10 Things You Need To Develop Your Sales Plan

Learn the 10 essential data points to gather before creating an effective sales plan that aligns your team and drives growth.


The saying goes, If you fail to plan, you plan to fail. This is true in sales. Without a sales plan, your sales team will struggle to hit targets and miss out on opportunities.

A sales plan helps you set achievable goals, predict future performance, and identify improvement areas.

This guide will walk you through the 10 essential pieces of information you need to gather and analyze before crafting an effective sales plan for your business.

What Is a Sales Plan?

Sales team crafting an effective sales plan

A sales plan lays out the specific goals, strategies, and actions your business wants to take to drive more sales and revenue over a set period of time. Think of it as a game plan that keeps your teams aligned.

Why do you need a sales plan?

More than 60% of salespeople say selling is way tougher now than 10 years ago. A well-crafted sales plan ensures your team spends time on the right priorities and best opportunities. Without one, sales efforts can feel disjointed and less productive.

10 Things You Need to Develop Your Sales Plan

Before you can create an effective sales plan, there's some must-have information you'll need to gather first. This data gives your plan a solid foundation and helps you set realistic goals, make smart decisions, and allocate resources properly.

Here are what you'll want to have on hand as you start building out your plan:

1. Company Annual Recurring Revenue Target

The Company's Annual Recurring Revenue (ARR) Target is your destination. It's the total amount of yearly revenue your company wants to bring in from recurring sources like subscriptions or monthly fees. 

Think of it as the bullseye your sales team will aim for throughout the year.

Your company’s leaders usually set this target, considering factors such as market trends, past performance, and overall business goals.

The SMART framework makes goals more effective. SMART stands for specific, measurable, attainable, relevant, and time-bound.

For example, your SMART goal is to increase ARR by 20% to $10 million within the next fiscal year.

This target is specific (20% increase), measurable (trackable ARR), attainable (considering past growth and market trends), relevant (supports expansion plans), and time-bound (one fiscal year).

2. Starting Annual Recurring Revenue

This is your starting point. It's the recurring revenue you already have locked in at the beginning of your planning period, like customers with existing subscriptions. This is your baseline, the foundation you'll build upon to reach your target.

You can find this number by looking at your customer base and identifying how much recurring revenue they generate. Most businesses have CRM software that tracks this information.

If you're a small business, you will likely start with a lower starting ARR. This is completely normal! Many businesses begin with a smaller customer base and are still establishing recurring revenue streams.

What matters is tracking your growth afterward. Since your Starting ARR is your baseline, you should monitor your month-over-month growth. 

3. Churn Rate

Sales representative seeing high churn rate and lost customers because of poor sales planning

The churn rate represents your unforeseen hurdles. It’s the percentage of customers or revenue your company loses over a period, usually due to cancellations. 

Businesses typically lose between 10% and 30% of their customers annually. However, knowing your churn rate can help you identify improvement areas, develop retention strategies, and set realistic growth goals.

The higher the churn, the harder it is to grow your overall revenue.

To calculate churn, divide the number of customers you lost in a specific period (e.g., a month) by the total number of customers you had at the beginning. Then multiply by 100 to get a percentage.

Here’s the formula:

Churn Rate (%) = (Lost Customers / Total Customers at Start) x 100

Let's say you're a subscription-based service with 1,000 customers in January. At the end of February, you had lost 25 customers (through cancellations or not renewing subscriptions).

Here's how to calculate your churn rate for February:

  • Lost Customers: 25
  • Total Customers at Start (February): 1,000


Churn Rate (%) = (25 customers / 1,000 customers) x 100 = 2.5%

Your churn rate for February is 2.5%. That month, 2.5% of your customer base stopped using your service.

4. Expansion of Annual Recurring Revenue

Think of Expansion ARR as the additional revenue you expect from existing customers. This could come from up-sells, cross-sells, or other opportunities.

