Research Report Sales Planning Practices March 2016

Transcription

1 Research Report Sales Planning Practices March 2016 Research underwriter Copyright 2016 by the Sales Management Association. All rights reserved.

2 Authors Robert J. Kelly Chairman Sales Management Association Kathy Ledford Sales Management Association First published March Sales Management Association 1440 Dutch Valley Place NE Suite 990 Atlanta, Georgia USA +1 (404) Copyright 2016 The Sales Management Association, Inc. All rights reserved; no part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without prior written permission of the publishers. Research Report: Sales Planning Practices This document has been prepared by The Sales Management Association for use by its members. The Sales Management Association has worked to ensure the accuracy of the information it provides to its members. This report relies upon data obtained from many sources, however, and The Sales Management Association is not engaged in rendering legal, accounting, or other professional services. Its reports should not be construed as professional advice on any particular set of facts or circumstances. Members requiring such services are advised to consult an appropriate professional. Neither The Sales Management Association nor its programs are responsible for any claims or losses that may arise from a) any errors or omissions in their reports, whether caused by The Sales Management Association or its sources, or b) reliance upon any recommendation made by The Sales Management Association. Descriptions or viewpoints contained herein regarding organizations profiled in this material do not necessarily reflect the policies or viewpoints of those organizations. About The Sales Management Association The Sales Management Association is a global, cross-industry professional organization for sales operations, sales effectiveness, and sales leadership professions. We provide our members with tools, networking, research, training, and professional development. Our research initiatives address topics relevant to practitioners across a broad spectrum of sales effectiveness issues. Our research is available to members on our site at In addition to research we publish best practice tools, archived webcasts, and expert content. Visit our website at to learn more. 2 Copyright 2016 the Sales Management Association. All rights reserved.

3 Research Report: Sales Planning Practices Contents 1 Research Summary Research Objectives Summary of Key Findings 5 2 Sales Planning Elements Importance Ratings for Planning Elements Effectiveness Ratings for Planning Elements Effectiveness Gaps and Improvement Priorities Differences in High-Performing Versus Other Firms 11 3 Cross functional collaboration in the sales planning process Rating Collaboration s importance by Function Collaboration Effectiveness Ratings by Function Collaboration Improvement Priorities Differences in High-Performing Firms Collaborative Planning Efforts 16 4 Timeliness and Speed Planning Timeliness and Speed Planning Timeliness Correlates With Sales Force Buy-In 19 5 Engaging the Sales Force Effectiveness of Sales Force Interactions Differences in High-Performing Firms Effectiveness in Sales Force Interactions 21 6 The Planning Calendar Cyclical Planning Activities and Their Effectiveness Differences in High-Performing Versus Other Firms Cyclical Planning Activities 24 7 Technology, Tools, and Support Rating Technology s Enabling Impact Comparing Technology Effectiveness in High-Performing Versus Other Firms 27 8 Frequency of Planning Activities Summary of Planning Frequency by Planning Type Frequency of Key Planning Activities Differences in Planning Frequency Between High-Performing and Other Firms 33 9 About the Research Research Approach Research Timing and Scope Research Underwriters Respondent Demographics Firm Size Respondents Job Role Respondents Geographical Dispersion Firm Performance Sales Force Size, Structure, and Turnover 38 Copyright 2016 the Sales Management Association. All rights reserved. 3

4 4 Copyright 2016 the Sales Management Association. All rights reserved.

5 1 Research Summary 1.1 Research Objectives Sales organizations demand a daunting breadth of planning expertise: from prioritizing high-level objectives to align with firm strategy, to allocating limited resources to adequately cover opportunities, to establishing tactical performance goals at multiple levels within the organization, and, along the way, coordinating input from many corporate functions, on behalf of widely distributed sales force members, all while cultivating active participation and buy-in from disparate participants. This research investigates how firms meet these planning challenges. It surveys planning practices in business-to-business sales organizations, identifies emerging trends, and prioritizes management s planning priorities. It focuses primarily on sales team and organization-wide planning efforts (rather than call, opportunity, or customer-level planning). 1.2 Summary of Key Findings Sales planning integrates a wide range of diverse activities, often undertaken collaboratively across the firm. The most frequent planning activity is forecasting; approximately three-fourths of firms forecast at least quarterly. Most other planning activities, such as quota setting or expense budgeting, occur once or twice a year in the majority of respondent firms. Unsurprisingly, data accuracy is cited as an essential component of planning effectiveness. More surprising is the importance of Copyright 2016 the Sales Management Association. All rights reserved. 5

