“I’m almost afraid to sell more business because I don’t think I have enough resources to handle it.”
Thoughts of the Day: The sales function of any company needs to do more than sell. Accurate sales planning coordinated with operations goals is essential. A good sales team sells what’s needed, keeps the company informed and educates current and future customers about what’s coming next.
Selling more this year than last year is a given for any company’s sales department. Effectively managing sales also includes hitting macro and micro targets, based on continuous planning and review. A great sales department teams with its operations counterpart to regularly look at questions of quantity, dollar volume and profitability matched to present and future customer needs.
Sales must know what operations can deliver, now and in the future. It needs to inform operations about potential problems selling things that operations wants to produce. Sales must take action when it sees that customers are likely to want something operations isn’t yet prepared to deliver. Constant, collaborative information flow gets both parts of the company working toward the same realistic endpoint. That makes it easier for sales to do its job in the future.
Think of the problem this way: Sales decides to sell 1,000 units. Operations can only produce 800. Two hundred customers, or more, if there are delays in the production schedule, go away unhappy and are likely to complain about the company. Those complaints floating around the marketplace make it harder for sales in the future.
Alternately, operations produces 1,200 units, and sales can only find buyers for 1,000. Two hundred units go unsold. The cost of producing those excess units eats away at overall profitability. Customers may be happy that they received their orders on time, but may balk at future orders because sales prices had to go up to cover the lower profit on the previous cycle.
In both instances, customers suffer. Sales struggles to fill its future pipeline. Much better for everyone when sales builds goals in concert with production.
Planning starts with one-year and five-year cycles. What does the company need to sell in the upcoming year in order to be profitable? What will the company look like in five years? What will alter regarding customer wants and needs? What modifications and transformations are anticipated in production methodology and raw materials? How will the economy and competitive threats affect both supply and demand?
Once there’s agreement to one- and five-year objectives, a quarterly review cycle comes into play. Were sales goals met last quarter? How about profitability? Was delivery on time? What adjustments in sales would lead to a resounding “yes” to all of those questions?
Having analyzed the last quarter, it’s time to look forward. Adjust targets by answering the following questions: Increase volume or decrease? Switch around what’s being sold? Have the right customers? Are customers paying in full? Is anyone asking for significant discounts, which can indicate pressure from competitive threats or selling on price instead of selling on value?
Get specific. How much of what is to be sold? Delivered by when? Feed operations weekly, monthly and quarterly updates so it can plan and adjust.
Constantly assess sales capacity. Can sales meet the company’s upcoming goals with some capacity to spare? Or is sales stretched and barely hitting its targets? It’s essential to know when sales is under or over resourced.
Prepare for long-term success by asking sales to educate and assess the marketplace. Make sure customers know what’s being done to meet their upcoming needs. Look for “right fit” prospects to fill the pipeline. Ask for today’s order and request commitments to future plans.
Looking for a good book? Try Sales & Operations Planning: The How-To Book Handbook by Thomas F. Wallace and Robert A. Stahl.
Andi Gray is president of Strategy Leaders Inc., a business-consulting firm that specializes in helping entrepreneurial firms grow. She can be reached by phone at (877) 238-3535. Do you have a question for Andi? Please send it via email to AskAndi@strategyleaders.