No matter how small your business may be, knowing how to set sales goals is essential to your success.
When there are quantifiable milestones to hit, setting sales goals keep everyone’s priorities in line and give your sales reps the structure they need to develop effective selling strategies.
Of course, revenue growth will always be a key area to focus on when it comes to setting sales goals for your company. But successful sales management should also incorporate goals that are less tied to money, such as better customer service or faster closes.
By implementing well-rounded sales goals, you’ll be more likely to achieve the hard numbers you’re aiming for.
If you’ve never carried out structured sales goal setting for your business, the prospect may seem intimidating.
However, setting sales goals is really just the process of breaking down your time, money, and resources into smaller increments, then seeing how you can manipulate those increments to benefit your bottom line.
In this article, you’ll learn how to set sales goals, the best way to determine an appropriate target, as well as some tips on the best ways to hit your sales goals.
The secret to setting sales goals
Establish your target revenue
Successful companies tend to work backward when it comes to establishing sales goal setting for the month, quarter, or year.
Questions to ask yourself when creating targets include:
- How much did you make during previous high-revenue periods?
- What were the factors that led you to those numbers?
- Who were your highest-performing reps?
- What strategies were driving their success?
Next, take that historical data, apply it to your current situation, and ask yourself:
- Do you have at least as much (if not more) sales resources now compared to then?
- Do you want your reps to focus on bringing in revenue from existing clients or new leads?
- How much time do your reps typically need to close a deal in either of those scenarios?
When it comes to knowing how to set sales goals, it’s all about asking the right questions.
You also have to keep in mind any upcoming changes in your company, such as a new product launch or a major contract coming to a close. When you have a clear picture of the different factors at play, sales goal setting is easier.
Set a target length of time to close a deal
If your reps currently take five days to close a sale, you may want to shave that number down to four days to ensure they’re on track to hit their revenue target.
To get an accurate breakdown of where everyone’s time is going, take a look at the individual steps that go into closing a deal. This will help you identify areas where people can speed things along.
For example, look at the average time it takes for a sales rep to contact a new lead or the length of time between a quote being sent and a contract being signed.
Sales management software, like a CRM, allows your reps to log their activities and is a great resource for this investigation. The more detail you can learn about your current sales process, the more likely it is that you can set reasonable expectations for improvement.
Define your target closing rate
As you identify your target revenue and length of time to close a sale, it should become easier to determine what you want your target closing rate to be.
For instance, say you want your sales reps to decrease their closing timeline from five to four days. In this scenario, you could reasonably expect to increase your closing rate by 20%.
However, remember to not only account for past performance but also the current demand for your product or service when deciding how to set sale goals.
You can realistically increase your target close rate if the market potential is solid. But if you’re heading into a season when demand is typically low, you may want to temper your expectations for your sales goal setting.
Use the stretch framework for setting sales goals
Stretch goals are an excellent way to sharpen your sales goal setting and better the results you drive. However, they should be used with caution.
When presented correctly, stretch goals can light a fire in the bellies of your most dedicated sales reps. Ideally, the reps would band together and use a combination of friendly competition, newfound creativity, and stellar support to hit even the most ambitious targets.
But when stretch goals are used incorrectly, they can place employees under too much pressure to function effectively. When morale and motivation are waning, even regular sales goals can become difficult to achieve.
How to set sales goals with motivation
When setting new goals for your sales team, make sure they are aware of, and comfortable with, the process. The first thing you should do to empower your reps is to break down their goals into manageable chunks.
If they now need to close 20 sales per month, start by asking them to hit five sales a week. The idea is to ease into the new process and not overwhelm them with increased expectations.
Let your sales reps ask questions and voice concerns prior to solidifying your goals so they know their opinions and experience matter. Finally, offer additional incentives, such as increased commission or flex time, for reps who do everything in their power to meet their targets.
Track your progress
Lead management software helps sales teams monitor their progress and develop smarter strategies as time goes by. Look for a program that lets you track key metrics at every step of the sales process, from the first sign of interest to the final sale.
It’s easy to get caught up in the day-to-day operations of selling, but the right tools can show you how resources are being utilized on a larger scale.
This, in turn, shows you where adjustments can be made to open the door for greater selling potential. Sales management software can also help your team keep track of leads and customers as business gets busier, so you never miss out on an opportunity.
Reevaluate and adjust
One of the smartest things you can do when it comes to setting sale goals is to be flexible with them.
Circumstances change, and this can cause even the best-laid plans to veer off-course. Whether it’s a single event (such as losing a major client) or part of a larger trend (like general market disinterest), you need to be ready to revisit and adjust your numbers on a regular basis.
As business waxes and wanes, it will become easier to adjust your goals to fit your current situation. Let your reps know that you’re not arbitrarily moving the goalposts around on them. Instead, you’re simply anchoring their expectations based on real-world factors.
Recap: Setting sales goals
Sales goals are always going to be ambitious to a certain extent, but there are definitely ways to get closer to realistic targets. Working with the right data gives you a solid foundation for setting and achieving manageable goals.
Like all business processes, this will take some trial, error, and iteration over time. But as your business grows and your team becomes more experienced, you’ll likely see your goals and your accomplishments become bigger and bigger.
Ready to take your sales to the next level? Get your copy of this free ebook to learn how.