6 Research Summary management buy-in to planning success it was the sole criterion rated higher than data accuracy in importance. Sales planning s highly collaborative nature is also important for determining effectiveness. Sales organizations consider collaboration with executive management most important for planning, and are most effective at it, compared with their planning collaboration with other firm functions. Our research findings suggest that most firms under-invest in planning support, and fall far short on hoped-for planning output. Planning deliverables are too often slow, or late. Mid-year changes are too clumsily accommodated. Salespeople are too often not included in relevant planning decisions, unaware of planning s objectives, and ultimately unsure of the plan s prospects for success. Needless to say, we identified multiple improvement opportunities relevant to all firms, considered in aggregate. The most important of these are improving salesperson buy-in, better coordinating data inputs across the organization, and more effectively leveraging technology to enhance planning efficiency. They also include improving planning collaboration with the marketing function, and speeding planning deliverables (which, we found, has a considerable ancillary benefit in that its improvement correlates with better sales force support of planning efforts). We analyzed high-performing firms data and found significant differences in how they approach and execute sales planning. (We define high-performing firms as those exceeding their sales objective in the preceding 12 months.) We found that high-performing are 2.5 times more likely to use technology to make planning more efficient; they are 20% better at verifying data accuracy, and more effective in building collaborative relationships, particularly with IT, executive leadership, and marketing. They are twice as likely as their lower-performing counterparts to accommodate mid-year planning changes effectively. And, they are substantially more successful in securing support from both executive leadership and rank-andfile salespeople, most tellingly revealed in high-performing firms 24% improvement in the sales force s confidence levels in plan achievability. 6 Copyright 2016 the Sales Management Association. All rights reserved.

7 2 Sales Planning Elements Many different activities contribute to effective sales planning. Respondents rated the importance of seven such activities, based on their impact on planning in their organizations. These activities include coordinating and collecting data inputs, employing enabling technology, and securing buy-in from key planning participants. Sales Planning Activities Average Importance Rating 2.1 Importance Ratings for Planning Elements Securing management buy-in Verifying data accuracy Coordinating input across the sales organization Securing salesperson buy-in Integrating data across systems Using technology to enhance planning efficiency Coordinating involvement of non-sales functions Not at all Somewhat Extremely Average Importance Rating 2.1 Securing management buy-in, accurate data, and coordinating sales force input are rated as the most important sales planning activities. Copyright 2016 the Sales Management Association. All rights reserved. 7

8 Sales Planning Elements Respondents consider securing management buy-in the most important contributor to sales planning effectiveness a contributor rated even higher than ensuring data accuracy. (Management buy-in and data accuracy were rated 5.8 and 5.6, respectively, on a 7-scale, where 1 is not at all important and 7 is extremely important. ), Rated lowest in relative importance (though still well above the rating scale s midpoint of 4, somewhat important ) is coordinating the involvement of nonsales functions. 2.2 Effectiveness Ratings for Planning Elements Sales Planning Activities Importance and Effectiveness Ratings Importance Effectiveness Securing management buy-in Verifying data accuracy Coordinating input across the sales organization Securing salesperson buy-in Integrating data across systems Using technology to enhance planning efficiency Coordinating involvement of non-sales functions Not at all Somewhat Extremely Average Ratings 2.2 Firms are most effective in securing management buy-in and verifying data accuracy. Respondent firms also rated their effectiveness in these planning elements. Firms rated themselves most effective at securing management buy-in; it had an effectiveness rating of 4.8 on a 7-point scale, where 1 is not at all effective and 7 is extremely effective. Firms rated themselves moderately effective in verifying data accuracy (4.5), the next most highly rated activity. Effectiveness ratings were more muted for coordinating data across the sales organization (4.2), and securing buy-in from salespeople to participate in planning-related activities (4.2). The lowest-rated elements for effectiveness are coordinating 8 Copyright 2016 the Sales Management Association. All rights reserved.

9 Research Report: Sales Planning Practices other functions involvement within the organization (4.0); integrating data from multiple platforms, systems, or sources (3.9); and using technology to make planning processes more efficient (3.9). 2.3 Effectiveness Gaps and Improvement Priorities Comparing ratings for importance and effectiveness helps identify effectiveness gaps. The largest gaps between importance and effectiveness ratings are for integrating data from multiple platforms, systems, or sources; its effectiveness rating of 3.9, subtracted from its importance rating of 5.2, results in an effectiveness gap of (1.3). A similar, though slightly smaller, variance was found for coordinating data across the sales organization; its effectiveness gap also rounds to (1.3). Other significant gaps are reported for using technology to make processes more efficient (1.2); securing buy-in from salespeople to participate in planning-related activities (1.1); and verifying data accuracy (1.1). Sales Planning Activities Importance Effectiveness Grid 4.8 Effectiveness Verifying data accuracy Securing management buy-in y = 4.2 Coordinating other functions involvement within the organization Securing salesperson buy-in Coordinating input across the sales organization Integrating data across systems Using technology to enhance planning efficiency x = 5.3 Importance Coordinating input across the sales organization, using technology to enhance planning efficiency, and securing salesperson buy-in are the highest-priority improvement opportunities based on aggregate respondent data. Copyright 2016 the Sales Management Association. All rights reserved. 9

