How to Develop a Sales Strategy for Your Small Business
Every business needs to develop a good marketing strategy in order to succeed, but good marketing is not an end in and of itself.
Rather, it should act as the basis for further development – for planning and implementing a strategy of selling to your customers.
Read this guide to find out more about establishing a tailored sales strategy, forecasting, managing a sales team and how to measure performance.
How do I plan my sales approach?
The first crucial step in any sales strategy should be identifying your target market. Find out as much as you can about your customers – their needs, their preferences, and when, how, and where they buy. Keep a track of market trends, and establish who the key influencers and decision makers are in any business you are selling to.
Once you know who you should be targeting, make sure you have a clear business and marketing plan. Keep your key objectives in mind, and determine how you will deliver on them. Use your sales people to devise accurate, realisable plans. Your aim should always be to generate profitable business.
Think about ranking your customers. Categorise them into existing, potential, and key customers, and establish the total cost of selling to each of the customers in these categories.
You can then use a ‘profitability’ criteria to work out what it is that makes a certain customer profitable (i.e. do they add credibility to your business, do they give you access to other customers). This knowledge can then help to establish criteria with which to judge the profitability of all other customers.
Focus your sales activity only on these that meet your criteria and then raise your gross margins for unprofitable customers, by using cheaper sales channels for instance.
How do I target customers to grow my business?
A great way to generate additional business is to target new prospective customers.
Identify them efficiently (i.e. by comparing their profiles to existing customers) and plan your approach for gaining their business (i.e. by lowering your prices or offering a free trial of your product). Plan to make these customers profitable (i.e. by raising prices after a certain period).
You can also try to develop more business from existing customers. Plan for how you will keep them satisfied and maintain a good relationship, and for how you will increase the value of the purchases you make (‘up-selling’ and ‘cross-selling’)
Ideally, it’s important to have a good balance of customer types. Reach a sensible demarcation of time spent winning new business and time spent maintaining good customer relationships. Avoid over-relying on particular customers – you should always be seeking to secure new business to some degree.
How do I reach the customer?
There are a number of ways to reach out to potential customers and ideally you’d use a mix of different methods.
Direct selling is one of the most obvious and includes face-to-face transactions, e-commerce, telesales and direct mail. You should use face-to-face selling for high-value customers (since it is effective but expensive) and telesales/direct mail for lower value customers. E-commerce is the cheapest option – make sure you design your site with its sales potential in mind.
Additionally, you can use advertising to raise awareness and recognition of your products amongst your customer base, and provide any promotional material to the intermediaries that sell your product (if there are any).
If you’re looking to target new customers, try going through retailers, and consider using an agent to access customers overseas. You can find more details on the Manufacturers’ Agents’ Association
Other businesses can also be used to generate sales. Unless they are in direct competition with you, related companies may be willing to share customer information. The Data Protection Act requires companies to tell their customers which organisations they will share information with and allow customers to object to this.
How should I forecast my sales?
Your sales forecasts should break down the sales you predict and plan to achieve – by customer, by product, and by month. Involve your sales employees in the organisation and assembly of these.
As the first point of call you should consult previous sales levels. Base your predictions on these, taking into account changes in buying habits, large new orders, and the impact of pricing and marketing activities.
Use a percentage figure to show the likelihood of achieving sales, and include the dates that you predict you will close them.
You’ll then need to establish the number of leads required to make your targets. Demark those that should come from new and existing customers.
Once you’ve got clear targets, you’ll need to allocate the resources required to make them, for instance by deciding the number of salespeople who will work to achieve each target and allocating the amount of time that should be spent on each account.
Don’t forget to factor in costs such as salaries, equipment, and promotional costs. Plan these against your expected returns.
How should I prepare a sales budget?
Once you have prepared a forecast, you should assemble a sales budget. This should be an unchanging benchmark for you to compare your forecasts against, to establish their effectiveness. Prepare an optimistic version, a realistic version, and a pessimistic version. Draw up a plan of action for each eventuality.
A forecast is also never set in stone, and should be revised over time. Compare your achieved sales with your budget, and adjust accordingly on a quarterly or annual basis.
Make sure that you take sales cycles into account too. Remember, new products will take longer to sell than existing ones, so time launches well. And coordinate sales with other activities. Once devised, you may need to adapt your marketing and promotional strategies to suit your sales strategy.
What resources do I need to support my sales strategy?
You and your sales team will need access to a number of different resources in order to sell effectively. As a minium they will need:
Phones and laptops. In this day and age, no salesperson should be without one.
A comprehensive database. Train your salespeople to use it. Make sure it is easily accessible and (relatively) simple to use. If you have a large number of high-value customers, you may need to invest in advanced custom management software.
Standard documents. Any customary documentation – call sheets, proposal forms, and standard contracts – should be prepared and provided by you.
Promotional material. Your salespeople should have any brochures and price lists that you offer close to hand when selling.
How should I manage my sales team?
Every sales environment is different, and demands different skills and expertise. You will need to train and instruct your salespeople to handle their unique set of responsibilities.
As standard practice, you should offer at least a basic induction. Educate them about your business, products, and the market they will be selling in. Make sure they understand your sales strategy and policy, as well as any details about expenses and expected conduct.
Ideally, you should then also develop ongoing training courses, which focus on specific skills you wish to develop – listing skills, negotiation skills, etc.
Hosting regular role-play and rehearsal sessions is another great way to develop expertise and monitor performance.
For more one-on-one feedback, you could also offer individual coaching sessions. This gives you the opportunity to closely monitor their performance, assess their strengths/weaknesses, and help shape their development.
Finally, hold quarterly performance appraisals. Be positive and invite discussion/debate. Focus on areas where there may be no direct monetary incentive to perform well in – i.e. keeping sales records. Discuss whether any problems are the fault of the salespeople, or that of your strategy and provision of resources.
How do I measure the performance of my sales strategy?
Once you’ve got your sales strategy outlined, it’s equally as important to ensure it’s working well. Produce an annual/quarterly profitability analysis to keep track of this. Examine the resources spent on each customer/account. Establish and rank the productivity of each sales person and sales channel. Analyse the returns on your sales costs, and compare the results with your previous performance and with that of your competitors.
Evaluate your conversion rates on a monthly basis. Work out the number of sales made and the average value of each. Investigate the relationship between leads, visits, proposals and achieved orders and monitor the activity of your customers.
If you do identify any problems, think about feasible solutions. Try to ascertain the reason for any lost accounts, and see if you can win them back with a new offer.