Sales Target vs Sales Plan: What’s the Difference?

Is your sales plan actually a plan, or is it just a spreadsheet of target figures?

When it comes to sales target vs sales plan, the difference is simple: your target tells you what you want to achieve, while your plan explains how you’re going to achieve it.

I’ve seen plenty of businesses with detailed sales targets. Monthly figures, quarterly budgets, annual revenue goals, perhaps even targets broken down by salesperson, product or department.

All useful.

But a target tells you where you want to end up.

It doesn’t tell you how you’re going to get there.

That’s the job of the sales plan.

A sales target isn’t a sales plan

Imagine a business currently turns over £2 million and wants to grow to £2.4 million next year.

The £2.4 million is the target.

But where is the additional £400,000 going to come from?

That’s where sales planning begins.

Perhaps £150,000 could come from developing existing customers.

Another £50,000 might come from reactivating customers who haven’t bought recently.

Improving conversion on the opportunities already entering the pipeline might contribute another £75,000.

The remaining £125,000 could come from new customers in an existing market, entering a new sector or introducing a new product or service.

Those figures are only examples, of course. In a real business they need to be tested against what you already know: historical performance, average order values, conversion rates, market conditions, capacity and the sales resources available.

But once you’ve broken the growth target down in this way, you’ve moved beyond simply having a number to aim for.

You can start building a plan for achieving it.

Start by asking where growth will come from

When a business wants to grow, one of the first reactions can be:

We need more leads.

Sometimes you absolutely do.

But growth doesn’t automatically have to come from finding more new prospects.

It might come from:

• increasing sales from existing customers
• cross-selling other products or services
• developing relationships across other departments or divisions within customer organisations
• reactivating lapsed customers
• improving conversion of existing opportunities
• reducing the number of opportunities that stall or disappear
• targeting a new customer segment or market
• introducing a new product or service
• changing pricing
• improving customer retention or repeat business.

Most businesses will use a combination.

The important thing is to decide which sources of growth are realistic for your business rather than simply setting a larger target and hoping increased sales activity will deliver it.

Turn your assumptions into actions

Once you know where you expect growth to come from, you can start asking much better questions.

If you expect £150,000 of additional revenue from existing customers, which accounts have the potential to deliver it?

What else could they buy?

Are there other departments, sites or divisions within those organisations you could work with?

If £100,000 needs to come from new customers, how many new customers does that actually represent?

If your average first-year customer value is £10,000, you might need ten new customers.

But if your current conversion rate from qualified opportunity to customer is 25%, you won’t simply need ten opportunities.

And where are those opportunities going to come from?

Marketing? Referrals? LinkedIn? Exhibitions? Direct outreach? Partnerships? Existing networks?

Suddenly, “we need £100,000 of new business” becomes something you can actually plan around.

The same applies to improving conversion.

If increasing your conversion rate forms part of the growth plan, you first need to know what the current rate is and understand where opportunities are being lost.

There is little value in setting an objective to “improve conversion” if nobody knows the starting point.

Give the plan ownership

A sales plan shouldn’t live solely in the head of the owner, Managing Director or Sales Director.

Once you’ve decided what needs to happen, somebody needs to own it.

Who is responsible for developing existing accounts?

Who follows up marketing-generated enquiries?

Who is prospecting into the new target market?

Who reviews stalled opportunities?

Who makes sure quotations and proposals are followed up?

Who monitors whether the assumptions in the plan are actually proving correct?

In a small business, one person may own several of these areas. That’s perfectly reasonable.

What matters is clarity.

When everyone assumes somebody else is following something up, opportunities have a habit of disappearing.

Your sales plan should help you make investment decisions

A good sales plan isn’t simply a document describing sales activity.

It should help you decide where to invest your time and money.

Should you recruit another salesperson?

Do you actually need more leads?

Would investing in marketing help achieve the growth plan?

Is that exhibition worth the cost?

Should you enter a new market?

Would a CRM improve visibility, or do you first need to define the sales process you’re expecting it to support?

These decisions become much easier when they’re considered against a clear commercial plan.

Take exhibitions as an example.

Rather than booking the same exhibition every year because “we always go”, ask whether that event gives you access to the customers and opportunities your sales plan says you need.

If it does, great. Build a proper sales campaign around it.

If it doesn’t, perhaps the budget belongs somewhere else.

Review the plan, not just the target

This is where sales planning often falls down.

The target gets reviewed every month:

We’re ahead.

Or:

We’re behind.

But knowing you’re behind target isn’t particularly useful unless you understand why.

If sales are below plan, look at the assumptions underneath the number.

Are you generating fewer qualified opportunities than expected?

Has conversion fallen?

Are average order values lower?

Are existing customers buying less?

Is the sales cycle taking longer?

Has the new market not responded as anticipated?

Are opportunities entering the pipeline but then stalling?

Once you understand what’s happening, you can decide what to change.

That might mean increasing activity.

But it could just as easily mean improving qualification, changing the proposition, focusing on different customers, tightening follow-up, developing existing accounts or changing an assumption that has proved unrealistic.

A sales plan should never be something you create once and then file away.

Plan. Implement. Measure. Review. Learn. Adjust. Then go again.

What should a sales plan contain?

There isn’t one perfect sales plan template that works for every business.

A manufacturer with a small number of high-value customers will need something different from a professional services business or a company with hundreds of smaller transactions.

The plan should fit the business.

But as a minimum, I would want to see clarity around:

The commercial objective
What are you trying to achieve over the next 12 months?

Where growth will come from
How much is expected from existing customers, new customers, improved conversion, new markets, new products or other identified opportunities?

Priority customers and markets
Which types of customers and opportunities deserve your sales effort?

How opportunities will be generated
Which lead sources and channels will support the plan?

The sales process
What should happen from the point an opportunity is identified through to a decision?

Ownership
Who is responsible for the different actions within the plan?

Measures
What do you need to track to understand whether the plan is working?

Review rhythm
When will you review performance, challenge the assumptions and make changes?

You can make this more detailed if the size and complexity of the business requires it.

But don’t confuse complexity with quality.

Your target tells you where. Your plan tells you how.

Setting a sales target matters.

People need to understand what the business is trying to achieve.

But increasing last year’s figure by 10%, dividing it by twelve and putting the numbers into a spreadsheet isn’t a sales plan.

The real work starts when you ask:

Where is that growth actually going to come from?

Answer that properly and you can begin to make deliberate decisions about customers, opportunities, marketing, recruitment, investment and sales activity.

You can measure what’s working.

You can see what’s falling behind.

And when circumstances change, as they inevitably will, you have something meaningful to review and adjust.

A sales plan doesn’t need to be complicated.

But it should explain where growth is expected to come from, what needs to happen to achieve it, who owns those actions and how you’ll know whether it’s working.

Sales doesn’t need to be complicated. But it does need to be deliberate