The main aim of a business is to earn profit and grow. To achieve that, the organization has to work collaboratively. And that is why you need goals to get closer to the main purpose of running the show. Setting sales goals is not an easy task for sales managers as many factors come into play. Moreover, the sales goals have to be attainable and realistic.
Let’s look at what sales goals are, why you need them, steps to setting goals, types of goals, and examples.
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Sales goals are the sales objectives meant for the sales team of a company. To set effective sales goals, you have to keep the skills of each team member in mind. Try to pay attention to the following while you set sales goals for your sales team,
1. Increasing sales to fetch more profits for the business
2. Increasing the productivity of sales reps
3. Indulging more in cross-selling and upselling
4. Retention of existing customers and acquiring new ones
5. Better management of time
It is obvious that when you have a goal in front of you, you will strive hard towards achieving it. Goals are like road maps; they give a direction to businesses and are important for sales teams. The main reasons for setting sales goals are the following,
With sales goals, your sales team has a benchmark to achieve. It will help motivate reps to put in their best efforts. You can amplify the feeling further by providing special incentives to those who can surpass the goal. Click here to read the best sales motivational quotes for your team.
With clearly defined sales goals, there is clarity about what the sales team is supposed to do in a specific period. The reps would then set out to plan how to achieve the goals.
By setting sales goals, it is possible to streamline the sales process. In the endeavor to achieve goals, the reps can identify roadblocks to achieve their goal and attempt to get rid of them. It helps in enhancing the sales process and hitting sales targets.
Modern sales goals have the following components in them,
Setting goals just for the sake of it won’t fetch you desired results. Your goals have to be data-backed. There is a need to check the past performance of reps, regions that are valuable for sales, the company’s market share, and a lot more. It is possible to get this data easily when you use a CRM.
Setting unrealistic goals is the perfect recipe for disaster. If your company recorded a revenue of $200,000 last year, it would be unrealistic to set a goal of $500,000 for the current year. Reps would not even try working towards such goals because they know they can’t achieve them. There is no use in setting such targets that reps cannot handle. Ideal goals are those that reps consider achievable.
When you set challenging goals for reps, they stay motivated. However, in the enthusiasm to set goals that challenge reps, you must not forget that the goals have to be realistic. It is therefore important to maintain a fine balance.
Now that you know what sales goals are and why you need them let’s find out the steps to setting goals how for your sales team,
While setting goals, always start with how you want the result to be. It will help you make decisions that will take you there. It is easy; just visualize where you want to be in a year and set goals that help you reach where you want to be. Just keep in mind that your goals have to be in sync with the mission of your company.
At this stage, you have to focus more on defining the outcome you want rather than specific goals. You have to take note of the outcome you want and use it to show you the path for evaluating the goals you develop ahead.
Once you finish foreseeing your future, you should come back to the present and look at your current strategy, resources, and clients. Find out what all you need to reach where you visualize yourself to be. To help yourself set smart sales goals effectively, you have to consider the present and your future visualization. Learn more about sales forecasting methods.
To set sales goals, you can make use of the S.M.A.R.T methodology.
The acronym SMART stands for Specific, Measurable, Attainable, Relevant, and Time-Bound. It means that all your business goals must have these five characteristics. Let’s take a look at each of them to get a better idea,
As a salesperson, you should know what you are aiming at. If you have a goal like increasing revenue, it won’t be SMART as you are not specified here. A specific goal is something like – increasing revenue by 60%. It is more specific and clearly defined as it is a quantifiable goal that you can measure. It will help the sales team build a plan to achieve it.
A SMART goal is one that you can measure. It should be possible for you to track the goal’s progress. So, instead of a goal like ‘increase revenue’, you must have a quantifiable goal such as ‘increase revenue by 60% in a year’. When you have a goal that you can measure, it is possible to measure your team’s progress.
It is good to think big when you are running a business, but at the same time, the goals you set have to be attainable by your reps. They have to such that a rep achieves them by following normal work ethics. In other words, the goals have to be realistic. For example, if the reps can get a 20% increase in sales, you should set a goal of 25% for the next month instead of asking them to aim for 50%. While it is okay to make them aim high, being unrealistic with your goals can put lots of pressure on them and make them feel disappointed when they cannot achieve the goal.