10 Sales Planning Elements An Importance-Effectiveness matrix helps visualize relationships between respondents importance and effectiveness ratings. It organizes effectiveness and importance ratings for each category on an x-y scatterplot. Effectiveness ratings are assigned to the vertical y-axis, and importance ratings to the horizontal x-axis. The two axes intersect at the respective mean reported value for each scale (5.0 for importance, 4.75 for effectiveness, both 7-point scales). Each category is thereby forced into one of four quadrants, as illustrated below. Categories ranked above the mean for importance are sorted on the right half of the chart; those ranked above the mean score based on effectiveness are forced to the top half of the chart. This analysis helps prioritize improvement opportunities in the context of their importance. In so doing, it reveals three highest priority improvement opportunities for the aggregate respondent pool: coordinating input across the sales organization, using technology to enhance planning efficiency, and securing salesperson buy-in. The relationships between importance and effectiveness for each element appears rational: those elements that are seen as more important are also perceived to be more effective, while lower effectiveness is associated with less important elements. The lower-right quadrant typically contains activities viewed as low in effectiveness, yet considered highly important. Elements in this quadrant are management s most important improvement priorities. The lower-left hand quadrant shows activities performed less effectively than others, though also considered less important. In resource-constrained environments, firms are apt to reduce focus on functions in this quadrant. The activities falling in this quadrant are coordinating with other functions, and integrating data across systems. The upper-right quadrant represents activities with relatively high ratings for both importance and effectiveness. Elements appearing here are securing management buy-in for planning and verifying data accuracy. In relation to other functions, respondents will likely sustain focus on these. The upper-left quadrant includes functions of relatively lesser importance, executed with relatively high effectiveness. This quadrant is empty. 10 Copyright 2016 the Sales Management Association. All rights reserved.

11 Research Report: Sales Planning Practices 2.4 Differences in High-Performing versus Other Firms We compared high-performing firms effectiveness in sales planning activities to all other firms to identify which activities might have the strongest relationship to firm performance. We considered as high-performing those firms overachieving the firm sales objective in the prior 12 months. We found that highperforming firms have higher effectiveness ratings in all planning categories. High-performing firms were 20% more effective in verifying data accuracy (a 4.9 rating for high-performing firms compared with 4.1 for other firms; ratings are based on a 7-point scale, where 1 is not at all effective and 7 is extremely effective ), and 12% more effective in securing salesperson buy-in (4.5 vs. 4.0). Lower-performing firms average ratings for four planning activities were at or below the effectiveness rating scale midpoint (four on a 7-point scale). These were securing salesperson buyin (4.0), using technology to enhance planning efficiency (4.0), coordinating the involvement of non-sales functions (3.9), and integrating data across systems (3.9). Sales Forecasting Effectiveness and Firm Performance Percentage Distribution of Responses Securing management buy-in Verifying data accuracy Securing salesperson buy-in Coordinating input across the sales organization Using technology to enhance planning efficiency Coordinating involvement of non-sales functions Integrating data across systems High Performing Firms Non-High Performing Firms Not at all Somewhat Extremely Effectiveness Rating Higher-performing firms are better at verifying data accuracy and securing salesperson buy-in. Copyright 2016 the Sales Management Association. All rights reserved. 11

12 Sales Planning Elements Our sales organization uses technology to plan efficiently Percentage of Respondents 20% 53% High-Performing Firms Other Firms Higher-performing firms are more effective in using technology to support sales planning. The data also suggest a substantial technology gap between highperforming firms and their lower-performing peers. A majority (53%) of high-performing firms are effective in using technology to enhance planning efficiency, compared with just 20% of lower-performing firms. (For this comparison, an effective rating is 5 or higher on our 7-point effectiveness rating scale, where 1 is not at all effective and 7 is extremely effective.) An elevated commitment to technology is also reflected in higherperforming firms importance ratings for verifying data accuracy and coordinating input across the sales organization. Higherperforming firms not only perform better in these areas, they consider it more important to do so than do lower-performing firms. 12 Copyright 2016 the Sales Management Association. All rights reserved.

