Sales leaders and sales operations leaders have a lot at stake in annual sales planning: setting achievable targets, motivating the sales force, deploying optimum sales and territory coverage, and ensuring a cohesive buyer and customer experience. And while the planning process is always a challenge, it’s even more difficult in 2022 given the halted recovery, changing buyer expectations, and the pivot to digital selling.
Many factors go into effective annual sales planning, but there are two fundamental elements that are critical — now more than ever. They are the use of data-driven insights to drive greater precision in our selling motions and close alignment across revenue engine leaders. How sales organizations address these elements will make the difference between planning for executional success or frustration and failure.
Forrester’s best-practice research goes into depth in these two areas. Here are highlights with some takeaways to apply to your 2022 planning efforts.
Begin With Revenue Engine Alignment
How aligned is sales across the revenue engine? Most sales leaders recognize that successful planning starts with alignment with marketing, product, and customer success. Yet, it is still common to see the executive team announce growth and revenue goals for the coming year and then, with little guidance, leave each functional leader to determine how to deliver on them.
Marketing takes one approach, sales another, and the channel and customer engagement teams follow their own paths. This can result in suboptimized performance with missed pipeline and revenue targets and a whole lot of frustration.
What is required is an aligned revenue planning process that starts with a shared understanding of the company objectives and follows a structured process that defines the participants, inputs, actions, and outcomes that align the revenue operations. This entails three phases, described in more detail in our report, Introducing The Aligned Revenue Planning Process:
- Business alignment. In the first phase, the company’s prioritized growth strategies are set and initial revenue goals determined across go-to-market segments and route-to-market channels. This foundational step provides clear direction for the rest of the planning process.
- Functional interlock. Here, revenue operations teams translate and model the proposed revenue targets into a detailed revenue production plan — and then align the revenue plan with the annual functional plans being built by marketing, sales, and customer functions.
- Execution readiness. In the last phase, the revenue operations teams address the dependencies and risks that can block the successful execution of the revenue plan. These include budget, technology, data, process, and others.
Revenue operations leaders — including sales operations, marketing operations, and customer operations — need to actively participate in the fiscal planning process and should establish a cadence and governance for how the planning process will be managed. Executives, meanwhile, need to be held accountable for transparency during the business alignment stages to ensure that revenue ops has the inputs needed to build aligned revenue and functional plans. Get executive buy-in and commitment to successfully drive the aligned revenue planning process.
Leverage Data-Driven Insights
What kind of year will 2022 be? Given the halted market recovery and uncertainty from COVID-19, it is essential that sales leverages good third-party data on the expected market growth in 2022, with an understanding of the budget spend outlook by country, segment, and product category to ensure goals are realistically set. But insights-driven planning is also about driving greater performance and sales productivity by targeting with greater precision, with the right set of accounts in each market segment, and with a defined set of opportunities and buying group members that have a high propensity to buy.
The problem with most sales planning is that it is not a sufficiently data-driven process, so investment decisions, account prioritization, sales coverage, and rep-level quotas are not aligned to the in-year sales potential of the accounts. This means a lot of generalized assumptions are made with some goals “peanut butter spread.” These decisions suboptimize the sales organization’s and individual rep’s ability to overachieve. Not all accounts are created equal — some will spend much more than others next year, and some may be in the market for your solution, while others may not be. Do your reps have the insights to know the difference?
Insights-driven targeting is the best-practice strategy to this planning problem. It drives better account- and opportunity-level targeting, sales coverage, territory design, and quota setting to maximize sales and marketing performance.
Insights-driven targeting is achieved across three phases. Our client report, Introducing The Insights-Driven Targeting Spectrum, goes into depth, but here is a quick overview:
- Market alignment: First, the market is divided into discrete groups (segments) based on a common set of attributes, then the market potential of each group is determined. (Portfolio marketing often takes the lead on this work.) Next, market segments are prioritized based on attractiveness and ability to win.
- Account prioritization: Sales and marketing team up to prioritize accounts by evaluating the attributes that determine they have needs that are best addressed by the company’s offerings. This defines the ideal customer profile (ICP). They then calculate the opportunity potential of each account.
- Territory optimization: The outputs from the previous steps help in optimizing territories and determining the right coverage strategy based on account potential, share of wallet, and existing insights.
Nail Your Sales Planning
Annual sales planning should be a sales leader’s and sales operations leader’s priority well before the Q4 fiscal year. Amid the drive to deliver a strong Q4, it can be tempting to have planning take a back seat. Don’t let it. This is the time to build confidence in the ability to achieve and set up the sales organization for next year’s success. Key actions to take now include:
- Validate the source and business assumptions of growth built into the target goals, ensuring that budget aligns to the growth expectations.
- Align the sales, marketing, and customer success plans to the business goals. Build a sales production plan that aligns monthly goals to pipeline needs and sales capacity needs.
- Leverage market-, account-, and product-level, projected spend data to prioritize top potential targets, inform goal setting, and optimize sales coverage and territory design. Partner with market insights providers as needed.
For a deeper dive into what successful annual sales planning requires, join me and my colleagues Phil Harrell and Anne Slough for our upcoming LinkedIn Live session, The Keys To Unlocking Successful Annual Sales Planning on Tuesday, October 12 at 12 p.m. ET.
For more in-depth research and guidance on the annual sales planning process, reach out to us.