Why the budget process is an important first step in the sales process

By Henrik Troselius - September 19, 2018

We've discussed before how sales organisations need to be approaching the sales process as a cycle, rather than a linear chain of events. However, that cycle has to start somewhere. In modern sales, the budget process and setting targets is the most important first step for being able to measure and track results, and understand performance. When you aren't starting with your budget process, how can you know if your sales are headed in the right direction?

Why setting targets helps further the sales cycle

The budget process is necessary for a couple different reasons. First, it allows you a standard by which to measure performance, similar to setting Key Performance Indicators (KPIs). When you have a target that you intend to hit or surpass, you can then evaluate how well the sales staff has done.

Maybe more importantly, is that setting a target early on allows you to evaluate performance in real time. Throughout your sales cycle, you can then see how likely you are to hit your target, what roadblocks there are that would prevent you from achieving it, and how can you make changes along the way that will bring you closer to reaching your goals.

These methods in sales are important for actually going through the entire sales process. Without first setting the target, you will be unsuccessful in properly executing the subsequent steps of performance statements, review meetings, and ultimately making improvements.

How the budget process makes the sales cycle possible

In Goalplan's sales process, budget and goal setting are the foundational element for sales reps and sales teams to go through the entire cycle. This is because targets are used as a benchmark for performance evaluation, and also for evaluating the efficacy of coaching, training, and other learning opportunities.

Most importantly, sales staff should be involved in the budget process, so that they take true ownership over their performance and can then have a clear indication of how they are doing. With staff setting their own targets, they are more likely to take ownership over their sales process and believe in their abilities to achieve them.

After the budget process is completed, sales staff should participate in performance statements in which they are asked to self-reflect and evaluate how their sales performance is doing, and how likely they believe they are to achieve their goals. Review meetings are used to take a look at performance metrics and understand where the strengths and weaknesses are, and to use real data to compare to staff's own self-evaluations.

When discrepancies are found, this can be a crucial conversation for managers to have with their staff, to find where the gaps in performance may be. Then, when there is an understanding of the issues that may be there, or the areas for improvement, managers can then deploy coaching to help their staff better their skill sets, or understand the sales process better.

Sales competitions between staff also work to bolster sales and motivate staff to perform higher. But competitions may be worthless when there isn't a target that is being set, or a level of performance for staff to strive for.

In each of these steps of the sales process, the budgeting and goal setting is the crucial element that needs to happen first. Without setting a sales target, individually and team based, it's difficult to take the next steps in the sales process for a more effective and efficient sales organisation.

When you go through the sales process, and ultimately make improvements, you can then set a new target, which then begins the process again. Through this cycle, starting with budgeting, you can ensure you're going through the steps in a way that makes sales teams constantly performing at a higher caliber.

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