Gain Bigger Returns

Old models for forecasting sales and profitability may be easy and precise, but those approaches are typically outdated. They’re not going to help you maximize profitability or achieve short and long-term growth.

Let’s look at sales, and first decide how many sales people you need to cover your target markets using a familiar formula. Divide your prospects and customers into A, B, and C level accounts. A’s revenue is over X, B’s is between X and Y, and C’s is between Y and Z. The A’s get called every two weeks, the B’s get called once a month, and the C’s get called once every three months. And then you add up how many A, B, and C accounts you have, and determine how many calls sales people need to make. The result is the size of the needed sales force to provide the proper sales coverage.

If you want to achieve your objectives, you need to be honest about their effectiveness and focus on a more sound approach. Most companies make decisions about the size and the ability of their sales force arbitrarily. They consider only the most basic parameters: what we did last year and what we can afford. What you need to do is consider how big your sales force should be, where they should be, and the focus and volume of the sales activities your sales force ought to be spending their time.

Best Practices Approach

First, divide your target markets into categories or verticals. For each, look at what you are doing now in terms of allocating sales, resources and dollars. Then, make estimates of three scenarios: what would happen if you allocated 50 percent more and 50 percent less sales dollars to each vertical or category, and also what would happen if you doubled the sales resources. Secondarily, incorporate a similar practice by building in your marketing plan and programs and your marketing budget.

This is just one aspect of your overall sales strategy, but very important in meeting your sales goals. To optimize sales, develop a comprehensive sales strategy that includes pricing, gross margins, targeted verticals that match your core competencies, evaluate your sales team members, focus on your sales channels – direct vs. indirect, review your sales compensation plan, sales coverage and more.

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