I've been spending February writing about sales goals. When you think about your sales goal, you need to take the cost of sales into account. This is a key component to your sales budget.
As you work to adjust your sales budget to reflect your sales goals, keep the following principles in mind.
Balance New Hires’ Costs & Productivity
If hiring new sales reps is part of your plan to achieve your sales goal, you’ll need to account for the cost of hiring these reps. Depending on your hiring process, you may need to consider recruiting fees and other one-time costs like background checks. You’ll definitely need to consider the new employee’s salary and benefits.
As you look at hiring new sales reps to achieve your goal, consider how long it will take for them to be productive. If you expect a rep to begin producing midway through the year, make sure you hire them early enough to make that realistic.
Don’t forget to consider your turnover rate as well. If a third of new hires tend to wash out over the course of their first year, you’ll need to hire more people than you need. You don’t want to find yourself in Q3 with a plan that depends on revenue from a rep you fired in May.
Consider Modifying Territories
Many organizations seem to view sales territories as if they are carved in stone. But when necessary, territories can be adjusted to improve your sales budget.
Look at how much you’re spending in each territory compared to the sales you’re getting. Are there any discrepancies? Are the best salespeople assigned to each territory?
For example, one territory is made up of customers who expect a high touch, knowledgeable salesperson. Another consists of customers who like to buy transactionally and are happy to see their salesperson on rare occasion, if at all. You don’t want an expensive, underutilized salesperson acting as an order-taker.
We often see that some territories get a lot of investment and little return. On the other hand, some territories produce at a high level on a shoestring sales budget.
Take the time as you are setting your sales goals to adjust your territory budgets, and even the territories themselves, where necessary.
You may find that it’s more efficient to split some territories and merge others. As a smaller impact, you might move individual accounts or small parts of a territory to a rep who seems like a better fit.
Align Your Sales Budget with Your Marketing Budget
As you work to align your sales budget to your sales goal, keep your marketing budget in mind. Some investments in marketing may help reduce your cost of sales. And some of your decisions might impact the marketing budget.
For example, an investment in an inbound marketing platform might generate more leads, requiring less investment from sales in lead generation. Asking the marketing team to score leads may require an investment in a lead-scoring platform.
Too often, sales and marketing departments don’t effectively communicate or share strategy. Make sure you take the time to consider the following areas where the sales budget and marketing budget may overlap.
- Inbound marketing
- Content marketing
- Developing content
- Generating leads
- Nurturing leads
- Qualifying leads
- Scoring leads
- Developing presentations
- Producing demos
- Customizing offerings
- Producing promotional content
- Distributing promotional content
I hope these 3 principles are helpful as you work to align your sales budget to your sales goals!
For a thorough look at setting, tracking, and keeping your team accountable to sales goals, check out my latest eBook: The Ultimate Guide to Setting and Achieving Sales Goals.