by Rick Phillips
I spent a lot of time in the Boy Scouts as a kid. But their motto, "Be Prepared," never really sank in until I met my first sales manager, Charlie Walls. He taught me about territory planning, account analysis and pre-call planning.
Quite frankly, it took him a while to teach me those things, because at the time, I thought I knew everything and could be a success in sales through persistence and my gift of gab. It was only after I was properly humiliated and learned what failure felt like, was I ready to learn about the most basic lessons of selling.
Charlie helped me see I needed a three-prong planning system for sales success. It starts with territory planning, an overall view of the territory. It looks at the big picture.
Typically, you would do territory planning once a year. It is a long-term planning process that incorporates your income goals, corporate strategies, territory history and probable territory potential.
Account analysis breaks the territory plan down into the individual strategies you have for each account. This account analysis process is used to look into the past and present buying activity and potential of each of our accounts. We then use the account analysis to set goals for our customers and prospects and, ultimately, to help us make our territory plan successful.
Finally, when we know what our territory plan is, and we have a plan for each of our accounts, we can plan each of our calls. We call this pre-call planning. Once we understand our account analysis, we can make each of our individual sales calls with a selling strategy in mind.
In other words, we have a target or set of targets in mind for each account, and our pre-call planning helps us to consistently take steps to achieve our overall account objective on each call.
Now, let's take a closer look at territory planning, the first of the three parts of planning.
Territory planning is usually long-term planning. It helps you maximize your time and ensure you consistently build territory revenue by calling on a good mix of new prospects and existing customers.
On examining your territory and your past selling results, let's say you decide, "OK, last year, I sold $1.7 million, and this year, I want to sell $2 million."
There are some questions you need to ask to determine how you will increase your sales by almost 20 percent.
If you want to move from $1.7 million to $2 million, that means you must find an additional $300,000 in sales revenue, while ensuring you maintain your existing sales.
First, we cannot guarantee all of our accounts will stay with us at the same level of buying. Some will go out of business, some will slow down, some will move to the competition, while some will grow and buy more.
So territory planning should start with recognizing that each existing account is usually a two-sided issue. Some represent potential loss and others represent potential gain.
The real plan is in the details
We need a realistic view of our accounts. We need to come up with a territory assessment by account that says, for example:
1. Here are the accounts I feel will continue to buy the way they are buying, or increase their revenue. They add up to $1.2 million.
2. Here are the accounts in flux. These accounts could represent some losses. This year, they represent about $300,000. If we keep 75 percent of this business, we have $225,000.
3. These are the most vulnerable accounts. They represent about $200,000. If we keep 75 percent of that business, we will end up with $150,000.
As you look at the example territory, you can see that realistically, the territory could drop in revenue to $1.5 million. That's the real world. You must realistically examine your territory and decide what kind of losses to expect and what kind of competitive inroads you can make.
Building territory strategies
The second half of your territory plan should include a clear strategy to accomplish three things:
1. Maintain existing accounts. Let's face it: Most of the time, it's a whole lot easier to keep an account that knows you than it is to get a new account that doesn't. So our first priority is to keep what we already have.
2. Grow existing accounts. Again, it is a lot easier to get more business from an account already buying from you than it is to get that business from a competitive account.
3. Obtain new accounts from the competition. While this is the most time-consuming strategy, it is also potentially the most rewarding. There are prospects out there who need the services, programs and professionalism you and your organization offer. Penetrating these accounts may take time, but these represent a potentially significant boost in revenue.
If you want to maintain and grow existing accounts while obtaining new accounts, you must budget your time. Your territory action plan must include a time management plan. You will need to decide how to parcel your time and make some hard decisions based on account size and potential, spending more time with the most valuable accounts and less time with others.
You will also need to develop a prospecting plan, built around the time you plan to make available, the potential of new business accounts and the amount of new business you need to attract. If it is not a part of your daily and weekly selling plan, it simply will not get done.
The money plan
The issue of money might need to be discussed before you begin to develop your territory plan. Many sales professionals will determine how much money they want to make in a particular year. Then, they will develop a territory plan based on their revenue goals.
What kind of income do you want to make for the rest of the year or next year? If we look at our example again, you must define what the desired 20 percent increase in sales will mean to you and your family. The territory plan you are about to develop will mean a lot of work. It will mean you will be away from your family a lot, and, even when you are at home, you may be working on projects for customers.
So will the rewards be worth the effort? What will you do with the extra money? Will you plan a special vacation? Will you put a percentage of the money into savings for your children's education or a new home?
The key question is: What kind of money do you want to make, and what will you do with that extra income?
In the next article, we will examine account planning.
Rick Phillips is a management, sales and customer service speaker and trainer based in New Orleans. He is president of Phillips Sales and Staff Development (PSSD), a nationally recognized training firm he founded in 1984. Contact Rick at email@example.com.