Measure the Results of Sales Activity Over Time to Build Useful Predictive Sales Plans

I am a firm believer that most management plans only accrue value over time. Like a fine wine or a steak that improves as it ages, a management plan takes on relevance, accuracy and, of most importance, powerful predictive value as the density of information acquired from regular measurement of actual repeated activity acquires a body that can be rendered into a portrait of what is really going with a business. The business activity under measurement needs to be reasonably consistent and uniform throughout the entire period of scrutiny, else the analysis will be worthless. I hold this belief for sales plans, and marketing plans. No time? No gain from planning. Better not to start the planning process.

If, on the other hand, a business has the funding and the time to allocate to the planning process, then valuable information can be collected and built into, for example, a sales plan. Examples of valuable information include the following:

  • Length of the sales cycle
  • Number of prospect opportunities required to produce a sale
  • Average value of a sale

What is the measurement interval required to obtain accurate information about the three topics just listed? In my experience a minimum of six months. Anything less risks inaccuracy, irrelevance and, even worse, wrong thinking and worse planning.

I have first hand experience with business owners with ostensibly innovative business concepts who either planned too early, or wasted precious time attempting to plan and structure sales too early in the business process. There is no point planning sales for a business that is brand new. Better to spend time speaking with prospects. Collect (better yet, where possible, record) conversations, listen to what prospects tell you and then formulate carefully, over time, a sales plan.

Once you have established the typical length of the sales cycle; the number of prospect opportunities that a typical sales person will need to undertake to produce a sale for your product or service; and the average revenue value realized from a sale, then you can start to formulate a plan and implement metrics to manage your sales activity. As well, you will have acquired very valuable information for your product marketing plan.

In sum, it has been my experience that time spent on tactical planning early in a business cycle for a new, innovative product or service is time wasted. It is entirely possible to operate under rough plans while critically important information is collected and added to a realistic and plausible business plan that includes sales and marketing activities. Put the pedal to the metal where it belongs and not to the exhaust pipe.

© IMB Enterprises, Inc. & Ira Michael Blonder, 2011 All Rights Reserved

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