13 3 Cross functional collaboration in the sales planning process 3.1 Rating collaboration s importance by function Sales planning is a highly collaborative activity that integrates a diverse set of actors and inputs; even small firms may find that no one person in the organization knows everything required to conduct sales planning without collaboration. Our research quantified respondents opinions on which inter-firm collaborative relationships are most important, based on their impact on sales planning effectiveness. Collaboration with all functions is considered at least somewhat important, and each function for which we solicited an importance rating received a rating of at least 4, the midpoint indicating somewhat important. (One on our 7-point importance scale is not at all important and 7 is extremely important. ) Collaboration s Importance Between Sales and Other Firm Functions Average Importance Rating Executive leadership Marketing Operations Finance Human Resources IT Not at all Somewhat Extremely Average Importance Rating 3.1 Collaborative relationships between sales and other firm functions are important contributors to planning effectiveness. Collaboration with executive leadership is considered most important. Copyright 2016 the Sales Management Association. All rights reserved. 13

14 Cross functional collaboration in the sales planning process Most important is the sales function s collaboration with executive leadership (its average importance rating is 6.2). Also highly rated are marketing (5.6), operations (5.6) and finance (5.2). Human resources and IT are each rated 4.1. These more modest ratings are somewhat surprising given the essential role of IT in planning (see section 7) and the importance of communications and salesforce buy-in (see section 5) areas where human resources (HR) could provide expertise. (Note that high-performing firms rate their collaboration with HR and IT more highly than their lowerperforming peers.) 3.2 Collaboration Effectiveness Ratings by Function Top Sales Organization Collaboration with Other Firm Functions Importance and Effectiveness Ratings Importance Effectiveness Executive leadership Marketing Operations Finance Human Resources IT Not at all Average Rating Somewhat Extremely 3.2 Respondents place the highest effectiveness values on sales organization collaboration with executive leadership, operations, and finance. Respondents rated their firms collaboration effectiveness with each function on a 7-point effectiveness scale, where 1 is not at all effective, 4 is somewhat effective, and 7 is extremely effective. Compared with their corresponding importance ratings, effectiveness is rated lower for all functions. Respondents consider collaboration with executive leadership to be most effective (5.1). Other ratings, in descending order of effectiveness, are operations (4.6), finance (4.6), marketing (4.4), IT (3.8), and HR (3.8). We would expect effectiveness to be somewhat lower for other, non-executive functions, because their collaborations have multiple points of view and the potential for divergent interests. Examples 14 Copyright 2016 the Sales Management Association. All rights reserved.

15 Research Report: Sales Planning Practices include marketing assumptions about customer receptiveness to new products versus the sales force s understanding of customer preferences and finance s willingness to budget for sales expenses that the sales force deems necessary to reach at a presumed level of productivity. While the executive leadership relationship with sales is typically direct and the power relationship is clear, other functions also report into executive management, so their relationships with sales are most often triangular. Where absolutely essential with marketing, operations, and finance sales finds a way to make collaboration more effective. Where the importance is seen as more discretionary such as with HR and IT collaboration is rated as less effective. What may be missing is the perception of value that these two business partners may be able offer in many of the critical planning stages and activities. The largest gaps between collaboration importance and effectiveness are for marketing (1.2), executive leadership (1.1), and operations (1.0). 3.3 Collaboration Improvement Priorities Sales Organization Intra-Firm Collaboration Priorities 5.3 Effectiveness Executive leadership Finance Operations y = 4.4 Marketing IT Human Resources 3.5 x = 5.1 Importance Improving planning between sales and marketing is the most important collaboration improvement priority. Copyright 2016 the Sales Management Association. All rights reserved. 15

16 Cross functional collaboration in the sales planning process An Importance-Effectiveness chart helps to visualize relationships between respondents importance and effectiveness ratings. It plots effectiveness and importance ratings for each collaborating function on an x-y axis. Effectiveness ratings are assigned to the vertical y-axis, and importance ratings to the horizontal x-axis. The two axes intersect at the respective mean reported value for each scale (5.1 for importance, 4.4 for effectiveness; both are 7-point scales). Each function is thereby forced into one of four quadrants, as illustrated below. Functions ranked above the mean for importance are sorted on the right half of the chart; those ranked above the mean score based on effectiveness are forced to the top half of the chart. The lower-right quadrant contains functions where collaboration is viewed as low in effectiveness, yet considered highly important. Elements in this quadrant are management s most important improvement priorities. With an effectiveness rating on the midline, we place marketing in this quadrant due to its high importance. The upper-right quadrant represents functions with relatively high ratings for both importance and effectiveness. The functions appearing here include executive leadership, operations, and finance. In relation to other functions, respondents will likely sustain focus on these. Functions in the lower-left quadrant have relatively lower collaboration importance ratings, and lower effectiveness ratings. In resource-constrained environments, firms are apt to reduce focus on functions in this quadrant. Functions in this quadrant are human resources and IT. The upper-left quadrant includes functions of relatively lesser importance, executed with relatively high effectiveness. This quadrant is empty. 3.4 Differences in High-Performing Firms Collaborative Planning Efforts High-performing organizations show marked differences in how they value collaboration with other firm functions. 1 Compared with the other respondents, high-performing firms place higher 1 High-performing firms are those who overachieved their sales objective in the prior 12 months. 16 Copyright 2016 the Sales Management Association. All rights reserved.

