the company is going.
Vague terms like improve, increase, implement, start or sell aren’t measureable. Objectives that aren’t measurable make it impossible for managers to hold salespeople accountable. It’s easy to have misunderstandings about expectations and it is difficult to celebrate success when success isn’t quantified. Numbers are measurable. Brands or SKUs are measurable. Customers are measurable. The sales team has the easiest time coming up with objectives that are measurable of any department in the company.
A measureable objective might be,
“Sell customer A the “Spring Pastel” dog coat line resulting in a net gain of three new skus, and generating $150,000 in incremental revenue from the new skus by the end of Q3.”
The customer is identified, the product group to be sold is stated, the net gain in SKUs is called out, the resulting sales gain is clear and the time period for completion is noted. If the sales person and the sales manager agree on the objective there won’t be any doubt about whether the objective is met because the “success” is measurable.
What is the person supposed to DO? What’s the ACTION that is supposed to lead to the desired result? I recently read a quarterly marketing objective that said, “Improve our web presence”. First, “improve” isn’t measurable. Secondly, and to the point, what’s the person trying to meet this objective going to do?
Are they going to –
- Gather examples of the websites of our top five competitors, define where our website is lacking and sell senior management on the need for an investment, or
- Add e-commerce functionality to our website so our customers can place orders on line, or
- Send Wendy to the local community college to learn how to manage our website so we can add new products to the website and update content weekly to move up in our Google rankings
By making sure that the objective is action oriented it will focus the thought process on, “What are we trying to accomplish and what action that will get us there.”
Writing a sales objective to sell Wal-Mart when previously you’ve only sold to local Mom and Pop dealers may not be realistic. Is the company committed to the plan or is the salesperson thinking of the “what if” commission checks? Does the company have the resources, supply chain, and products necessary to service a mass merchandiser? If not, the objective isn’t realistic.
Just because it’s a big goal doesn’t mean it shouldn’t be the plan. But just writing the objective doesn’t mean that it is achievable.
On the flip side, an objective to grow sales by 3.5% with a retail partner that is adding 15% to its store base this year, in a category that is growing 30% per year, when you are doubling the size of your product line isn’t realistic either. The size of the goal needs to be measured against the internal and external factors that will influence your success.
The sales person writing the sales objective should be in the best position to know what’s realistic but the role of the sales manager is to ask the probing questions to know if the person is sandbagging or a wishful thinker. What’s realistic may be subjective but it should be thoroughly explored.
Is there a completion date for the objective? Are there benchmarks or check-in dates along the way? Is the objective timed with the new product launch, the buying cycle of the customer, or the seasonality of the product? Has the timing been coordinated with the timing of the other sales objectives in mind?
All sales are not created equal. $100,000 in new sales spread evenly over the course of the year may have a dramatically different impact on the overall business than $100,000 in new sales in one quarter. Knowing what to expect, time wise, allows purchasing to make sure the raw materials are in house to fill the orders and makes certain that there will be run time on the machines when the orders come in. A plan that calls for sales growth on a new product of $5,000 in Q1, $10,000 in Q2, $15,000 in Q3 and $70,000 in Q4 means that by year end the production plant has a run rate of $280,000 per year. Knowing that is much more valuable for production planning than saying that sales will be $100,000 for the year.
Many people writing SMART plans for the first time will pack everything into the first quarter. Typically that means things start to slide on their completion dates in the very first quarter. Part of being timely is recognizing both when the work needs to be done, and how much capacity there is to getting it done.
While SMART plans are typically thought of as a sales management tool they can, and in my opinion should, be used in all departments. It may take more thought to come up with the MEASURABLE component of the plan in some parts of the business than in others but if you can’t measure it, how can to track it or make it better?
If you’d like to discuss your team’s sales plans for the year or get another set of eyes to help make those plans SMARTer, just go to the contact page and send me a note.