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How to Set Smarter Sales Goals (And Actually Achieve Them) in 4 Easy Steps

Sales goals are always easy to set but rarely easy to accomplish. There are many reasons for this, chief among them the fact that understanding how to set sales targets that are both ambitious and achievable can be tricky.

But here’s the thing: if you work in sales, you can’t simply shrug your shoulders and say, “Oh well, I’ll try again next year” like you can with personal resolutions such as a new diet or exercise regimen. If your team can’t hit its quotas regularly, your company could go bankrupt, and you’ll be out of a job.

Instead, let’s focus on setting smarter sales goals that are realistic yet ambitious, motivating, and will propel your company forward. No one’s losing their job today.

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What’s a sales target?

A sales target, also known as a sales goal, is a fixed number of sales a salesperson or sales team attempts to hit within a specific timeframe.

For example, if management at Company X needs to generate $65,000 of revenue next month, and every sale the business makes is worth $1,000, Company X’s sales team would need to close 65 deals. Thus, the organization’s sales target for next month would be 65 deals closed.

Are sales goals completely necessary? A self-motivated, well-equipped sales team could certainly sell enough of its company’s products and services to financially sustain the business without worrying about specific revenue targets or closing rates. But (and it’s a BIG BUT), sales goals have been proven to boost sales team productivity, improving revenue numbers.

In other words, setting sales goals is an excellent strategy if you want to grow your business.

4 steps to smarter sales goals

In theory, setting a sales goal isn’t difficult: Just pick a number, any number, and call it a day. But setting a smart sales goal, i.e., realistic and motivational to your sales team, requires some effort. Follow the four steps outlined below to set (and achieve!) smarter sales goals for your organization.

1. Calculate your close rate

“It’s important to make your goals realistic. Using past data will make sure you aren’t aiming for something your team can’t achieve, which will cause morale to plummet if they don’t meet unreasonable expectations. Analyzing your team’s current and past performance also gives you a metric by which to judge future success.” — Jesse Silkoff, Founder of My Roofing Pal

To set smarter sales goals, you first have to understand how well your sales reps are performing. This means calculating your team’s average close rate.

Fortunately, this is pretty easy to do. Simply take the number of leads your company generated over the past 12 months. Then, divide it by the number of sales made over that same period. For example, if your team generated 1,000 leads in 2019 and made a total of 60 sales, your close rate would be 6%.

After finding your average close rate, decide if it’s acceptable or not. If the answer is no, don’t worry. There are plenty of ways to improve!

2. Determine your sales minimums

“In setting sales goals, it’s not only important to understand where you ARE, but also where you want to be. When companies fail to define the overall goals of the business, it’s impossible to define the sales goals to get there. Failing to align the sales goals with the business goals is one of the biggest mistakes I see companies make.” — Susan Mann, Founder of Compass Sales Advisory

Now that you know where you are, you can better decide where you want to go.

First, determine how many sales your team needs to make to keep the lights on. If your company requires $20,000 a month to operate and every sale made is worth $2,000, your team needs to make a minimum of 10 sales every 30 days to keep your business out of the red.

But you’re not just trying to do the bare minimum here, right? You’re trying to grow your business and excel! This means the sales goal you set for your team needs to exceed the number you just came up with.

The trick is choosing a sales goal that’s both ambitious and realistic. You don’t want to choose a figure that’s too high for your team to reach. You also don’t want to shortchange your company by setting a goal that doesn’t challenge your sales reps, allowing them to be complacent.

Before plucking a number out of the ether, be sure to take a hard look at your sales projections and history. For example, a good sales quota will:

  • Take into account historical revenue and growth models
  • Take into account the size of your reachable target market and the reach of the sales team
  • Be based around a company’s upcoming product roadmap: New features and products impact sales forecasts, too!
  • Include other future growth within the company, even outside the sales department

Still crunching the numbers? Not to worry. This guide will help you set a quota that won’t sink your sales team.

3. Implement a proven strategy

“The key to both generating leads and increasing the close rate is to find the right leads to feed into your sales process. Start by clearly defining who your target customer is, and then ask yourself how you can best meet them where they are.” — Jason Aten, Sales Analyst at Fit Small Business

At this point, you know your team’s average close rate and the number of sales you’d like to hit monthly. Now, you have to craft a plan to hit that figure!

There are two ways to do this:

Generate more leads

Let’s say your team’s average close rate is 6%, and you’re currently generating 100 leads monthly. This will result in 6 sales every 30 days. But if your sales goal is nine sales a month, you actually need to generate 150 leads to hit this target, assuming your close rate stays the same.

Pro tip: Your CRM should tell you all of the key metrics.

There are plenty of ways to generate more leads. For example, you could run Facebook ads or Google Adwords campaigns, dive into content marketing, or maybe even buy a lead list.

Just keep in mind that many lead generation activities cost money, which will increase your company’s operating expenses and require your sales team to make more sales every month to meet the required minimums.

Improve your close rate

Another way to meet your sales goals is to improve the rate at which your team closes deals. Imagine if your reps successfully sold to 9% of the leads that came their way instead of just 6%. Your team could then hit its sales goal without generating any more leads.

