Your sales strategy identifies which customers your business is targeting, it specifies how you will reach them and it outlines how you will convince them to buy from you. It sets out your sales forecasts, allowing you to measure performance and spot opportunities to improve.
Ultimately, a successful sales strategy turns your business and marketing plans into profit.
1. Developing a sales strategy - where to start
Base your sales strategy on your business and marketing plans
- Set out in detail how you will deliver marketing objectives, target market segments and support major marketing activities.
- Identify the key aims of your strategy. For example, which target markets you are aiming for and the timescales involved.
- Get realistic, accurate sales plans by involving your sales people.
Understand your target market
- Find out more about your customers. For example, their needs, what products they want and what level of service they expect.
- Establish when, where and how your existing customers buy.
- If you sell to other businesses, identify who influences buying decisions, who actually makes them and who places the orders.
- Monitor key trends in your market, and find out what your competitors are doing. Take into account changing customer behaviour, developments in technology or new legislation.
- Identify the key drivers of your business - the people, knowledge and conditions that influence how well your business functions.
Concentrate on generating profitable sales
- Rank customers in order of profitability, identifying existing, potential and key customers. Take into account the total cost of selling to each one.
- Identify the activities that led to your most profitable sales last year.
- Define other benefits to your business of serving each type of customer. For example, a high-profile customer may provide you with credibility. Your first customers in a new sector may make it easier to sell to others in that sector.
- Decide how important these different benefits are to you. Only sell to less profitable customers for a good reason.
- See if you can improve margins on your less profitable sales. For example, you might reach the customer using a cheaper sales channel such as ecommerce.
2. Understanding your target customers
Business growth depends on creating new, profitable business with different types of customer.
Generate sales from new prospects
- Target prospects carefully. Identify the characteristics of your current profitable customers, and use this profile to identify new customers that fit the bill.
- Plan how to approach each new customer. For example, to win business, you could offer to let them use your product on a trial basis.
Encourage more sales from existing customers
- Set out what you will do to get existing customers to make higher-value purchases and buy different products (up-selling and cross-selling).
- Plan how to keep key customers happy and build relationships.
Build up a mix of customers to help protect your sales revenue
- Do not rely too much on one customer. Be aware of potential customer cash flow problems.
- Work out a sensible balance between time spent developing new business and time spent keeping existing customers happy.
- Be aware of, and manage, seasonal sales patterns. Many businesses find that only ten months out of 12 bring income.
3. Reaching your customers - sales channels
Once you have worked out which customers to target, you need to decide which sales channels will be most effective.
You can either sell directly or through an intermediary. Weigh the costs of each channel against the benefits it would bring.
Most businesses sell directly to customers
- Direct sales methods include selling face-to-face, ecommerce, direct mail and telesales.
- Selling face-to-face is the most expensive sales method.
- Direct mail and telesales are more cost-effective options for lower value products.
- Selling via your website can be the most cost-effective sales channel. Involve sales and marketing in designing the website and the user journey.
Use a sales intermediary
- You can reach customers through retailers.
- If you are breaking into overseas markets, consider using a sales agent.
- You may need to focus on selling to the intermediaries. For example, persuading retailers to display your product prominently.
Promote your sales channels
- Think carefully about how customers would prefer to hear about, and buy, your products or services. Make sure customers can find you easily online.
- Use advertising, events, PR and social media to build recognition and awareness of your product.
- Provide promotional material to intermediaries, such as brochures.
4. Your sales forecast and budget
With your sales employees, prepare your sales forecast
- Prepare a detailed breakdown of the sales you plan to achieve by month, by customer and by product.
- Base forecasts on previous sales levels. Take into account information about new orders, changes to customers' buying habits, and other factors such as pricing and marketing activities.
- State the likelihood of achieving sales, using a percentage figure, and set out when you expect to close them.
- Agree how many leads are needed to achieve the forecast growth. Set out how many leads should come from new and existing customers.
- Define the number of sales you expect from a set number of visits, calls or other contacts (your sales conversion rate).
Determine the sales activity needed to achieve targets
- For example, allocate the amount of time to be spent on each account. Remember to include all the activities needed to close a sale.
