Whether you are a solopreneur or manage a team of salespeople, how do you do business planning that becomes more than wishful thinking? How do we make real growth happen? In this series on business planning, we’ll walk through how to make plans actionable by creating both “bottom-up” and “top-down” business goals!
Did you know that you can double your sales without adding a single new client? It’s possible.But what often keeps salespeople from growing is a dangerous laissez-faire attitude that swallows ambition, sales complacency. Part of this complacency is due to the economy: When the economy is roaring, clients continually place orders and keep distributors busy, so most of the work becomes merely keeping up with deadlines. But it’s deceptive; sales “busyness” can completely shroud the fact that you’re leaving money on the table. A lot of money on the table.
The other part of this complacency comes from the fact that you have no method or action plan for changing your sales behavior and making growth a reality. Most salespeople merely hope their clients will do more without any plan or action to guarantee growth, which is a vulnerable position for anyone to remain in, particularly since some experts predict that a recession is right around the corner.
Business planning always starts with where you are at now, with your existing book of business, and studies have shown that it is 5x more expensive to acquire a new customer than to retain an existing one.The following 7 questions will guide you to create a plan for 2019 that will help uncover sales opportunities right in front of you, within your existing book of business, while simultaneously creating space in your calendar to help you grow.
Q1: Who are your top ten clients?
List them in declining order by gross sales and by gross profit.
Q2: How close are you to driving revenue on behalf of your top ten clients?
How recession proof is your client portfolio? What if you could recession-proof your portfolio and diversify your clients in a way that brings you peace of mind and more revenue? The recession-proof question: How close are you to driving revenue on behalf of your top ten clients?
If you work on projects that directly impact sales, not only will you have the added benefit of recession-proofing your client relationship, you'll create repeat order business that will grow your sales. Do some of the projects you work on for your customers actually impact sales? If not, now’s the time to begin talking with your customers about strategic ways you can get closer to the sale.
Q3: How diverse is your portfolio?
In addition to getting closer to the sale, how
diverse is your portfolio?
Are you tied to only one industry? Or working within a few verticals only? When I was a distributor, we had a lot of business tied up in the oil and gas industry, and when oil prices tanked, we took a massive hit in revenue. Even if you disagree with the possibility of an imminent recession, it’s good business practice to evaluate and diversify your client base. Review the industries you currently work with and remember Jamie Watson’s advice with Certified Marketing Associates: no single client should command more than 10% of your sales.
Q4: Which departments do you sell to?
For each of these client companies, list the number of buyers and note which departments they work in. To help, consider this chart created by a research study from PPAI on the different departments that buy. Which departments are you not selling to?
Q5: For what purposes do you sell to your clients?
In PPAI’s annual Sales Volume Study, they demonstrate the many purposes that promotional products are used for by most companies (see chart below). Consider the projects you worked on for your clients in 2018, are there purposes you are not selling to? Take your top ten accounts and create a list of the purposes you haven’t yet sold to within each account.
Q6: Where are the areas for growth?
Based on your penetration within each Top 10 account with multiple buyers, and based on your knowledge of which purposes you sell to, where are your areas for growth?
Can you put a dollar figure to each customer? Example: If you have a large customer who does $80,000 a year with you, but you are only working with one department, then you likely have lots of room for growth. Put your best guestimate on an increased figure beside each customer, like so:
- Client 1: $100,000 in sales with growth potential of $30,000 = $130,000
- Client 2: $80,000 in sales with growth potential of $40,000 = $120,000
- Client 3: $50,000 in sales with growth potential of $20,000 = $70,000
- Client 4: $75,000 in sales with growth potential of $10,000 = $90,000
- Client 5: $40,000 in sales with growth potential of $50,000 = $90,000
If these clients represented your entire book of business, your total sales in 2018 would have been: $345,000. With your projected increases, your potential sales opportunity for 2019 is an additional $150,000 or $500,000. If you earned 40% commissions, your total increase in compensation (given 40% margins) would be a $24,000 increase in income.
Q7: Who are your bottom 10%?
The secret to creating more bandwidth in your schedule, giving you time to grow, is to eliminate those customers that are costing you money.
Mike Michalowicz, an expert at helping entrepreneurs grow remarkable businesses, spoke at our recent skucamp conference and said that the lowest 10% of customers are not “earning you” but they actually cost you to keep them as clients. How? Opportunity costs. For every minute you spend with a marginal customer, you are not only losing money (because your time is more valuable) but it means that this customer is robbing you of the time you could be spending with a customer who could spend infinitely more.
For help with this, consider the profitability diagram below and ask where each of your customers fall. Are those bottom 10% of your customers truly bad customers that you should fire? Or are they potential clients who, with proper time and attention, could blossom into a key account? If they don’t have potential, trim your client list and create bandwidth in your calendar for the time to invest in the right kind.
Digging into the recent history of your sales and projecting the opportunities for growth keeps you from guessing or worse, simply wishing for an increase in sales with no action plan to make it a reality. “Planning,” wrote Alan Lakein, “is bringing the future into the present so that you can do something about it now.”And now that you have estimated the potential growth per key client and you have cleared more space on your sales calendar by eliminating the poor performers, you can now “fill in the gap” with strategic marketing tactics, which we will discuss in our next installment in this series on business planning.
"Setting a goal is not the main thing. It is deciding how you will go about achieving it and staying with that plan." - Tom Landry