Look at your existing customer base and their buying habits. Can you offer them more value for a higher price? Are there complementary products or services you can sell them? Analyze data and brainstorm ideas to set a realistic target for extra revenue from existing customers.

Why do you need to know this before crafting your sales plan?

Expansion ARR focuses on revenue generated from existing customers familiar with your products or services. This recurring revenue provides a predictable and reliable income stream, essential for financial planning and stability.

5. Account Executive Quota

Account Executive (AE) Quota is basically your AE’s personal sales target. It's the specific revenue the company expects them to bring in during a certain period, like a quarter or a year. 

Imagine it as a bullseye on a dartboard — each AE aims to hit their target by the end of the round.

Quotas help you monitor individual and team performance. Track the total revenue each AE generates through their sales activities. Most CRM software can handle this automatically. 

At the end of the quota period (quarter/year), compare each AE's actual revenue against their assigned quota. Did they hit the target? Exceed it?  If they’re falling short, it might indicate a need for additional training or adjustments to sales strategy.

Your sales plan hinges on achieving specific revenue targets. AE Quotas provide the foundation for these targets.

6. Account Executive Ramp Schedule

Company trains new account executives according to the ramp schedule

When you hire a new AE, they won't be a sales expert overnight. The AE Ramp Schedule is like a training plan that helps them get there. It outlines how long it typically takes new hires to learn the ropes, become comfortable in their role, and start hitting their quotas. 

This might involve classroom training, working alongside experienced AEs, or a mix of both. The goal is to get them to contribute fully to the sales team as quickly as possible.

Here’s what to do:

  1. Identify the different stages of your current onboarding process, including training modules, shadowing opportunities, and performance milestones.  
  2. Then, monitor how long it typically takes new hires to complete each stage and reach specific performance benchmarks, such as closing their first deal. 

If onboarding takes 3 months, you wouldn't expect new hires to contribute significantly to sales quotas within the first quarter. Factoring in the ramp-up time helps you set achievable sales goals for the entire team.

Tracking this progress helps you identify areas for improvement in your onboarding process to shorten the time it takes for new hires to become productive.

7. Number of Account Executives per Director or Vice President

Sales Directors and VPs are like team coaches. However, they can't handle a giant team alone. The number of AEs per Director refers to how many Account Executives each director directly manages.

This is a simple calculation:

  • First, count your sales team's total number of Account Executives.
  • Next, count the number of Sales Directors or Vice Presidents who manage the AEs.
  • Finally, divide the total number of AEs by the number of Directors/VPs to get the average number of AEs per Director.

It's important to find a sweet spot here. Too many AEs per director can make it difficult to give everyone the individual attention and support they need, while too few AEs can limit the team's overall sales output.

Knowing the ideal team size helps you set achievable quotas based on the available coaching and support resources.

Some points to consider:

1. The AE’s Experience Level

New hires typically require more supervision and coaching than seasoned AEs. A director can manage a larger team of experienced AEs already familiar with your products and sales processes.

2. Sales Complexity

Complex B2B sales cycles with lengthy negotiations might require more director involvement and support. In these scenarios, a smaller team size per director may be needed.

3. Director's Bandwidth

Analyze the Director's workload and available time for coaching. Don't overload them with too many AEs, which will hinder their ability to provide effective support.

To help you find the right balance, you can research average team sizes for sales directors in your industry. This provides a starting point for your ideal ratio. Then, monitor team performance, coaching effectiveness, and individual AE support.

8. Number of Sales Development Representatives per Account Executive

Sales Development Representatives are managed by the Account Executive

This ratio shows how many sales development reps (SDRs) are assigned to support each AE with prospecting and generating leads.

40% of sales reps consider finding new leads the biggest challenge. Sales development representatives (SDRs) and AEs work together to generate qualified leads and nurture them.

SDRs act as the frontline, prospecting and generating qualified leads that can then be passed to AEs to work through the sales cycle. Working together, SDRs and AEs ensure a smoother flow of qualified leads for higher conversion rates.

