Set Effective Sales Goals
The exact specifications of your sales goals have much to do with your industry, your business values, and your organizational culture. As you contemplate what your sales goals look like, or review your existing goals, keep the following considerations in mind.
Sales needed to keep the door open
Although the many companies that shutter their doors each year are a testament to the fact that there’s no guarantee you can sell enough to stay afloat, understanding how much you need to sell in order to meet your financial obligations is an incredibly important metric. Start here. Your sales goals can’t be lower than this point.
Not all goals are monetary
Remember that sales goals can extend beyond dollars and cents. Consider complementary goals such as number of units sold, number of leads generated, number of upgrades, number of upsells to existing customers, and/or a minimum number of customer interactions each month.
Carefully consider what unintentional negative behaviors your goals can encourage. For example, if you set a goal of 100 minutes on the phone each day, some salespeople have been known to simply call a toll-free hot line and leave the phone on hold for an hour. A variety of goals and units of measure can encourage healthy sales habits and real sales.
Time to close
If your average sales cycle takes six months, your sales team has little wiggle room to double closed sales in the next three months. Don’t set them up for failure.
In the same vein, if your team has never closed more than 2 percent of deals over the last two years, setting a goal to close 20 percent of sales next month is not realistic.
An exception: If you radically overhaul your sales process, launch a new product line, or experience a similar change of external events, a big jump is possible — but audacious goals should only be set as bonuses, not something on which your team’s rent payments will depend upon.
It sounds obvious, but some organizations overlook this in their frenzy to make sales. You can’t sell to 1 million female joggers in Maine if there are only 200,000 of them. It’s also nearly impossible to capture 100 percent of any market, so keep your total market size in mind when setting figures.
Company versus team versus individual goals
You need different goals for the company as a whole versus the sales team specifically versus individual sales people. Setting team goals versus individual goals can lead to wildly different behaviors, and you need to keep this in mind.
Individual goals can pit people against one another, but team goals can discourage any one person from going the extra mile. Your organizational culture has much to do with which type is the better fit, and many organizations find that setting a team goal with specific individual responsibilities is the best compromise.
A more experienced salesperson has a bigger Rolodex, more deals in the pipeline, and generally a higher chance of succeeding than new team members. Putting the two on a level playing field may be unfair.
At the same time, offering more senior salespeople higher commission rates or bonuses can motivate the new folks to want to become senior, too. “Senior” doesn’t have to be defined in years — it can be akin to an airline frequent flyer program where you gain status based on your sales in the last two years.
Setting discount floors
If your sales people have the capacity to offer discounts, be careful of how this privilege can be abused to meet sales goals. For example, to hit a goal of 100 units, someone can offer your product at a 95 percent discount in order to close the deal — ultimately costing you money.
Previous sales figures
Your past sales numbers (and/or your competitors’ past sales numbers) are a North Star in terms of what your team is capable of. Don’t expect that simply moving the goal out a few million miles will be all your team needs to reach it.
A good goal motivates — it should be encouraging your team members to make that one extra phone call at the end of the day or stretch that one extra bit to win a potential client over. It should not cause them to become desperate animals on the last day of the month, trying anything and everyone to get another close.
Get feedback from your sales team as you develop goals. Don’t assume that including your sales force in goal discussions would lead to easy-to-reach goals. Quality sales people are fueled by a challenge and want to see the company for which they work succeed. Trust in your team and honor their feedback, and they’ll deliver even better results for your entire organization.