Sales planning is a crucial component of any business strategy and taking the time to carefully develop sales plans makes a big impact on how the organization’s sales team performs. Planning how to target specific customer profiles or new sales territory, as well as creating consistent messaging between all sales reps, will help lay the foundation for how your company will meet key revenue goals.
But where does the best sales planning come from? Who should be involved in the process? The two most common approaches to developing a sales strategy – top-down and bottom-up sales planning – are frameworks for how your organization structures strategy development and who is involved in the process.
We’ll cover both of these approaches in more detail below, including the advantages and disadvantages of both
What is Top-Down Sales Planning?
In top-down sales planning, the key sales targets come directly from leadership teams. Leadership communicates their strategies to managers and sales representatives who are then responsible for achieving the goals based on outlined tactics.
The leadership teams involved in this method of sales planning usually extends beyond just the sales team, as they will likely need input from departments such as finance and marketing to fully scope out their plans. The idea with top-down sales planning is that leadership teams can potentially provide a more holistic approach to the overall sales strategy because they have access to view the overall performance metrics for the organization.
Advantages of Top-Down Sales Planning
Clear Vision and Alignment: Top-down sales planning usually focuses on what the overall company’s goals are. As mentioned above, they look directly at the data for the organization to see where they currently stand against their goals and where they need to be to actually attain the company goals, and then work within that differential to develop strategies. This leads to a very clear and cohesive plan towards reaching key sales metrics.
Quick Decision Making: The less people who are involved in decision-making, which is often the case with top-down sales planning, the less time it will take to finalize and implement plans. While there are still multiple people involved in planning, the teams are much smaller, meaning less meetings and less time spent on deciding on a strategy. This makes launching the final sales strategy swifter and more efficient.
Consistent Messaging: When messaging and strategy comes directly from leadership, it ensures consistency and provides a unified sales strategy that is easily adopted among sales team members. Because leadership often works with multiple department heads to develop strategy, such as marketing, it can result in stronger brand positioning as both departments are using the same messaging. Marketing departments can also strategically plan campaigns to support sales efforts during key events.
Disadvantages of Top-Down Sales Planning
Lack of Flexibility: There tends to be a lack of flexibility in adapting sales strategy to market changes or consumer behaviors with top-down sales planning. Leadership teams may not be able to meet as regularly or consistently as their employees, so they may miss out on changing demands. Or, if they are alerted to changing sales dynamics, they may be slow to respond with an updated sales strategy.
Potential for Disconnect: Without the input from a broader team of people, there is the possibility for a disconnect among leadership and their direct employees. Leadership may be unaware of specific challenges that their sales reps are facing and therefore may not consider how to address these challenges when developing their strategy. If leadership is ignorant to the challenges that sales reps face, not only will they not account for them in their sales strategy, it could lead them to set goals that are too ambitious and unattainable for sales reps.
Reduced Motivation: When team members feel that their input is not valued and that they have little control over planning, it can decrease motivation among team members. This is commonly compounded when leadership either does not consider the uphill battles that their sales team is facing, or underestimates how easy it is to overcome these hurdles. If leadership doesn’t make any efforts to address potential roadblocks in how their sales team can meet the organization’s goals, it can be frustrating for team members which can in turn affect their performance and morale.
What is Bottom-Up Sales Planning?
Bottom-up sales planning starts with the team members who are out in the field interacting directly with customers every day. Sales representatives are encouraged to bring their firsthand knowledge of common customer pain points, customer insights, and other valuable customer feedback that can be used strategically to develop comprehensive sales plans and realistic sales targets. Sales managers then review the recommendations from their team, provide their own input, and then finalize the targets to build a sales plan for the entire team. Once the sales managers have finalized their team’s collective plan, they send it up the leadership chain for final approval.