17 Research Report: Sales Planning Practices value on collaborative relationships with human resource and information technology functions. High-performing firms importance ratings for IT and HR collaboration are 18% higher than for lower-performing firms. High performers rate the importance of collaboration with marketing (7%) and operations (5%) as of somewhat greater value than do other firms. Both groups clearly view executive leadership collaboration as most important. Average Importance Rating 3.4 Higher-performing firms place higher importance on collaborative relationships with non-executive functions than do their lowerperforming peers. And, their collaborations are more effective in comparison. Human Resources IT Marketing Operations Finance Executive leadership IT Executive leadership Marketing Human Resources Finance Operations High- Performing Firms Other Firms Average Effectiveness Rating High Performing Firms Other Firms Percent Difference 18% 18% 7% 5% 2% -1% Percent Difference 23% 20% 17% 12% 5% 2% High-performing firms planning collaborations are also more effective than other firms. Most significantly, they achieve collaborative relationships with IT, executive leadership, and marketing that are 23%, 20%, and 17% more effective, respectively, than lower-performing firms. Human resources collaboration is 12% higher for the high performers, while finance and operations collaboration is better by only 5% and 2%, respectively. Copyright 2016 the Sales Management Association. All rights reserved. 17

18 4 Timeliness and Speed 4.1 Planning Timeliness and Speed Sales Planning Speed and Timeliness Ratings Percentage Distribution of Firms Planning outcomes are untimely or slow at least some of the time in most firms consistently late/slow Firm Performance sometimes late/slow never late/slow Sixty-five percent of firms report they are sometimes late or slow in executing planning activities. On a 7-point scale, where 1 is consistently late or slow and 7 is never late or slow, 31% rate at the midpoint value of 4 ( sometimes late/slow ). Thirty-six percent of respondents rate speed and timeliness at or above 5. High-performing firms are much less likely to be late with planning deliverables. Low-performing firms are more than twice as likely to consider planning deliverables often late or slow. 18 Copyright 2016 the Sales Management Association. All rights reserved.

19 Research Report: Sales Planning Practices Low-performing firms are more than twice as likely to be often late or slow with planning deliverables. How Often Late? Often Sometimes Infrequently How often this answer was selected: High-performing firms 20% 29% 51% All others 41% 32% 28% 4.2 Planning Timeliness Correlates With Sales Force Buy-In The speed and timeliness of sales planning activities is moderately correlated with firm success in securing sales force buy-in for planning efforts (correlation coefficient = 0.54). 1 High-performing firms are timelier in planning; presumably their planning timeline is sufficient for sales force participation. 1 Correlation means that two things move together; positive correlation means they move in the same direction while negative correlation means they move in opposite directions. In statistics, perfect positive correlation is indicated by a correlation coefficient of 1.0, absence of correlation is indicated by a correlation coefficient of 0, and negative correlation is indicated by -1. It is generally accepted that strong positive correlation is shown by a value of 0.7 or more, and a moderately positive correlation is 5.0 or greater. For more information about the formula used, or on interpretation of correlation coefficients, see It is important to note that correlation of two factors does not mean that one caused the other. Copyright 2016 the Sales Management Association. All rights reserved. 19

20 5 Engaging the Sales Force Salesperson buy-in is an important contributor to sales planning effectiveness. This section further explores the important links between sales force engagement in planning activities and sales planning effectiveness. Firm Sales Planning Characteristics Respondents Average Agreement Rating 5.1 Effectiveness of Sales Force Interactions Goals are clear at the individual level Sales organization understands its role in the business plan Sales organization is informed of their performance Sales organization is made aware of plan changes Sales organization believes the plan is achievable Sales organization contributes to plan change decisions Completely Neither Completely Disagree Agree Nor Agree Level of Agreement Disagree 5.1 Respondents rate their plan communication and engagement efforts in generally positive terms. Respondents believe individual goals are clearly communicated, though are less certain of the sales force s confidence in achieving assigned goals. 20 Copyright 2016 the Sales Management Association. All rights reserved.

21 Research Report: Sales Planning Practices Respondents rated six descriptive statements related to sales force buy-in with planning activities, based on how accurately each statement describes sales force engagement in their firms. A 7-point agreement scale was used, in which 1 is completely disagree, 4 is neither agree nor disagree, and 7 is completely agree. Respondents are most effective in clearly communicating individual goals, which garnered an average rating of 5.3. Other engagement elements, in descending order of rated effectiveness, are sales organization understanding of its role in the business plan (5.1), sales organization s awareness of their performance (4.9), their awareness of plan changes (4.5), their confidence in achieving goals (4.5), and their perceived contribution to plan decisions (4.4). A reasonable conclusion is that most firms see the value in making goals clear and communicating the role of the sales organization in the business plan Here is what you are accountable for and here is what you need to do to achieve it. Firms are less effective, and perhaps less energetic, in keeping the sales organization abreast of changes, gaining buy-in to the assumptions and achievability of the plan, or including the sales force in plan change decisions. 5.2 Differences in High-Performing Firms Effectiveness in Sales Force Interactions Average Agreement Rating High- Performing Firms Other Firms Percent Difference 5.2 Sales forces in highperforming firms are more likely to consider their plans achievable and be made aware of plan changes. Sales organization believes the plan is achievable Sales organization is made aware of plan changes Goals are clear at the individual level Sales organization contributes to plan change decisions Sales organization understands its role in the business plan % 17% 8% 6% 5% Sales organization is informed of their performance % Copyright 2016 the Sales Management Association. All rights reserved. 21

