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What Is Sales Planning? Advice for Creating a Sales Plan, Sales Forecasting and More

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Accurate forecasting is the foundation of effective sales planning. 

When your sales team can predict future performance based on accurate data, they’re more likely to better allocate resources and set more realistic targets.

But according to Gartner, more than half of sales leaders lack confidence in the accuracy of their forecasts, with poor data quality being the main reason. 

Creating a sales plan based on this type of uncertainty—where actions become based on intuition rather than evidence, Gartner writes—can mean missing the mark on revenue growth. And when stakeholders realize the data on which they're basing their forecasts is unreliable, they’ll lose trust in the forecasting process.

To avoid this, it’s important for finance teams to get involved in the process from the get-go

Below, we explain exactly how finance teams can collaborate with sales to create a sales plan and share a sales forecasting and planning template you can use to speed up the process.        

Key Takeaways

  • A sales plan is an internal playbook that outlines your company’s strategy for growing revenue, covering which segments and territories your business will focus on, goals, tactics and resources needed to hit targets within a timeframe
  • To create effective sales plans, involve your finance team in the process, as they deeply understand your business finances better than other teams
  • The process of sales planning focuses on allocating the business’s resources and salespeople effectively
  • Sales planning software can help you aggregate and manages your sales and revenue data in one place, letting both sales and finance teams easily access the insights they need to make decisions


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What Is a Sales Plan?

A sales plan is an internal playbook that outlines your company’s strategy for growing revenue, covering which segments and territories your business will focus on, goals, tactics and resources needed to hit targets within a timeframe.

It empowers your sales team to: 

  • Spot revenue-generating opportunities
  • Assign sales reps strategically
  • Set the right quotas and track performance
  • Generate the quality of leads needed to hit your revenue goals

Finance's Role in Sales Planning

In order for your sales plan to be successful, Finance needs to play a pivotal role in its development. 

As part of the finance team, you understand your business's financial health (revenue goals, profit margins, and budget constraints) better than other departments. Finance may also have the best view of all the systems where sales and revenue data lives and the right technical skills and cross-functional collaboration to bring these data sources together. This knowledge positions you to provide useful insights for the sales plan. 

For example, you can analyze your company's historical sales performance to spot insights (trends, opportunities and potential risks) that you can pass on to sales. 

Sales, on the other hand, can use these insights to identify what targets are feasible, given your company's financial situation, and allocate resources in that direction. 

This critical partnership between finance and sales helps with:

  • Setting realistic sales targets that align with the company’s financial goals
  • Making accurate forecasts that allow the sales team to plan ahead
  • Pinpointing weaknesses in the sales process
  • Allocating sales reps effectively

This ongoing process of optimizing the business’s sales strategy is known as sales planning.

What Are the Key Elements of an Effective Sales Plan?

From finance teams’ standpoint, an effective sales plan should cover the following key elements to drive revenue growth and ensure financial sustainability and profitability:

  • Clearly defined revenue targets and sales forecasts
  • Costs associated with sales activities and budget allocations
  • Profitability analysis to assess the financial impact of sales strategies
  • Potential financial risks associated with sales activities
  • Scenario planning and contingency measures
  • Sales incentive compensation plans
  • Sales key performance indicators (KPIs)
  • Quota planning
  • Capacity planning

How To Do Sales Planning: In 6 Steps

The process of sales planning focuses on allocating the business’s resources and salespeople effectively.

As your finance team works to supply Sales with the right data and insights to fuel their strategy, here are the six steps you should follow.

1. Analyze Historical Sales Performance

Reviewing historical sales data lets you see: 

  • How customers have behaved in the past
  • What products or services they've bought or ignored
  • How well your sales efforts have performed over time

These insights reveal (normal and seasonal) trends in customer behavior. 

For example, say you notice certain products sell better at specific times of the year (if your business sells winter coats, for instance, you’ll see a bump in sales in the colder months). This helps you predict when they’ll be in demand, so your sales team can plan accordingly.

Tips for Analyzing Your Historical Sales Data

Collect sales data from your CRM, spreadsheets, or other relevant sources. Some examples include total sales volume, customer acquisition cost and revenue growth. 

To make the process easier, use sales planning software, as it can help you gather relevant sales data from multiple sources and consolidate it in one central location to power your planning.

