This is the period when companies have the last chance to commit their sales force to drafting goals for the coming year. It is an important time when organizations rediscover their entrepreneurial spirit by reconsidering their vision of the world and their ability to give and receive trust. Like a period of entrepreneurial adolescence that comes around every 12 months.
As consultants we’re often involved in guiding and suggesting the best methods to carry out this vital task; there is no doubt that the sales target underpins any subsequent strategic and operational forecast made by the Company.
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In our experience, there are two ways to approach this process: one that we will call “in reverse” and the other that we will call “exploratory”.
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In the first case, companies start by analyzing the previous year to define a “growth” percentage that is in line with the company’s economic and financial needs and objectives. This approach involves directors and managers in three main stages:
- a first phase that we could call checking the rear-view mirror that consists in evaluating the trends of the previous years and comparing them with the future growth needs of the company;
- a second phase of commercial engineering aimed at transforming what emerged in phase one into percentages of growth turnover;
- and a third phase of internal negotiations with the objective of ensuring the choices made in the first two phases are accepted through the various levels of the sales force.
As with every choice, this approach has pros and cons. Among the advantages is the fact that it ensures speed, with decisions taken centrally by the management, which reinforces leadership in decision-making as well as permitting a perfect match between commercial objectives and business needs. On the other hand, this way of setting the target hides pitfalls such as the lack of reliability resulting from the fact that such analyses fail to take into account information from the sales team and the downgrading of the role of sales staff who are forced to accept choices coming from above.
Although such flaws often exceed the merits, most companies still tend to adopt this method. Why is this? We believe that such a choice is based on an “unwritten agreement” between the sales force and the management that we could summarize as follows:
You decide, but I reserve the right to disagree later.
Basically, both sides are passing the buck, with the management making unilateral decisions and delegating responsibility for their consequences and the sales force passively accepting these choices but immediately preparing to find arguments to justify any possible failures. What appears to be a convenient solution for everyone in the short term may seriously compromise the company’s results.
The method we prefer is that of the explorer. In some ways, we could say that this approach is exactly the opposite of the one described above. In fact, it commences with the gathering of information and the operational choices of the sales force and then incorporates these to meet the needs of the company.
To proceed correctly, our salespeople need to analyze their customer portfolio and trends and then choose the appropriate actions to produce the desired results.
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Indeed, rather than a forecast, it would be more precise to talk about a detailed planning of the following year’s activities, from which the results will derive.
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The sales staff should be the first to advocate this approach as it empowers them, allowing them to plan their results.
A maxim frequently used by management dictates that ‘the best way to predict the future is to invent it’. This method, based on operational choices is much more reliable, but on the one hand it requires a strong capacity to delegate by the management, who must trust and rely on their people in the field, and on the other hand, the willingness of the sales force to take responsibility for the choices by acting and not reacting. One of the risks inherent in this approach is the potential deviation of the sales force’s plans from what the company management deems necessary to achieve. The flexibility of the processes and the willingness to dialogue through the involvement of the various company departments to ensure the new goals become reality, are fundamental qualities for any managers and directors who wish to use this technique.
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On the other hand, you also need a sales force well-versed in interpreting data, and designing and planning the required actions.
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As we have been arguing for a while, our profession has changed with the salesperson once again playing a central role in company processes. This change imposes a new step, which transforms sellers from order gatherers to hunters, in the knowledge that the best way to achieve a sales target is to prepare it carefully and in detail.
In life, as with management, it’s all about questions and perspectives: if I ask myself ‘what will happen in a year’s time?’ I will probably find any prediction tricky. If I ask myself instead ‘what projects do I have for the coming year?’ I become the protagonist and creator of my results and I enhance my chance of achieving them.
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