Setting smarter sales goals

How to set smarter sales goals

Goal setting works when there is true alignment between expectations and ability to execute upon the the plan. The best way to set goals for your team is to do so in a way that is measurable, attainable, and realistic.

Most teams have a mandate to attain an annual revenue target in which each rep is responsible for a specific portion of that number. To better track progress throughout the year, annual revenue goals should be broken down into smaller quarterly and monthly goals per sales rep.

 

The breakdown

The way to break down these annual goals into smaller time frame revenue goals is to consider your business in the context of the habits and cycles of your audience. Accordingly, goals should match the seasons and cycles of your customer base. If your audience tends to make most of their buying decisions at the end of the year, perhaps the last quarter will have a disproportionately larger goal than the other quarters.

For example:

Q1 – 23%
Q2 – 23%
Q3 – 23%
Q4 – 31%

Once your quarterly goal is established, map out monthly revenue goals that funnel into these larger goals. Given the example above, a sales rep would need to reach 7.67 percent of their annual goal during each month of the first three quarters of the annual target.. If the annual quota for this rep is $1 million, the monthly revenue goal is $76,700 for each of these first three quarters.

 

Stretch goals

Many managers use stretch goals to incentivize over-performance. In our example above, a stretch goal could be $80,000 and there could be an additional bonus if the stretch goal is achieved during quarters where quota is achieved. Quarterly stretch goals are also rather common and reward reps with additional bonuses for quota for beating goals.

As your goals are set, also take care to ensure that they are realistic. Setting aggressive goals is important, but if numbers are not based on reality, teams will experience poor morale and attrition. Overly aggressive goals are counterproductive to team continuity and goal attainment.

Sales reps respond positively to team success. Reps perform with enthusiasm when they see their peers hitting quotas and reaching personal compensation and career goals. Make sure the goals are realistic to retain high performers and maintain a positive motivated team culture.

 

Track and measure

Once you have your team goals in place, there are additional ways to set your team up for success. Reaching the goals requires linking the desired revenue outcomes to the activity inputs that generate the results. These specific activities should be identified and measured on a regular basis to ensure that your teams are tracking toward success. Some activities to identify and measure could include opportunities created, demos set, demos held, or quotes sent.

How can you measure these activities for success? The best way to do this is to translate the revenue goal into activity terms. For instance, if your average deal size requires reps to close four deals per month in order to hit the quota, and your team’s win rate is 30 percent per demo held, your reps will need to aim to hold 14 demos per month. If you know that 80 percent of demos scheduled are held, then your SDRs should have a goal of setting at least 18 demos per month, or 5 demos per week.

 

Attain the activity

With a weekly goal in place, you can come up with daily activity goals that support this weekly demo goal. These daily activity goals depend on your team’s style and mix of inbound versus outbound activity. These daily activities should be tracked in your CRM to closely monitor trends and your progress toward these goals. Dashboards that present this data in real time are extremely helpful for visualizing team habits and understanding how goals are being attained.

This approach measures performance in a manner that is transparent and clear for all team members. Setting goals in this way also allows for managers to utilize modern tools in order to see how daily activities track over time and use this information to adjust and shift priorities depending on the team’s performance.

Tracking performance on this granular level also allows managers to see details of a particular team member’s efficiency, which is important to support personal development goals and learn more about the balance of strengths within your sales teams.

 

Final thoughts

Setting smarter sales goals will empower you with the structure to guide your sales reps’ activities to make sure they support team and personal goals. This will create a team culture where reps are motivated and have incentives to reach beyond quotas. Using CRM tools to monitor progress will give you more confidence in your forecasts and commitments. Setting goals can be difficult. Hopefully, the above ideas and best practices can serve as a foundation for your process as you build a goal framework for your growing team.

To learn more about how to optimize your sales process, read our 2017 Sales Effectiveness Report.

CTA Sales Effectiveness Report

 

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