22 Engaging the Sales Force High-performing firms sales organizations are 24% more effective than other firms in securing sales organization buy-in for planning. Buy-in refers not only to the sales force s support for planning activities, but their belief that the plan is achievable. These two things are typically linked by participating in the planning process, the sales force will have a better understanding of how their goals were created and insights into what they must do to achieve them. (Sales force participation in planning activities is correlated with their understanding of the business plan; the correlation coefficient is 0.60.) It is this view of the needed sales action plan along with a confident optimism that makes the performance/buy-in link so plausible. (The correlation coefficient for sales force understanding of the business plan and their view of it as achievable is 0.65.) Compared to lower-performing firms, high-performing firms next most significant difference relates to making the sales organization aware of plan changes something high-performing firms do 17% more effectively. This difference suggests a more collaborative planning process within the sales organization itself in higher-performing firms. Less significant differences are present for other practices related to sales force interactions in the planning process. These include making sure goals are clear (8%), ensuring the sales organization understands its role in the business plan (5%), and keeping the sales organization informed of their performance (1%). 22 Copyright 2016 the Sales Management Association. All rights reserved.

23 6 The Planning Calendar Important sales planning related activities occur at regular intervals most often in conjunction with the annual business cycle. Our research examined a sequence of planning activities corresponding to a typical annual planning calendar. These include gathering field sales forecasts, formulating overall company objectives, establishing subordinate goals for salespeople, and managing mid-year plan changes. 6.1 Cyclical Planning Activities and Their Effectiveness Firms are most effective at communicating individual performance expectations to the sales force; this seems to be the most straightforward task among those in the annual planning cycle, as it comes after more difficult decisions and analyses are complete. On average, respondents effectiveness in communicating individual performance expectations to the sales force is 5.2 on a 7-point scale, where 1 is not at al effective, 4 is somewhat effective, and 7 is extremely effective. Firms are least effective at accommodating midyear plan changes; these are rated at 4.1 on the effectiveness scale. Other cyclical planning activities and their average effectiveness ratings are (in descending order of effectiveness) gaining commitment from management stakeholders (4.9), allocating individual quotas (4.8), finalizing targets from executive leadership (4.8), and gathering sales organization forecasts (4.1). Firms rate themselves somewhat effective (4) or better on all aspects of sales planning. Copyright 2016 the Sales Management Association. All rights reserved. 23

24 The Planning Calendar Firm Sales Planning Effectiveness by Planning Cycle Stage Average Effectiveness Rating Communicating Performance Expectations to Sales Organization Gaining Commitment from management Stakeholders Allocating Individual Quotas Finalizing Targets From Executive Leadership Gathering Sales Organization Forecasts Course Correcting Plan Mid-Year Not at all Somewhat Extremely Effectiveness Rating 6.1 Firms are most effective at communicating individual performance expectations, and least effective at making mid-year adjustments to plans. 6.2 Differences in High-Performing versus Other Firms Cyclical Planning Activities Firm Sales Planning Effectiveness by Planning Cycle Stage Average Effectiveness Rating Communicating Performance Expectations to Sales Organization Allocating Individual Quotas Finalizing Targets From Executive Leadership Gaining Commitment from management Stakeholders Gathering Sales Organization Forecasts Course Correcting Plan Mid-Year 1 Not at all 2 Effectiveness Rating 4.1 High-Performing Firms Non-High Performing Firms Somewhat Extremely 6.2 High performing firms are better at mid-year plan changes and gathering sales organization forecasts. 24 Copyright 2016 the Sales Management Association. All rights reserved.

25 Research Report: Sales Planning Practices High-performing firms are most notably different than lowerperforming firms in two areas related to cyclical planning activities. These are administering mid-year plan changes (18% more effective) and gathering sales organization forecasts (15% more effective). Average Effectiveness Rating High- Performing Firms Other Firms Percent Difference 6.3 High-performing firms are more effective in each planning stage. They are more than twice as likely to be effective at making mid-year course corrections compared to lower-performing firms. Course Correcting Plan Mid-Year Gathering Sales Organization Forecasts Finalizing Targets From Executive Leadership Allocating Individual Quotas Communicating Performance Expectations to Sales Organization Gaining Commitment from management Stakeholders Percent Choosing Effective High- Performing Firms Other Firms 18% 15% 11% 11% 10% 8% Percent Difference Course Correcting Plan Mid-Year 63% 32% 96% Gathering Sales Organization Forecasts 90% 56% 59% Finalizing Targets From Executive Leadership 70% 46% 53% Allocating Individual Quotas 60% 44% 38% Communicating Performance Expectations to Sales Organization 73% 55% 34% Gaining Commitment from management Stakeholders 73% 57% 28% Copyright 2016 the Sales Management Association. All rights reserved. 25

