Effectiveness of Sales Plan – Most Important Business Question

Dear M & M:

What are some ways I might measure the effectiveness of my sales plan?  I know my bottom-line but is that enough?


Dear Jim:

Tracking your bottom-line sales revenues is not enough to give you the critical information you need to create the most effective sales plans and results. Knowing how products sell by price, distribution channel, geographic area and profit margin gives you a more detailed picture of how and where you should sell for maximum results. Use a variety of tools for measuring how your sales occur to adapt to changing market conditions and take advantage of your best sales strategies. Goals: Obvious tools for measuring the effectiveness of a sales plan is to set goals, then track them during the year. Using historical benchmarks married with an analysis of current trends, set realistic goals you think you can meet. For new products, look for trade association research to help you set sales goals. Set goals by gross sales, product, distribution channel and geographic region. Price Analysis: Measure your sales by price to help create a more optimal marketing strategy. If most of your sales are coming from low-end items, you might want to abandon the effort you are putting into selling higher-priced goods or services, even if they have high margins, to devote more resources to your high-sales items. Consult with your marketing department first — you might need a few high-end items to manage the brand you have created for your business. Distribution Analysis: Look at where you are selling your goods to see where your sales efforts are best spent. It might be cheaper to sell things online, but most of your sales might be coming from retail stores. You might find one type of high-sales product sells primarily through catalogs, while another high-sales product sells best online. This information will help you devote more time and effort to selling the right products in stores, online and in print. For example, if you sell three items on a website page, measuring your sales by where they sell might lead you to drop one of those items from your website and promote the other two more. Margin Analyses: Calculate whether you are making most of your profits from low-margin items or those with bigger profit margins. If you find that most of your sales are coming from low-margin items that are cheaper to produce than high-margin goods, this might allow you to improve your overall return on investment by dropping high-margin items that don’t give you enough sales volume to justify their continuation. Doing this might help you increase sales of your better-performing product or service. Growth Analysis: Measure your sales growth by geographic area, distribution channel, item and sales representatives. You might find that most of your sales are coming from an older, established territory, long-time retailer or senior sales rep, but that your growth is coming from a newer area or sales people. If your goal is sales growth, you might need to concentrate less on your traditionally strong sales areas and put more effort into your smaller but growing areas and people.


Dear M & M:

What is the single most important question a business should be able to answer?


Dear Aiden:

A quick easy answer, “What is your value proposition”?This is the single most important question of the bunch. Wikipedia says a value proposition is a promise of value to be delivered and a belief from the customer that value will be experienced. A value proposition can apply to an entire organization, or parts thereof, or customer accounts, or products or services. Creating a value proposition is a key component of business strategy.  How well you satisfy your customers is one of the main components of sustainability.  If you can’t explain–in three, jargon-free sentences or less–why customers need your product, you do not have a value proposition. Without a need, there is no incentive for customers to pay. And without sales, you have no business. Period.


 To ask your questions: Call the Small Business Development Center(SBDC) at Cochise College (520)-515-5478 or email schmittm@cochise.edu or contact the Sierra Vista Economic Development Foundation(EDF) at 520-458-6948 or email  hollism@svedf.org


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