The fuzzy logic of planned sales growth

Observation #35

carpedia-observation-35Being analytical by nature, we sometimes struggle to get a handle on the fuzzy logic behind planned sales growth. One of the things we often find lacking (and sometimes missing entirely) is the logic as to why sales will improve. No, not the forecasts and budgets, broken down by customer and region — there’s often no shortage of those. What’s lacking are the changes in actual sales activity that will create the increased volumes.

Sales growth comes from some very specific sources (e.g., price increases, new customers or distributors, new products or markets, increased volumes from existing customers, better retention of base customers). But P&L statements — or even sales reports for that matter — are rarely explicit about the source of growth. They tend to highlight markets or customers or product types, so they link to the original budget forecasts. But planned sales growth implies specific activity required on the part of the sales organization related to where the growth is intended to come from. For example, new customer growth would imply new leads and conversion rates on the part of salespeople. New distributor growth would similarly require a specific series of actions to achieve.

But if the planned sources of growth are not made explicit, you can’t translate anticipated volume into the required sales activities. If the required sales activity is not explicit, it’s very hard for a sales manager to provide any meaningful direction, beyond basic coaching. The fate of the growth plan reverts mostly to the sales force, who also may not know which specific actions are required to achieve the plan put forward. Achieving the sales plan becomes driven by fate and market conditions.

Sales is one of those areas that’s really part science and part art. As consultants, we tend to overplay the science part, while sales professionals have a tendency to overplay the art aspect. But there needs to be some movement toward the middle ground if a company wants to actually manage its growth.