The goals that you set for your company have to be relevant to your business. If you set a goal that has no direct connection with your business, it is not worth it. Your goals must always fit into the definition of your business and help it grow. Small businesses often expand themselves, but when you do so, you must make sure that they are relevant to the basis of your business.
Your goals must have a deadline, or else you will keep procrastinating. With time-bound goals, you will work with more zeal for achieving sales goals in time. Without a deadline, your team will not be motivated to work towards the goals. A goal like – ‘Increase revenue by 20% this month’ is much better than only saying ‘Increase revenue by 20%’.
Keep the above as a checklist when you are developing goals.
Create wider goals for your whole company before you create them for each sales rep. Keep the current scenario and the outcome you desire in mind while creating the wider goals. Doing so will help you find out whether the goals for each sales rep will help meet the objectives of the company or not.
After you complete creating a goal for the whole team, you can assign goals individually to reps to help your company achieve its broader objectives. These individual goals must also be based on the SMART methodology as discussed above and have to consider the reps’ abilities. Keep them realistic and attainable.
Here’s an example for better understanding – If your business goal is to increase profits by 20% in a year, you can assign each rep an individual goal of increasing the profits by 5% each quarter.
A sales team can accomplish its goals only when it has the resources it needs. In their absence, the reps would not be able to achieve the goals you have set for them. Therefore, to see your team win, you have to ensure that they have all they need to accomplish their individual goals. Here resources refer to the training, coaching, and technology they need in the form of automation tools.
This step is the most important one. Review the progress from time to time and make tweaks in areas where the team members cannot hit the target and lag behind. Keep conducting sales meetings from time to time to evaluate progress which will help in improving the performance of reps.
Here’s what you should try to focus on while setting goals,
When you set goals, you first have to take a look at the capabilities of your current sales team and the reps individually. Find what they are good at and the areas where they need to work on. Take the opinion of the whole sales team if you want to see your business surge ahead.
To grow the business, you have to perform better than you did last year. Sales goals should have figures in them, or else they will be too vague. At the end of each year, you have to compare the year’s statistics with that of the previous year so that you know whether there is a need for a strategic change for the upcoming year. You can consider setting sales goals based on the last year’s data.
You have to make sure that your goals are manageable and to do so, you should break a larger goal into smaller chunks. As you have already seen, you can break down a goal of increasing sales by 24 percent in a year and make it a goal of increasing sales by 2% each month, which sounds more attainable.
You have to look at the skills and expertise of each rep while setting sales goals, and as it differs from one rep to another, it is not possible to assign all of them the same kind of goals. You have to consider even the previous sales records to see what they do best.
In sales, incentives work well. If you are setting sales goals and give incentives to reps when they surpass their targets, they will get motivated and perform better.
Sales goals are of different levels, and each level affects the ones below them. Let us begin with the highest one,
Annual sales goals are for what you want to accomplish for the entire year. It can be something like the revenue you want the company to earn in a year, the number of new customers you want to acquire, etc. One of the best ways to set one is by taking a look at last year’s performance. Suppose you earned a profit of 20% last year, you can consider increasing it by 10% for the current year. However, other factors come into play. For example, a competitor would have entered your arena, and it may not even be possible for you to reach the previous year’s goals.
It is tough to see the progress of an annual goal which is why your sales team should focus on a monthly or weekly goal. Team goals refer to monthly or quarterly goals for the whole sales team. That means the annual goal gets divided by 12 for monthly team goals or by 4 for quarterly goals. However, what is the need for a team goal when you are going to assign goals to reps individually? It is because even when reps cannot reach their individual goal, they can contribute to the larger team goal and stay motivated.
As the name suggests, individual sales goals are for each rep. While setting these goals, it is important to note that the success rates of sales reps selling to different industries or markets will be different, and it is important to consider that when you assign goals. A rep selling to large enterprises can bring more revenue to the business than those who sell to small businesses.
