Sales is about hitting targets and goals. Every sales rep, whether inside or field-based has targets to hit. You gotta’ make that number, or meet the quota; however your company phrases that, it means the same thing.
Quota means hitting or exceeding revenue goals for the financial year. No matter how you break it down, whether monthly or quarterly, the result should be the same.
Successful sales people hit targets. Those who aren’t as good, or at least aren’t a good fit for the company, fail to achieve targets.
However, if targets are only based on revenues, then that isn’t a smart way to set sales goals. Giving sales teams annual, quarterly or monthly targets is akin to telling them, “try your best.” Is it any wonder that not all of them keep up the momentum throughout the year?
In this article, we look at smarter ways to define sales goals.
Why smarter goals are needed?
Sales is a marathon, not a sprint.
During a marathon, it’s not only useful, but a psychological necessity to know how far you’ve come and therefore, how much further to go. Without milestones, it’s human nature for us to loose heart, reduce the amount of effort we put in and, in time, give up.
Smarter goals stop that from happening. Stop salespeople from running out of steam. According to a Harvard University study, setting specific goals improve performance and outcomes 30%. Would a 30% improvement in performance be useful for your sales team? Here are some smarter goals you can set to improve sales performance and outcomes.
6 ways you can set more effective sales goals
#1: Define monthly goals more accurately
As an example, let’s say a sales team have been set an overall target of £5 million new revenues for the next financial year. You’ve got a team of four, plus yourself, the sales director. One of the team is fairly new, only just finding their feet.
How would you divide this goal? £1 million each over 12 months.
Or do you divide it based on who manages the most accounts/covers the largest territory?
Do you factor in seasonality, which can vary depend on sector/industry norms.
What if you are planning to on-board another team member later in the year?
Adjust and adapt for every eventuality so that the goals are more closely aligned with the reality of the working year, workloads, capacity, and the number of accounts the team is currently managing.
It’s always easier to generate revenue from current than new clients, so targets should also be aligned with an accurate assessment of the pipeline at the start of each working year.
#2: Activity-focused goals
Next up, think about how you monitor and manage activity.
Or do you only focus on outcomes and outputs?
Outcomes are easier to monitor, in many ways. Either a customer says yes, or they don’t. A prospect might say not yet, but they come back and confirm 3-months later. These outcomes are a result of actions taken.
No matter how many calls your team makes. How many meetings they attend. How many miles on the road meeting prospects and key accounts, they — and you — can’t control whether or when a prospect says yes. Your sales team can do as much as they can, but not everything is in their control.
Actions, on the other hand, are in the control of salespeople and the team as a whole.
Take more calls.
Do more meetings.
Do more, sell more, is the idea behind activity-based goals. And monitor this activity. If someone is only booking 3 meetings per day, but needs 5 to hit target, then they aren’t doing enough calls/sending enough emails to generate sufficient activity to achieve the goals set.
Increasing sales activities improves results. Vantage Point Performance data found that the top quarter of sales managers performed at 115 percent of their target, which was 39 percent greater than the target achieved by bottom-performing managers.
#3: Ramp-up goals
For those looking to increase sales team productivity, you can’t expect a team to go from doing 30 calls a week to 60 overnight. To ensure people don’t get overwhelmed, targets need to be ramped up.
Set goals so that activity scales over time, making each step seem easier to achieve. In the long-term, it’s better for the team and makes it more likely they will hit the overall target instead of giving up and starting to look for another job when you need them to stay focused.
#4: Pipeline activity goals
Do you know how well, or not, the pipeline is being managed?
In sales reports and meetings, team members might report enthusiastically about a meeting they’ve just had. Weeks or months might pass, you keep asking them about it, then eventually, that particular deal goes quiet or disappears.
It happens all of the time and it can have a serious negative impact on whether or not a team hits targets.
Here is a question worth asking when evaluating a sales pipeline:
- What has the prospect done recently?
- Do they return your calls and emails?
- Have they got back to you with more information?
- Have they outlined goals and objectives?
New prospects or long-term customers: If you are the only one putting in the effort it isn’t a good sign for the state of the relationship.
Managing and monitoring pipeline activity, not just outcomes, goes a long way towards more accurately forecasting the pipeline.
#5: Set priority goals
What are the biggest things you could do to hit target this months or quarter? Focus on what is going to make the most difference. Now, that might mean landing a massive client you’ve been cultivating for over a year. Or it might mean landing 12 smaller clients that will bring in the same amount of revenue.
Whatever it is, base these actions and goals on the overall state of the current pipeline and prospecting activity.
#6: Stretch goals
One of the best ways to incentives sales teams is to give them an outsized reward for hitting or exceeding target.
If hitting target earns them an extra 5% commission/bonus, how much more effort might they put in if you offer something special. Such as a skiing holiday. Vegas. New York. Sales people respond to incentives, and the bigger the incentive the harder and smarter they’re going to work to achieve the goals set.
When setting targets and goals, look at the big picture and them zoom in to focus on micro-activities that make achieving those goals possible. Focusing on outcomes not actions mean missing a massive part of how sales people actually hit targets, giving them the right support to ensure they achieve the goals set.
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