Before building your sales plan, analyze your current SDR to AE ratio and pipeline metrics. 

Do your AEs have enough qualified leads being fed to them? Are the SDRs overwhelmed trying to support too many AEs? There's no magic ratio, but 1-3 SDRs per AE is generally common.

Why does the ratio between these roles matter?

If you have too few SDRs, they might struggle to keep up with prospecting and qualifying enough leads. This means the AEs might have gaps in their pipeline and be waiting for new leads to work with.

Too many SDRs may generate a high volume of leads, but if they're spread too thin, they might not have enough time to qualify each lead properly. The AEs might end up receiving a flood of unqualified leads that require more work to nurture

To determine the ideal ratio for your business, look at your average lead volumes, deal cycle lengths, and the number of active opportunities an AE can reasonably manage at once. If your ratio seems imbalanced, you may need to adjust hiring plans.

9. Number of Customer Success Managers per $2M in ARR

Customer success managers (CSMs) are vital in reducing churn and driving expansion revenue from existing accounts. But you need enough CSMs to provide attentive support.

Knowing your ideal CSM to ARR ratio allows you to factor in customer success costs during sales planning. This helps you create more accurate forecasts of your overall revenue stream.

How much is enough? 

The rule of thumb is one CSM for every $2 million ARR. So, if your ARR is $10M, you'd want around 5 CSMs. This ratio helps CSMs maintain a manageable load of active accounts.

So, if you know you'll need 5 CSMs for a projected ARR of $10 million, you can factor in the associated CSM salaries and benefits when calculating your projected profits.

Understand that this is just a benchmark. Your ideal ratio depends on the complexity of your product, implementation requirements, Health Score criteria, and expansion sell motions.

More complex products mean your customers need more support and more CSMs. Low health scores mean in-depth customer success plan creation or frequent check-ins, so you’ll need more CSMs.

Companies with simpler products may be able to stretch 1 CSM to $3M ARR.

10. Number of Solutions Engineers per Account Executive

This is the ratio of solutions engineers (SEs) providing technical guidance and support to each of your AEs. SE support aligned to your AEs is non-negotiable for products requiring technical expertise.

They explain the technical aspects of your product to potential customers, bridging the gap between the technical aspect of your solution and sales conversations.

Knowing your SE to AE ratio lets you set achievable goals that consider the availability of technical support. Overpromising features or integrations without sufficient support can lead to missed deadlines and frustrated customers.

So, how many SEs do you need?

It depends on how complicated your product is to sell. Consider these questions:

1. How technical are your sales calls? 

Do AEs always need SEs on calls for deep technical discussions, or just occasionally?

2. Who runs product demos? 

Do AEs handle them, or do they need SEs to showcase the technical features?

3. Do SEs also handle implementations? 

If so, they'll need more time with each customer.

Generally, the more complex your product, the more SE support your AEs will need.

Spreading SEs too thin makes it tough to meet AEs' needs. But too many SEs are costly if they're underutilized. Find your balance based on your product's technological intensity.

The right ratio keeps your opportunities progressing without hiccups. It's about empowering your sales team with the technical resources they require.

Bringing It All Together

An effective sales plan requires gathering the right data upfront to set realistic targets and allocate resources properly. 

With a solid grasp of your company's ARR goals, current performance metrics, team structures, and support needs, you can build a comprehensive plan that aligns your sales efforts and positions your team for success. 

Remember, a sales plan is not a static document but a living strategy that requires continuous review and adaptation to market changes, performance insights, and evolving business needs. 

With the essential elements outlined in this guide, you'll be well-equipped to create a sales plan that drives sustainable revenue growth, improves efficiency, and fosters a high-performing sales culture.

Improve Your Sales Strategy with Expert Resources from Lunas

Your sales process is the backbone of your business's success. Explore Lunas's library of expert blogs to stay ahead of the curve and continually optimize your sales strategy. 

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