Regardless of industry, most companies are preoccupied with the sales and marketing aspects of the business — and with good reason. Failing to do so can impede growth and put the business at an immediate disadvantage. Although a focus on marketing is commendable, it may be too narrow. Specific sales targets are fine, but the chances of success are reduced without a written business plan that outlines how these goals will be achieved.

All businesses endeavor to increase sales. Far more difficult, however, is increasing profitable revenue streams. Many middle-market companies focus on total revenues but overlook the different types of revenue streams that make up that total. For example, a company’s revenue may increase each year, but if its most profitable product or service accounts for a shrinking portion of the total, the business could be headed for trouble.

A sales and marketing "profit summit," in which management steps back and analyzes its sales profitability levels and marketing approaches, can help a business focus on the "how to" details and document them in a formal written plan. The plan should outline how the business will attack the issues that affect both the top and bottom lines from a sales perspective, enabling the business to drive the most profitable areas of the enterprise.

Digging Deep in Four Critical Areas

In general, four critical factors must be addressed in a sales or marketing plan:

• The first, and often the most overlooked, is manpower. If the goal is to increase sales by 20%, how will it be achieved? Will the business expand its existing sales force? Will it reduce turnover? Recruiting, training, and retaining qualified sales personnel has become particularly important in today’s tight labor markets, and it’s becoming increasingly difficult to find quality employees. The business must address manpower issues in conjunction with setting any sales goals.
• Another critical factor in profitable revenue growth is the ability to differentiate products and services in markets in which they are perceived as similar or interchangeable. The business must be able to identify — and effectively communicate — the features that make its products or services the better choice. For example, if the company has resources and expertise that the competition lacks, it may have an advantage even if the products are similar. The key is to create a total package (product, resources, expertise) that can help customers increase revenue or reduce costs.
• If the company is unable to differentiate its products and services, it will have a difficult time with the third factor — growing and retaining its customer base. The business must identify ways to prevent customers from doing business with the newest entry in the market or the lowest-priced competitor. Building customer loyalty, difficult as it may be, is imperative for long-term success.
• Finally, the business must focus on boosting profitable sales. This means reducing the discount required to make a sale and increasing the profitability of each customer and supplier. If a company can document and communicate its ability to help customers reduce their own costs or grow their revenues, this added value can be attached to the sales price of its product or service, thereby creating measurable increases in margins.

The Profit Summit

The four critical areas outlined above can be fleshed out in a profit summit. Often, an outside business advisor’s fresh perspective can facilitate the process and inject new insights that can be implemented to immediately improve the sales and marketing processes. An outside facilitator can help by researching competitors, interviewing the company’s constituents (customers, employees, suppliers, vendors), and gathering benchmarking data about the most successful enterprises.

Remember, the best business plans and the best engineered organizations can fall short of their goals without a clear understanding of how sales and marketing goals will be achieved. An organization remains at risk of underperformance until these specifics are identified, documented, and executed.

The profit summit concept was developed by Corporate Dynamics to help small businesses with their sales and marketing business plans.