Building a Sales Plan

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As discussed in my previous post, the most important element of success for a new start up, or indeed an established business is sales. Sales drive all other activities you undertake in business. The problem is that a lot of owner managed businesses do not have a clear sales plan. Over the next few posts I would like to share a few ideas that may help lay the foundation for creating your own individual sales plan.

The first point I would like to make about sales is that it is a very individual process and your style of selling will be influenced by your personality, experience, your product or service plus an assortment of other variables. So don’t attack sales in a formulaic fashion, be prepared to let your personality shine through the process and don’t get caught blindly following a list of do’s and don’ts laid down by some selling super star. Your potential customers want the real you. People buy people is a cliché I know but still very true and you can only get so far by pretending you are who you are not and copying someone else’s approach. Advice point 1 – Develop your own style. It’s risky and you will have to confront some failure along the way but it will be the thing that serves you best in the long run.

However success in sales is not complete anarchy, there are some fundamental ground rules and things you can learn from people with experience. It is some of these ground rules I would like to discuss in this and some following articles.

Rule 1 Collate and Analyse Data

Don’t rely on gut feel. The secret to success in sales is to know that the actions you take will lead to profitable sales. Guesswork is for amateurs. Below are three areas of analysis it is wise to explore as the initial phase of your sales planning exercise.

Identify the right customers

It’s clear not everyone is going to buy your product or service and a lot of time, money and effort can be saved by avoiding the trap of marketing or selling to the wrong people. Oscar Wilde once said ‘The play was a great success but the audience was a total failure.’ Choosing the right customers to focus your sales efforts on will save money, time and a lot of disenchantment.

Getting the demographics right is critical to the efficient running of a sales plan. There are some 85 year olds who run half marathons but are they the right demographic to market running shoes to? Understanding the correct demographic will take some thought and research and you must be prepared to test your assumptions. You don’t have to spend thousands on market research; you could ask people you know or run a simple survey on social media, anything that will help identify your ideal customer. One final point, don’t think just about the end user; think about the purchaser they may not always be the same. Why is it that you find men’s underwear advertised in women’s magazines?

Think Value

Customer Lifetime Value is a very important metric which tells you how much business you can expect to gain from a customer over their life with your product or service. This will help determine how much you can afford to spend on acquiring the customer. CLV can be calculated on an estimated basis for a new business venture or on an actual basis if you have built up good customer data. It is calculated as follows:

Value of sale X Number of expected sales X Average period of client retention = CLV

Example

If a Gym offers membership at £40 per month and members on average members stay for 3 years

CLV would be 40 x 12 x 3= £1,440

Use this figure to give you an objective benchmark to use when considering your marketing and sales costs in relation to acquiring new customers. You now are able to cost all offers, discounts etc against the CLV to understand their real effect on long term profitability.

Understand the sales cycle

Not all products and services will have the same sales cycles. Understanding the process of selling your product or service is of major importance to your sales plan. Long sales processes particularly around complex products or services may involve multiple proposals, many meetings and a lot of resource before the sale is secured. This adds cost and will put a bigger strain on the businesses cashflow; this must be factored into your planning.

The sales cycle may also affect the type of customer you target. Selling your product or service to Tesco, Virgin or any other major company may have a huge impact upon the volumes you can sell but the process can be long and very costly. Starting with local smaller companies could be the most appropriate avenue for a new business to establish a positive revenue stream before tackling one of the giants.

These are three of the core areas that you should spend time analysing to as you begin to put your sales plan together but add to these anything that is specific to your product, service, local market etc. Collating and analysing your data takes the guesswork out of your planning and ensures your sales plan is built upon a solid foundation.

Sales first- The key to start-up success

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I have recently had the opportunity to meet with a number of aspiring young entrepreneurs who have been brave enough to make the leap and start their own business. It has been quite an eye opening experience. On the positive side I have seen that amongst the young people in the Midlands region of the UK we have some outstanding talent. I have however also seen that without proper advice and mentoring that talent on its own will not be enough to secure success.

My main concern is that I have seen some businesses who have not quite grasped the first and most important fact about being in business – you have to make sales. They have spent all of their start-up capital, often acquired by loans, on overly expensive websites, unnecessary software programs, piles of stationary, office premises etc. etc. without securing any revenue streams.

It is imperative that if we are going to help these young people in the pursuit of their entrepreneurial dreams we must start with the first and most important priority being advice around how they sell.

Whatever the product, whatever the route to market for these businesses to survive they must FIRST establish a revenue stream and worry about their accounting software and highly stylised logo’s somewhere further down the line.

And as they move forward and become more established businesses sales must be the primary concern in any business advice program. It is no accident that sales turnover is the first line on your profit and loss account. New clients and customers are the blood that delivers oxygen to the rest of the business, cut this supply and the business will quickly begin to fail.

People go into business for all sorts of reasons, mostly because they have a passion for the product or service they offer, rarely because they want to be salespeople. The best advice we can give to any young entrepreneur is first and most important priority in business is and always will be sales.