One way of setting smart sales goals is by looking at their previous data, customer profiles, and your share in the market. Together they will help you assign challenging goals to reps.
There are a lot of factors in sales that are in the control of salespeople. The reps might go on leave, clients may change their buying habits or turn to competitors, ruining individual sales goals. To help reps gain control, you have an activity goal. To improve sales emails, you can measure them in numbers, such as the number of emails sent or phone calls made. They can even help guide reps and make them stay on track.
Sales teams can exceed the goals, and that can be advantageous to your business. However, you can blow their goal out of proportion as it won’t be realistic, and when they surpass the goal, it would no longer be challenging. To help you out, there are stretch goals, and according to them, the reps get extra rewards when they exceed their targets.
Here are a few sales goal examples for you,
It is a very common sales goal for any business that sells products or services. Make sure you set a realistic goal with a timeline for it. Do check the past sales record before assigning the goal to the rep. For example, you can assign reps the goal of selling 10 units of your SaaS product in a month.
Increasing the number of units the reps have to sell requires them to pursue more leads and minimize repetitive and time-consuming tasks. It is why you should consider going in for sales automation so that reps have more time to spend with prospects and work towards hitting sales targets.
Sales revenue refers to the total money earned after the sales of a product or service. When you assign a rep the goal to increase their sales revenue, it is a clear goal and one that you can also measure as the head of the sales team. You can be specified by setting a target of increasing sales revenue by 20% in the last quarter of the year.
A company’s revenue is the basis of its existence, and increasing revenue is an important sales goal. As it can be challenging, you have to create manageable activity goals for reps to find the larger goal relatively achievable.
For instance, it would be ideal to decide upon the number of demos they have to arrange in a week or the number of phone calls each of them has to make daily to achieve the goal.
Customer churn rate refers to the number of customers who bid goodbye to your business within a specific period. A sales goal can bring down the customer churn rate to less than 1% in a month.
For a software company that deals in SaaS products based on subscription, the churn rate matters a lot and directly impacts the growth of the business. Though there can be various types of churns, and two of them are the following,
Account churn – It occurs when customers leave when they cannot get value from the product they subscribed for. If this type of churn is high, it means the sales team is targeting the prospects who don’t need your product.
User churn – This churn has a connection with your product. The product packages may not have the right features. You have to work with the concerned department to set things straight here.
This sales goal has an impact on various aspects of the company and is quite important. A common sales goal can be – Reduce the customer acquisition cost by 5%.
To achieve this goal, you have to find out where your maximum expenditure is and whether you are targeting the prospects that are difficult to reach. You have to change your approach and target those who are easy to reach out to and are likely to convert.
The cycle time refers to the time taken by a rep to find a lead and close the deal. The sales cycle varies from one industry to another and depends on the deal size. It can range from weeks to months based on what you are selling.
By reducing the sales cycle, sales reps can close deals faster. A sales goal example can be – ‘Reduce cycle time by 5%’ and to achieve this goal, focus on research in the starting stage of the sales cycle so that you don’t knock at the wrong door and engage with uninterested prospects. Automating the sales process will be helpful to a great extent in reducing the length of the sales cycle as your sales reps will have more at hand to focus on selling.
The above are just a few sales goal examples. There can be many more.
Measuring your sales goals matters a lot as recording progress can help you understand where you stand. It would be futile to set goals when you do not monitor them.
When there are tools to help you with tedious tasks, you should consider using them. It would be better to focus on making sales than spending your time creating reports. Try to invest in a platform that helps make your job easier.
Data is important regardless of the size of your organization. Analyzing data will benefit you as you will be able to set more accurate goals when you gather more data. Again, it would be better to use a tool here, as automation will save a lot of time.
When you have information at hand, try your best to strategize your goal. If you find it tough to interpret data on your own, you can hire an expert. However, turning to a tool that uses artificial intelligence to help you out is another good option.
To get the desired outcomes, you have to start setting the right goals, which holds good for areas beyond sales. Most often, sales reps feel motivated when they have realistic goals in front of them. Sales goals usually aim at improving the bottom line of the company, but the right kind of goals also help improve salespeople’s skills and shape them into more capable sellers.
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