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Planning Helps Businesses Achieve Revenue Goals

Most companies are preoccupied with the sales and marketing aspects can impede growth and put the business at an immediate disadvantage.  Although a focus on marketing is commendable, it may be too narrow. Specific sales targets are fine, but the chances of success are reduced without a written business plan that outlines how these goals will be achieved.

All businesses endeavor to increase sales, but many companies focus on total revenues and overlook the different types of revenue streams that make up that total. For example, a company’s revenue may increase each year, but if its most profitable product or service accounts for a shrinking portion of the total, the business could be headed for trouble.

To avoid this trap, management should develop a formal, written plan that outlines how the business will attack the issues that affect both the top and bottom lines from a sales perspective. Such a plan allows the business to drive the most profitable areas of the enterprise.

Four Critical Areas

In general, four critical factors should be addressed in a sales or marketing plan:

• The first and often the most overlooked is manpower. If the goal is to increase sales by 20%, how will it be achieved?  Will the business expand its existing sales force? Will it reduce turnover? Recruiting, training, and retaining qualified sales personnel has become particularly important in today’s tight labor markets, and it’s becoming increasingly difficult to find quality employees. The business must address manpower issues in conjunction with setting any sales goals.
• Another critical factor in profitable revenue growth is the ability to differentiate products and services in markets in which they are perceived as similar or interchangeable. The business must be able to identify — and effectively communicate — the features that make its products or services the better choice. For example, if the company has resources and expertise that the competition lacks, it may have an advantage even if the products are similar. The key is to create a total package (product, resources, expertise) that can help customers increase their revenue or reduce their costs.
• If the company is unable to differentiate its products and services, it will have a difficult time with the third factor — growing and retaining its customer base. The business must identify ways to prevent customers from doing business with the newest entry in the market or the lowest-priced competitor. Building customer loyalty, difficult as it may be, is imperative for long-term success.
• Finally, the business must focus on boosting profitable sales. This means reducing the discount required to make a sale and increasing the profitability of each customer and supplier. If a company can document and communicate its ability to help customers reduce their own costs or grow their revenues, this added value can be attached to the sales price of its product or service, thereby creating measurable increases in margins.

Often, an outsider’s fresh perspective facilitates the process and injects new insights that can be implemented to immediately improve the sales and marketing process. Remember, the best business plan and the best engineered organization can fall short of its goals without a clear understanding of how sales and marketing goals will be achieved. An organization remains at risk of underperformance until these specifics are identified, documented, and executed.