This way, you’ll have access to all relevant sales data in one central location.

Consider how you’ll visually represent your sales data through charts, graphs, and dashboards to more easily spot any recurring patterns or trends over time. 

For example, you can view a detailed breakdown of sales performance for a specific period (year, quarter, or month) or region and look for seasonal fluctuations, sales spikes, long-term growth or decline and any other significant patterns. 

You can also look out for which products or services have been popular among customers, as well as any trends in purchasing frequency or volume. This lets you deeply understand the impact of your previous sales plans to identify what worked and what didn’t.

2. Conduct Cost Analysis  

Reviewing all sales-related expenses, such as commission and incentive compensation, reveals how much money your team spends (or has to spend) to generate sales revenue. 

By digging into your sales costs, you can: 

  • Identify exactly how much resourcing you require to support sales
  • Determine if your business has the financial capacity to support the same level of investment in sales or not
  • Allocate resources to areas that have the highest impact on sales performance
  • Set realistic budgets to hit your sales targets without under or overspending 

Tips for Conducting a Cost Analysis

Get granular in outlining the different components of your sales team's compensation, as this is one of the most significant expenses associated with sales operations. It includes base salary, commissions, and bonuses. 

Break down the commission structure to ensure it aligns with your business goals and motivates your sales team to give their best. For example, you can calculate commissions based on revenue, profit margins or other key performance indicators. 

To automate commission and incentive planning, consider using incentive compensation management software. A tool like Vena can provide pre-built templates and source systems integrations to automate your compensation calculations, payouts and reports. 

The software also helps you:

  • Create sales incentive compensation plans
  • Model payouts based on your preferred commission and sales bonus structures
  • Set quotas based on revenue targets

3. Set Realistic Sales Targets

Setting your sales targets for the year involves looking at your historical sales data to set a benchmark that’s achievable. 

For example, if historical sales data shows that certain products have taken six months to gain traction in a new market, a realistic sales target could be setting incremental goals for each month leading up to the six-month mark. 

Tips for Determining If Your Sales Targets Are Feasible

Use historical sales data as a starting point for setting your sales targets. 

Review how your sales have performed over a period (say, the last few quarters or years) to:

  • Spot trends — Has there been a steady increase, decline, or fluctuation in sales?
  • Review how well the organization has performed against previous sales targets. Were the targets consistently met, exceeded, or missed?
  • Identify external factors that influenced performance that were beyond your company's control (such as regulatory changes or shifts in market demand)

Also, based on your business type, it’s important to consider the company’s current production capacity — available resources, machinery, manpower and production processes.

For example, if your proposed sales targets exceed production capacity, it could lead to bottlenecks, delays or even customer dissatisfaction due to inability to fulfill orders.

This analysis helps your sales team adjust expectations and create realistic sales plans. It also ensures sales targets align with company-wide goals

A walkthrough of how to use Vena to set sales targets based on historical data, in this case for franchise businesses with unique needs for planning sales by location.

4. Create a Sales Forecast

Here, you break down sales targets into specific periods, such as monthly, quarterly, or annually, to understand how sales will likely perform over time. 

Creating accurate sales forecasts—with the right data, updated in real time—ensures your team plans ahead, allocates resources in the right direction and hits revenue and growth goals. 

Tips for Creating a Sales Forecast

First, determine the time frame for your sales forecast, whether it's monthly, quarterly, annually, or any other relevant period based on your business needs and industry.

Different industries and businesses experience seasonal fluctuations in sales. 

For example, retail businesses see increased sales during the holiday seasons. So, aligning the forecast period with these seasonal patterns lets you better anticipate fluctuations in sales volume and adjust your strategies accordingly. 

Next, choose your sales forecasting method. There are three to choose from:

  • Historical forecasting: use past sales data to identify patterns/trends over time
  • Sales funnel-based forecasting: track how leads move through the sales funnel and analyze historical conversion rates at each stage to predict future sales
  • Mixed approach: combine both methods to forecast sales 

To speed up the process and develop more accurate forecasts, use this sales forecasting and planning template

5. Allocate Resources 

Now that you have an insight into your expected revenue streams, you can help allocate resources to areas that will likely yield the highest returns. 

The budgeting process can help with allocating resources such as funds and salespeople efficiently. It also helps your team set spending limits and allocate resources based on priorities.

