Tips For Successful Sales Budgeting

Local sales experts share budgeting formulas on having successful sales.

By Barbara K. Mednick, Star Tribune Sales and Marketing

Last update: October 5, 2006 - 12:13 PM

Just like a chef needs to have the skills, right combination of ingredients and careful attention to detail to create an impressive and savory culinary delight that garners rave reviews, so must salespeople have the expertise, focus on the customer and formula for effective sales budgeting.

To help salespeople calculate realistic budgeting numbers and lay the groundwork for a successful 2007, local sales experts offer various budgeting formulas, critical factors to consider, tips for sales success and words of wisdom.

Calculating The Numbers

Sales revenue budgets should always be higher than the business income budget, which should be 85 percent of your total sales quota, says John Moroney, associate partner, Acumen Manage-ment, LLC. Typically, sales quotas can sustain a 5 to 10 percent increase over the previous year, assuming productivity improvements, added products or services and more sales from existing customers.

Individual sales quotas will typically be five to 10 times the total cost of a salesperson in a high-margin industry and 20 to 50 times the total cost in a slow growing or low-margin industry, he says. Michael Roby, professional speaker and sales consultant, offers this formula for independent salespeople.

First, you need to determine your profit (which equals your personal savings goal or PSG), and add your personal expenses (PE) to determine your income goal (IG). The PSG + PE = IG. Then, determine the sales required to make your IG, says Roby.

Input On Sales Quota

Do salespeople usually have a say in their quota for the next year? No, but I will compare quotas to what other similar type and size companies are establishing and what type of performance their salespeople have had, says Moroney. Roby, however, believes that salespeople do have a say in their quotas. Sales performance is always a product of a salespersons attitude and how they manage resources, says Roby.

Critical Factors To Consider

To determine your sales quota, you need to consider the percentage of new versus existing account revenue, what the average sales transaction was versus what was assumed for 2006, win rates versus competitors and whether there are new target markets, explains Moroney. Roby offers this advice. Analyze your customer relationships, retain and expand your best accounts and find more customers like them.

Tips For Success

Focus on how you can serve your customers better and what other customers they can introduce you to, says Roby. Get a robust lead generation and marketing process in place, and focus on expanding your network, firing unprofitable customers and asking for referrals, says Moroney.

Words Of Wisdom

Concentrate on your sweet spot. If you arent sure what that is, make sure that you define it before launching any marketing campaigns, recommends Moroney.

Roby observes that the only realists are the optimists. Make sure your attitude is positive, your focus is on the customer, you are using all of your resources and always ask for the order. Work hard, and by all means, have fun! he says.

Barbara K. Mednick is a Twin Cities marketing PR/communications consultant and freelance writer.

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