- Decide how many sales people you need to achieve your sales targets, and allocate territories or accounts.
- Take into account your sales costs, including promotional materials, salaries and equipment.
Prepare your annual sales budget
- This is a summary of the sales forecast. It acts as a benchmark that you can compare against your updated forecasts.
- Prepare pessimistic, realistic and optimistic versions of your budget, and plan what you will do in each case.
Revise your sales forecasts using past performance as a guide
- Compare sales achieved with your sales budget. If there is a significant difference between the two figures, find out why.
- You may need to plan new sales initiatives or adjust how much you spend on sales.
Be aware of sales cycles
- The total amount of time taken to complete a sale can have a critical impact on your cash flow.
- If you have a new, untested product or service, it may take longer to make sales.
- Work with customers' decision-making habits. For example, large organisations may be slower to reach decisions.
- Carry out sales drives and product launches when customers are buying. For example, suppliers to retail make the most sales at exhibitions at the beginning of the year.
Co-ordinate sales with other business activities
- For example, do not plan for sales that your production processes cannot fulfil.
- Plan sales campaigns to support promotion (eg new product launches).
- When you have defined your sales strategy, you may need to adjust your marketing plan. For example, you may identify a new customer group to target.
5. Sales tools and training
Use sales tools to increase efficiency
- A good customer relationship management (CRM) system is essential to manage customer information.
- Provide appropriate admin support to allow sales people to focus on selling.
Give your sales team access to the records they need
- These include sales history, contracts, proposals and promotional material.
- Record relevant information each time a customer is contacted. For example, reason for contact, issues covered and follow-up action required.
- Consult a lawyer to draw up major legal documents, such as long-term contracts or exclusive distributor agreements.
Support and train your sales team
- Make sure sales people understand what sets your product or service apart (your USP) and what value your product or service brings to the customer (your value proposition). Get them to communicate this to customers.
- Give sales people key information about pricing, profit margins and negotiable areas.
- Get sales people to produce weekly sales reports. These should give scores for each customer, reflecting the potential value of sales and the likelihood of conversion. Monitor the accuracy of their scores.
- Train your sales people to improve their product and market knowledge, as well as helping them to develop their selling skills.
- Monitor and drive progress in supportive, weekly one-to-one meetings.
Using sales technology effectively
The right sales technology can significantly improve efficiency
- For example, provide field sales reps with online tools to check stock and take orders while on the customer's premises.
- For best results, give your sales people regular training and technical support.
CRM software can be an invaluable tool
- Make sure the CRM software lets you generate management reports. For example, you should be able to analyse and group your customers using different criteria.
- Make sure the system you choose is compatible with other technology you use.
- Feed in data from different parts of your business. For example, a sales person should be able to see if customers are over their agreed credit limit before selling them new products.
6. Measuring sales performance
Conduct an annual or quarterly sales profitability analysis
- Look at the time and money spent on different customers. Focus on profitability rather than volume of sales, and the quality rather than the quantity of contact.
- Find out if turnover was lower or higher than forecast, and why. Compare this year's sales with last year's, and with those of similar companies in your market.
- Analyse which sales people and which channels are most productive.
Analyse sales conversion rates monthly
- Work out how many sales have been made, and calculate their average value.
- Analyse the relationship between leads, visits, proposals and orders achieved.
- Monitor activity with both new and existing customers.
- Examine each stage in the selling process to find out where you are losing sales.
Identify sales problems and find out what has caused them
- For example, reductions in sales to key customers might be the result of an unreliable delivery service.
- Identify dead accounts and follow them up. Making a sale to an existing customer is far easier and cheaper than winning a new one.
- Find a sales agent registered with the Manufacturers' Agents' Association or AgentBase.
- Find a solicitor for help with sales contracts and other legal issues through the Law Society.
"Overtrading is a common cause of business failure. Production and purchasing costs soar and payments are not yet coming in. Make sure you have the capacity and finances in place to enable you to fulfil your sales targets and order commitments." - June Lonsdale, Anglo Recycling Technology Ltd
"In recessive times, customers look for two factors - 'Am I putting my business into a safe pair of hands?' and 'Are we really getting good value for our hard-earned money?'." - Guy Aston, Huthwaite International