Another focus of the budgeting process should be aligning resources with strategic objectives, to ensure they’re directed toward activities that support the overall mission and vision of your organization.

Tips for Allocating Sales Resources Effectively

Assess all available resources, including financial resources, human capital, equipment, technology, and any other assets your company has. 

Then map out your sales territories to ensure you're targeting the right prospects. Look at your current sales team and the territories they represent to identify:

  • Those with the busiest sales pipelines
  • Reps with the best track records and highest quotas
  • Territories with the most profit or highest growth potential

This helps you see where your highest ranking sales reps will have the most impact or where you might be able to open up a new growth segment.

Identify territories that show high growth potential or have a large customer base that remains untapped. Then, allocate additional resources such as salespeople, marketing budget, and promotional activities to these territories to maximize returns on investment.

Also, consider how you’ll design your incentive compensation structure to align with your company’s objectives and motivate sales teams to perform at their best. 

For example, offer a commission structure where salespeople earn a percentage of the revenue generated from their sales. You can apply graduated commission rates (where sales reps earn higher commission rates for achieving certain goals, such as surpassing sales targets or selling high-margin products/services).

6. Establish Key Performance Indicators (KPIs)

KPIs provide quantifiable metrics that allow you to measure the success of your sales team’s efforts, so you can track progress towards the company’s financial goals. 

Tips for Establishing Key Performance Indicators (KPIs)

Determine which sales metrics directly contribute to the business’s core financial goals—this will vary from business to business.

Some examples include:

  • Revenue-related metrics: Total sales revenue, average deal size, sales growth rate, sales by product or service category, and revenue from new vs. existing customers.
  • Profitability metrics: Gross margin, net profit margin, contribution margin per sale, and sales efficiency ratio (revenue generated per salesperson or per dollar spent on sales and marketing).
  • Cash flow metrics: Accounts receivable turnover ratio, days sales outstanding (DSO), and sales forecast accuracy.
  • ROI metrics: Customer acquisition cost (CAC) vs. customer lifetime value (CLV), marketing ROI, and sales pipeline ROI.
  • Cost management metrics: Sales and marketing expenses as a percentage of revenue, cost per lead, and cost per sale.

Determine specific targets and benchmarks for each KPI based on the business’s financial goals, historical performance, industry benchmarks and sales forecasts.

Consider incorporating your priority sales KPIs into a dashboard (made in PowerBI or your analytics platform of choice) to make it easy for anyone in the organization to get a holistic view of the financial impact of sales activities and in turn guide strategic decision-making.

What Are the Challenges of Sales Planning?

There are many reasons why sales planning can be quite difficult from a financial standpoint. Here are the top six reasons:

  • Uncertain market conditions (economic downturns and customer preferences)
  • Not knowing which products or customers generate the most money
  • Seasonal fluctuations in sales, which strain financial resources
  • Fluctuating costs, which directly affect profit margins
  • Limited financial resources to execute the sales plan
  • New updates to regulations, such as ASC 606 or IFRS 15, which redefined revenue recognition standards

Use Sales Planning Software to Create More Effective Sales Plans

Sales planning software offers a centralized platform to store and manage sales data (such as customer information, sales pipelines, performance by sales rep and historical performance). 

Being able to access this critical data in one place eliminates silos between sales and finance teams, letting each easily access the information they need to make decisions. Vena makes it even easier for sales and finance teams to collaborate by letting you:

  • Access templates and reports online—updated in real time—vs. relying on files stored on someone's local device
  • See an audit trail of the entire history of changes in a file
  • Assign tasks to specific team members
  • Get input from Sales faster by using an interface they already know—Excel


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About the Author

Shaun Jansen, Vice President, Mid-Market Sales, Vena

Shaun Jansen is Vice President, Mid-Market Sales at Vena. An ardent champion of empowering organizations to embrace agility, resilience and readiness in today's constantly evolving business landscape, Shaun is a true visionary. He possesses a deep-seated commitment to elevating the office of finance by replacing outdated, inefficient and manual processes with streamlined, data-driven workflows that help them reach their fullest potential. With an impressive track record of success, Shaun has consistently delivered remarkable results, securing his reputation as a trusted advisor to countless businesses. His unwavering passion and expertise make him a driving force in shaping the future of the finance industry.

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