Advantages of Bottom-Up Sales Planning
Realistic Targets: Sales reps working on the ground are more likely to set realistic targets as they know exactly what potential hurdles they could face. More often than not, it’s these hurdles or challenges that sales reps face that are the limiting factor in whether or not they achieve outlined sales goals – not lack of motivation. So, being able to take these factors into account when setting key metrics ensures that your reps’ voices are heard and that the goals established are realistic based on current consumer demands and market conditions.
Increased Engagement: Nothing will get your team more excited to achieve sales goals than giving them the freedom and power to develop their goals and strategies for attaining them. By allowing your team to be involved in this process, your reps will become more engaged and committed to reaching the goals that they themselves have outlined. It can be extremely empowering and motivating to sales reps to know that their input is helping drive the business forward.
Flexibility and Adaptability: In complete contrast to the top-down approach, bottom-up sales planning allows for more flexibility to changing strategies. For the exact reasons that this is a disadvantage of top-down, bottom-up sales planning can mean quick responses to changes in the market. Individual sales teams usually meet regularly to discuss tactics and best practices and are the first to notice challenges that could negatively affect goals. By noticing these challenges as soon as they become an issue, it’s more likely adaptive measures can be put into place to counteract these issues.
Disadvantages of Bottom-Up Sales Planning
Complex Coordination: When working with multiple people to coordinate a strategy, it takes a lot of additional time and complex coordination. It becomes even more complex to coordinate when you take into account different sales teams and regions. Each individual sales team may be responsible for putting together their own strategy, which makes aggregating individual plans into a coherent strategy complicated and time-consuming. Bottom-up sales planning can easily become ‘too many cooks in the kitchen’.
Potential for Misalignment: Without strong guidance from leadership, sales goals developed using a bottom-up approach may not align with broader organizational goals. In larger group planning, it can be easy to get off topic or segue into peripheral goals that don’t address the bottom line. In order to avoid this, brainstorming sessions need to be continually brought back to the company’s broader strategic goals to ensure strategies remain on topic and are aligned with other corporate initiatives.
Inconsistent Messaging: Another potential issue with ‘too many cooks in the kitchen’ is that it could lead to inconsistent messaging across different sales teams. Instead of acting as a united front with cohesive messaging, different sales teams may have varying interpretations of the sales strategy, potentially causing confusion among customers.
Top or Bottom?
As with any business strategy, choosing which method to use largely depends on your company, your company’s culture, and your widespread organizational goals.
It is not uncommon to see a combination of both top-down and bottom-up, providing opportunities to both sales teams and leadership to be involved in key strategic planning. However, company size plays a big role in how agile and flexible an organization can be with planning.
The larger an organization is, the more complicated it can be to rely on bottom-up sales planning because of the size of the teams involved and the large volumes of sales data that must be evaluated. On the other hand, smaller or mid-sized companies can usually be more agile and have the flexibility to include team members in their planning without making things too complicated.
Build Your Sales Strategy With Core
When it comes down to it, both top-down and bottom-up sales planning have their unique strengths and challenges. There are situations where one is preferred over the other and your organization may choose to employ a mixture of both into your overall sales strategy. For example, you may choose a top-down approach to annual goals, while providing your team the flexibility to develop monthly or quarterly strategies using the bottom-up method. Whatever sales strategy you choose, you need an accurate and reliable platform to provide you with the data needed to inform your decisions.
Core Commissions’ all-inclusive AI-powered commission automation platform is the specialty tool you need to manage not just incentive compensation, but the performance metrics your team relies on for understanding your business needs and where there’s potential gaps preventing you from meeting your sales goals.
Our advanced drag and drop reports and analytic features enable you to easily visualize any sales data, so your team can identify patterns to help you make more informed decisions on key strategic planning. Additionally, as any compensation administrator knows, commissions and incentive compensation is derived from performance metrics. Having all of your sales data in one place makes it easy to stay abreast of changes in performance as well as the ability to use the data already in the system to calculate and manage incentive payments.
Contact us or schedule a demo to see how we can not just streamline your commission management processes, but your entire sales operations.