But how do you improve your close rate? You could:

  • Invest in Training For Your Team: When your team has access to training materials (online courses, in-person instruction, tickets to conferences, etc.), they’ll be able to learn the latest sales strategies and techniques. They can then incorporate these strategies into their own sales tactics and improve their close rates.
  • Create Sales Enablement Content: True to its name, sales enablement content is any piece of content that helps salespeople sell more products. It can take various forms, such as case studies, whitepapers, and informational blog posts. When your team has access to these kinds of materials, they’ll be better equipped to close more deals.
  • Focus on Higher-Quality Leads: Lastly, you can improve your team’s sales numbers by focusing on higher-quality leads. If a prospect is still in the “researching” stage, they’re much more challenging to sell to than one active and engaged. Your reps should focus on folks ready to buy sooner rather than later. Among these leads, some will simply be more lucrative than others—bigger sales, more money, etc.—and should be handled accordingly by the sales team. By re-evaluating the quality of leads your sales team focuses on, you can quickly boost your sales numbers without changing too much else.

These two strategies aren’t mutually exclusive. You can create a plan to generate more leads and improve your average close rate at the same time.

Whatever you decide to do for your company, make sure to break your sales goals down into bite-sized, actionable steps. Then, tackle each step in a systematic and strategic way.

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4. Evaluate your KPIs

“KPIs to consider include customer acquisition cost (CAC), lifetime value (LTV), churn (customer unenrollment rate), monthly recurring revenue (MRR), annual recurring revenue (ARR), and burn (net cash loss).” — Ian Kelly, VP of Operations at NuLeaf Naturals

The final step toward setting (and achieving) smarter sales goals is to analyze your results. Are you accomplishing what you set out to do? If the answer is yes, congratulations! You’ve probably set the perfect sales targets for your team.

However, your initial sales goals will likely need to be adjusted. They’ll either be too high, and your team will consistently miss these lofty targets, or too low, and your reps will always exceed the goals you set for them with ease. Neither is ideal.

If your team can’t reach the sales targets you ask them to, they’ll become discouraged. If they meet them too easily, they may not be inclined to put in the extra work to sell more. It’s your job as a sales manager to find that sweet spot and stay on top of it as it changes.

So look at the results your sales team is achieving and adjust your sales targets accordingly. The perfect goals will be ones that your team can hit regularly — but only if they work hard and stretch themselves a bit to make it happen.

Additional tips for setting the right sales targets

What else can you do to ensure your goals are relevant and achievable? Here are some additional tips to bear in mind as you set your sales targets:

  • Introduce incentives: Setting realistic goals aligned with appropriate incentives can elevate a team member’s performance, making them more productive and promoting business growth. Set up a rewards program comprising monetary and non-monetary incentives to recognize large and small achievements for the best results.
  • Keep your team motivated: Calculate your monthly targets and reverse-engineer the figures to set short-term targets along with your long-term goals to keep your team motivated. When team members achieve small wins regularly, it tends to boost morale and help them stay motivated.
  • Exercise transparency and clarity: Involve your team in the goal-setting process to ensure they understand how you determine monthly and annual targets. Provide a breakdown of past results and current objectives, including clear steps to ensure everyone is on the same page.
  • Monitor your market: Regularly evaluate trends within your industry and the market climate to identify shifts that could impact your sales targets. Adjust your approach while maintaining realistic and achievable goals when opportunities or threats appear.

Make sure you’re setting SMART goals

We all know we should be setting SMART goals, but let’s face it: we don’t always follow this proven formula. The SMART goal-setting approach is popular for a reason, so here’s a reminder of each component to ensure you’re setting the best possible goals for your sales team this year:

  • Specific: Stipulate your sales target in detail, leaving nothing to the imagination, to ensure all team members understand precisely what you’re working toward.
  • Measurable: You must be able to track and measure the success of your goals while working toward your target, so there has to be a quantifiable element included.
  • Attainable: Setting lofty goals that you may never achieve can demotivate team members and work against business growth, which is why it’s important to ensure your targets are realistic.
  • Relevant: Other departments will set goals that differ from yours, but your sales targets must relate to the company’s overall goals and contribute toward achieving them.
  • Time-bound: Every target must have a deadline, not only for the sake of measuring its success but also to create a sense of urgency to motivate the team and to help propel the business forward at a reasonable pace.

Boost sales success with smarter sales targets

Setting the right goals for your sales team is essential. Once you learn how to set ambitious yet attainable goals for your team, you’ll be able to keep your reps better engaged, keep capital flowing into the company bank account, and keep your sales team extremely happy. Win!

While setting smarter goals requires some elbow grease, you now know exactly how to do it. Just follow the four steps outlined in this article:

  1. Calculate Your Close Rate
  2. Determine Your Sales Minimums
  3. Implement a Proven Strategy
  4. Evaluate Your KPIs

Need a robust CRM system to help you monitor and achieve your sales targets? Nutshell to the rescue! Find out why thousands of sales teams love Nutshell. Sign up for a free 14-day trial today, or speak to our team to discuss your specific needs.

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