26 High-performing firms are, in fact, almost twice as likely (63% vs. 32%) to be effective in accommodating mid-year plan changes as lower-performing firms. High-performing firms are in fact more likely to be effective in all cyclical planning activities. They are more than half-again as likely (90% vs. 56%) to be effective in communicating performance expectations to the sales organization and in allocating individual quotas (70% vs. 46%), more likely effective in gathering sales forecasts (60% vs. 44%), more likely effective in finalizing targets from executive leadership (73% vs. 55%), and more likely effective in gaining commitment from management stakeholders (73% vs. 57%). 7 Technology, Tools, and Support The use of enabling technology clearly differentiates highperforming firms sales planning efforts; its impact is most clearly seen in improving data accuracy, plan administration, speed, and timeliness in completing planning deliverables, and coordinating sales force input (essential to securing support and participation). Despite the significant technology advantages enjoyed by highperforming firms, technology s overall impact on planning effectiveness (across all firms) is more muted, and suggests a significant improvement opportunity for those firms heretofore slow to incorporate planning-related technology tools. 26 Copyright 2016 the Sales Management Association. All rights reserved.

27 Research Report: Sales Planning Practices 7.1 Rating Technology s Enabling Impact Respondents effectiveness ratings for technology use are uniformly low. Only two of five categories collecting sales force input, and providing accurate information are rated above the rating scale midpoint of 4, somewhat effective (and these only just, both rated at 4.1). All other elements rated failed to exceed the somewhat effective rating. Two of these were rated as ineffective (below 4): capturing information in one place (3.6), and modeling future changes (3.3). Firm Effectiveness in Using Technology to Optimize Sales Planning Average Effectiveness Rating Collecting sales force input Providing accurate information Communicating plan updates Capturing information in one place Modeling future changes Not at all Somewhat Extremely Effectiveness Rating 7.1 Ratings for technology effectiveness are low, suggesting slow adoption of technology tools in planning activities. 7.2 Comparing Technology Effectiveness in High- Performing versus Other Firms Higher-performing firms more effectively utilize technology in all five planning activities researched. The largest difference is seen in capturing all required information in one place, which high-performing firms accomplish 26% more effectively. Other areas show less variance; high performers use technology to better provide accurate information (12% better than low-performing firms), distributing information about plan updates (8% better), providing flexible analyses of multiple options and future outcomes (7% better), and collecting input from salespeople and managers (5% better). Copyright 2016 the Sales Management Association. All rights reserved. 27

28 Technology, Tools and Support Firm Effectiveness in Using Technology to Optimize Sales Planning Average Effectiveness Rating High Performing Firms Non-High Performing Firms Collecting sales force input Providing accurate information Communicating plan updates Capturing information in one place Modeling future changes Not at all Somewhat Extremely Effectiveness Rating High-performing firms are better at technology than other firms, though still have modest effectiveness scores for technology use Average Effectiveness Rating Firm Effectiveness in Using Technology for Sales Planning High- Performing Firms Other Firms Percent Difference Capturing information in one place % Providing accurate information % Communicating plan updates % Modeling future changes Collecting salesforce input % 5% High-performing firms are better at using technology to capture required inputs to provide accurate information. 28 Copyright 2016 the Sales Management Association. All rights reserved.

29 8 Frequency of Planning Activities 8.1 Summary of Planning Frequency by Planning Type Organization-wide forecasting is most often done about six times per year, on average, by respondent firms. Quota setting is done least often, usually once or twice per year. The frequency of other planning activities falls between these two. Specific Sales Planning Activities Frequency Average Planning Frequency Organization-wide sales forecast Sales expense budgeting, including compensation Headcount projection or analysis Coverage model assessment Sales organization strategy, action plans Quotas or goal setting Never 2 Annually 3 Twice Annually 4 Quarterly 5 Monthly 6 Weekly 7 Daily Average Planning Frequency by Firm 8.1 The most frequently performed planning activity is the organization-wide sales forecast; the least frequent is setting quotas. Copyright 2016 the Sales Management Association. All rights reserved. 29

30 Frequency of Planning Activities 8.2 Frequency of Key Planning Activities Organization-Wide Sales Forecast Frequency Percentage Distribution of Responses Never Annually 2x/year Quarterly Monthly Weekly Daily Sales performance forecasting is most often done on monthly or quarterly intervals. A large majority of firms (83%) forecast sales at least as frequently as every month. Sales Organization Expenses Budgeting Frequency (including Payroll) Percentage Distribution of Responses Never Annually 2x/year Quarterly Monthly Weekly Daily Forecasting of budgeting sales expenses is most often conducted annually or monthly. Forecasting expenses related to the sales organization occurs annually (41%) in most firms, followed by monthly (22%), quarterly (20%), semi-annually (12%), and weekly (1%). Three percent of firms report they never do this. 30 Copyright 2016 the Sales Management Association. All rights reserved.

