Sales Planning Methodologies and When to Use Them

Picture of Zach Burnett
Executive Vice President, Global Field Operations

This much is true–some humans were born to be successful salespeople. They have the power of persuasion, the courage of conviction, and an abundance of tenacity. This much is also true–even the sales teams who are overflowing with natural-born talent require a watertight, strategic sales planning methodology and tactical regulations, especially when it comes to territory management and quota allocation.

With a process in place, both individuals and teams know where, when, and how they are supposed to approach and (hopefully) win leads, thus leading to a decent commission and a motivated sales organization. Without it, picture a sales version of the “wild west” – an unpoliced landscape controlled by outlaws who can sell out-of-date beans to a hungry cowboy. So, with a choice of recognized sales planning models and methods available to be used, how do you identify the right one for your business? In this blog, we’re narrowing the field down to two; bottom-up and top-down. We’ll look at what they are, how one or the other can best support your territory and quota planning strategy, and finally, what is the ideal software solution to support your final decision.

What is a Top-Down Sales Strategy?

In one sentence, it’s a methodology and set of principles that evolve from the very top of an organization that filters down to all those within the business. Top-down is extremely popular with larger organizations with a big workforce, forms the backbone of many objective and KPI sales planning processes. Accountability should lie within the hands of the decision-makers and department heads. These top-down “rules of engagement” tend to be universal, whether you work in sales, marketing, IT, or HR.

What is the Top-down Approach in the Context of Sales Planning?

The answer is simple; your sales team will need to follow the instructions and orders of those within the higher echelons of the organization. There is an acceptance that decision-making is kept among the few and adhered to by the many. Sales leaders will set the territories, quotas, and objectives that align with the business’ wider KPIs, rather than looking in granular detail at the ability and track record of individual salespeople. Every tactic, whether it’s a waterfall or trickle, is part of the decision cascade generated at the top.

The obvious drawback of the top-down is that when it comes to quota allocations, the previous performance of a team or the individuals is of little consequence. And any past performances or sales records have hardly any bearing on the actions of the decision-makers. This can make many sales teams feel disenfranchised, demotivated and disengaged. A top-down approach starts with a quota and works its way down to what’s necessary to achieve that number. The expectations of high-level executives can be out of kilter with reality, putting unrealistic pressure on those at the sharp end of sales negotiations.

It’s worth calling out how this top-down approach plays out from an external perspective. If you’re coming at this as a sales professional trying to make inroads into this type of organization, that means making a connection with a real person of influence. If you establish this connection and build a relationship, then you’re likely to secure a strong contract and account, selling plenty of products on numerous occasions. And if you know how difficult it can be working this way in your own organization, you’ll have some idea of how tricky it may be when dealing with a different top-down company.

What is a Bottom-up Approach?

A bottom-up approach within the context of territory and quota planning turns all the above on its sales strategy head. Sales managers and their teams use their own insight and experience when setting territories and allocating quotas. The very people that are out at the sharp end can contribute their knowledge, and historic data reflecting past campaigns has its place in the present and future. The bottom-up approach can be seen as much more democratic and holistic.

By considering more localized issues and aspects, there is room to plan territories around factors such as the age and economics of an area. And when used in tandem with TQP software, there is very little room for coverage gaps. Top-down thinking and planning are very much “bigger picture”, so these elements can be overlooked. Bottom-up also gives your sales team more autonomy and control—they can be an ongoing part of discussions over whether a territory is performing or needs rethinking — which keeps them both focused and motivated.

With this grassroots way of working, there is clearer and more realistic sense of what revenue a sales rep can generate, or how many closes they are likely to achieve. However, as democratized and fair as top-down sounds, it’s not always the best solution for every TQP situation. Whereas with top-down the salespeople can feel isolated, with bottom-up it’s a reversal. The department heads may feel isolated from the core sales business, and if they have stakeholders to answer to, they may well prefer to take back the strategic reins.

Making the Best Sales Planning Choice for Your Business

If you’re in the business of selling and using territory and quota planning strategies, there is no one answer. Depending on the scale of the sales campaign and its impact on wider business objectives, you’ll repeatedly need to make an informed choice between these two methodologies. But you don’t have to rely on instinct alone. Looking at this more holistically, much of your top-down or bottom-up decision will hinge on what type of product you’re selling and where you are planning on offering it. By using territory and quota planning software, such as the solution offered by Varicent, you can apply and adjust the metrics, market research, and sales teams so your planning approach is always on point and profitable.

Tags: Sales Performance Management

Picture of Zach Burnett
Executive Vice President, Global Field Operations

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