Friday, November 22, 2013

Why Do Salespeople Need an Annual Plan?

I’m a Salesperson, for crying out loud, why do I need an Annual Plan?

Some will do just about anything before planning.
It takes more than just adding it to the top of your "do do" list.
Let me talk directly to my friends who fill the critically important role of Distributor Sales.

First, I consider myself to be a member of your brotherhood.  I know it’s a tough job.  Day after day, you load in to your vehicle, had out to face down angry customers, smart-alecky purchasing guys, and unsavory reps from vendors.  You trudge through rain, sleep, snow and traffic that would wilt the heartiest of letter carriers.  If no one has said it recently, thanks for what you do. 

Salespeople are the backbone of the Distribution Industry.  Now don’t you feel better?  But here comes the part where I explain precisely why you’ve got to make time for something many find distasteful.  Bear with me… I promise it will only take a moment.

Regardless of what you think, Annual Planning isn’t just for the guys up in corner offices.  Management needs to plan for financial ups and downs.  They need to worry about managing cash flow, maintaining the right inventory, measuring staff needs and budgeting for the coming year.  And, no doubt you will be asked to share in the fun.  Most of you will be asked to assist with sales projects.  Some of you will be assigned to being part of annual physical inventories.  A few might even be handed a paint brush as part of an end of effort to spruce up the office.  But there’s more for a salesperson to think about. 

Customers aren’t forever
Reviewing many distributors in a whole lot of industries, we’ve learned customers aren’t forever.  Typically, you can count on losing 10% of your “base” business every year to things like plant closings, mergers and acquisition activity, economic shifts and changing needs.  Simply stated, in order to stay even, you have to grow business by 10 percent.

A good annual plan would include evaluating customers on your list who may be on the decline.  Understanding where this loss will come from will direct your thoughts on call frequency and use of your time.

At the same time, determine which accounts are poised for growth.  Sometimes this has nothing to do with you.  If your customer has an expansion pending, your numbers may improve even without your special efforts.  But, working to increase your presence at a growing account pays larger dividends to your sales number.

Special pricing and supply contracts
Special pricing agreements have grown in importance in distribution.  In some lines of trade (like the Electrical and Automation business) they have literally exploded in use.  We tend to create them and forget them.  An annual plan would include reviewing the agreements for inconsistencies. 

Here’s how it works, a customer indicates they are going to buy hundreds widgets for their new project.  You provide them with a pricing agreement but sales of their new machine never took off.  But, when they buy a single part, they get the special price.  This fact cuts into your commission check and sets the wrong kind of expectation for the future.
A good plan includes candid conversations about raising the price to a more acceptable level.  While this may not be comfortable, we have discovered distributors who present massive price increases (6+ percent) often irritate the customer.  You can always lower the price later if and when their quantities grow. 

Pushing the envelope further, do you have any accounts where a special price agreement might give what one client calls “the new exclusive”?  Formulating special pricing agreements, locks out competitive distributors who handle the same product lines.
Click here for a brief tutorial on special pricing agreements

Personal Positioning with Supply Partners
We all have them; friends and allies who sometimes can make our job a bit easier.  They tip you off to opportunities.  They give you insider information.  They allow you to make more money for yourself and for your company.  And, sometimes they are easy to overlook.

Now is the time to plan a meeting with each of these people to talk about their goals and plans for the next year.  Chances are any manufacturer’s salespeople need extra details to feed back to their headquarters group.  Investing in a planning meeting will strengthen your relationship and create future opportunities.

Planning for information storage and retrieval
A lot has happened in the world of distributor data.  CRM systems spring up everywhere.  New ERP operating systems are being sold daily.  New phone apps, smart phones, tablets and internet availability nearly everywhere make it hard to keep up with things. 

In some instances we sales types have been left with more options, but never a clear cut path to bringing all the data together in the way we can use it.

I recommend spending some time thinking about what customer information you need on a daily basis.   We could do it just about any time, but end of year is a great time to plan and begin your implementation.  What information?  How will you add to it?  Where will you keep it?  What’s important for you versus requested/required by management?

Calculate the Gross Margin potential per call
Plan by understanding the gross margin potential required attain your 2014 goals.  Selling is an emotional endeavor.  We all have our favorite customers.  They appreciate the work we do, they greet us warmly and make the people side of the job pleasant.  But, are they big enough or likely enough to warrant our time? 

I have a spreadsheet used to calculate the gross margin potential for sales calls.  Shoot me an email; I will share it with you.

There’s more but….Lot’s more…
This message might run for another couple thousand words, but nobody would read it.
Let me sign off with a list of topics you need to think about:
·       Sales Skills – What are you doing differently today than five years ago?
·       Product Training – What are your strengths and weaknesses?
·       Specialists – Are you getting the full bang for the buck from the ones you work with?

And my favorite
Vacation, relaxation and play – Work hard, play hard.  Have you pondered loading the gang into the old family trickster and hitting the road for Iowa?  If your kids haven’t seen the sun shining over 13.7 Million acres of corn, they may be missing out.

Don't forget about our planning special running through the end of December.  It's a great time to help yourself and the nerds on your team.
Yeah, you read that right!  

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