31 Research Report: Sales Planning Practices Sales Organization Strategy Planning Frequency Percentage Distribution of Responses Never Annually 2x/year Quarterly Monthly Weekly Daily The organization-wide sales plan is developed or revised once or twice per year by most firms. The formal organization-wide sales plan that outlines strategies and action plans is most often developed and/or revised annually (45%) or quarterly (25%). Another 18% of firms do this twice a year. Monthly (6%) and daily (1%) development and revision are also reported, while 5% never do it. Sales Organization Headcount Planning Frequency Percentage Distribution of Responses Never Annually 2x/year Quarterly Monthly Weekly Daily Budgeting sales organization headcount and expenses is done annually or quarterly in most firms. Forty-six percent of firms report conducting budgeting or analysis of sales organization expenses such as compensation or headcount on an annual basis. Another 19% do this quarterly, 15% do it semi-annually, 13% report doing it monthly, 2% report weekly, and 6% say never. Copyright 2016 the Sales Management Association. All rights reserved. 31

32 Frequency of Planning Activities Sales Organization Coverage Model and Resource Allocation Planning Frequency Percentage Distribution of Responses Never Annually 2x/year Quarterly Monthly Weekly Daily Evaluating alternative approaches for sales deployment, opportunity coverage, and sales expense allocation is done annually or quarterly in most firms. The evaluation of alternative approaches for deploying salespeople, covering opportunity, or allocating sales expense is done annually (43%), quarterly (19%) or semi-annually (14%). Less often reported are monthly (10%) and weekly (4%). No firms reported daily (0%) evaluations, but 9% say they never do it. Salesperson Quota-Setting Frequency Percentage Distribution of Responses Never Annually 2x/year Quarterly Monthly Weekly Daily Most firms set performance goals annually. The overwhelming majority of firms (74%) set quotas or other performance goals for salespeople, markets, products, or channels on an annual basis. Some report setting goals quarterly (12%), twice a year (8%), monthly (4%), or daily (2%). No firms report setting quotas weekly (0%), while 2% never set quotas. 32 Copyright 2016 the Sales Management Association. All rights reserved.

33 Research Report: Sales Planning Practices 8.3 Differences in Planning Frequency between High- Performing and Other Firms Sales Forecast Frequency and Firm Performance Percentage Distribution of Responses High-Performing Firms Non-High Performing Firms Organization-wide sales forecast Sales expense budgeting, including compensation Headcount projection or analysis Coverage model assessment Sales organization strategy, action plans Quotas or goal setting 1 Never 2 Annually Forecast Frequency Twice Annually High-performing firms perform most forecasting slightly more frequently than other firms Quarterly Monthly 6 Weekly 7 Daily Except for developing the organization-wide sales plan, highperforming firms conduct all types of forecasting slightly more frequently than do other firms. Average Frequency High Performing Firms Other Firms Percent Difference Forecast or budget sales organization-related expenses including compensation % Forecast sales performance (organization-wide) Conduct budgeting or analysis of sales organization expenses such as compensation or headcount % 8% Evaluate alternative approaches for deploying salespeople, covering opportunity, or allocating sales expense % Set quotas or other performance goals for salespeople, markets, products, or channels % Develop or revise a formal organization-wide sales plan that outlines strategies and action plans % High-performing firms more frequently forecast sales organization-related expenses and organization-wide sales performance. Copyright 2016 the Sales Management Association. All rights reserved. 33

34 9 About the Research 9.1 Research Approach This study aggregates participating firms responses to a webbased survey. The Sales Management Association developed the survey and recruited participants from our membership and broader audience of sales managers and sales operations professionals. In exchange for participating, we offer respondents advance copies of the detailed study report. Before reporting results, we eliminate invalid or ineligible responses, and sometimes contact respondents to clarify their responses. Survey results are only reported in aggregate, and never in a way that would compromise the identity of any single respondent. All individual respondent data are treated with strict confidentiality. 9.2 Research Timing and Scope This research represents summarized data from 112 participating firms, directly employing more than 66,000 sales professionals and 8,100 sales managers. Data was collected between August and December Respondent demographics and descriptive information is summarized at the end of this report. 9.3 Research Underwriters This study was made possible in part through the underwriting support of Anaplan. The Sales Management Association underwriters provide annual financial support to The Sales Management Association. Underwriters may suggest research 34 Copyright 2016 the Sales Management Association. All rights reserved.