8 Steps for Setting Smart Sales Goals for a Stronger Business Plan
Setting sales goals is an integral and critical aspect when you are designing a business plan and it can prove to be even tougher than you think!
A sales manager who focuses only on numbers while setting sales goals is making a serious error in judgement!
I am not saying that you shouldn’t focus on driving more sales and push the whole team for success, but if you do not have a clear and strong plan to achieve a tangible set of goals, your team and you can’t possibly reach the magical goal you set for them.
It is important to keep the long-term goals of the company under consideration. If you set just some randomly high numbers for the sales reps, there is a good chance they might end up offering some bad, unprofitable, and high-churning deals, all in an effort to meet the numbers.
Not only will these deals fall through in a short time, but may also end up giving your company a bad reputation for failing to deliver or under-delivering on the promises made by the sales reps.
The idea is to set some numbers that motivate, instead of setting goals that appear unachievable and daunting!
Getting SMART while Setting Goals
Deliberate and study all relevant data before setting your goals up!
The golden rule of setting goals, however, is to set SMART goals.
- Specific – Be clear, be specific. When you set a specific goal, there is a good chance that you would perform better, as opposed to vague ones.
- Measurable – The goals need to be measurable. Make sure that the goals are easily ascertained, e.g. reduce churn by 30%, improve lead acquisition by 20%, etc.
- Achievable – Don’t get carried away. If the goal you set for others to achieve is unrealistic, you’re wasting everyone’s time!
- Relevant – Make sure that it is related to your BIG picture. As you are setting a business goal, make sure that it aligns smoothly with your business goals
- Time-Bound – Set clear deadlines. When the team knows the deadline or the timeframe set aside for your goals, they’ll procrastinate less, stay on track, and always be aware of their progress.
In general, the sales goals set by sales manager include the following:
- Monthly sales goals
- Waterfall goals
- Sequence goals
- Activity goals
- Incentivized goals
- Goal progression
- Stretch goals
- Mentor goals
How to set Smart Sales Goals?
1. Set your monthly sales goal
This one applies to both, personal and team goals. The monthly sales goals you are setting aside for yourself or for your team only make sense when they are aligned with annual sales goals.
This can be done best by working backwards from the annual revenue target set for the company.
After you have planned and defined your target, you can then go ahead and work out how much the entire sales division, the smaller teams, and an individual sales rep needs to sell, in order to meet that annual revenue target.
While working out this monthly sales target, it is important that you take into account any seasonal fluctuations or the staffing issues. This means if you have a couple of new people joining in the sales team in Q3, you are going to have a tough time meeting the sales goals. What you should do is plan for it in Q2 or Q4 so that your annual goals do not suffer.
2. Establish your waterfall goals
When you are creating or re-adjusting the sales goals or task goals for your staff, take care that you are allowing them some time to gradually reach the new targets. Giving your team a sudden jump in the goals can only lead to them getting stressed and overwhelmed.
This means that if your sales representatives are making 15 calls in a day, you can’t expect them to suddenly start calling 30 people in a day. This has to be done in a staggered manner where they gradually go from 15 to 18 to 20 and so on.
Doing this would definitely be better for the overall morale. If you increase the load by 100% suddenly, chances are they wouldn’t be able to meet them. This can really bring the motivation levels down.
The waterfall approach is proven to produce high quality work with great numbers. The team won’t burn and crash due to the stress as they would have time to acclimatize with the increasing load before reaching the new goals set out for them.
3. Prioritize the Goals
Prioritization is key to meeting the goals, irrespective of the scale and scope of the project. The idea here is to first figure out which are the goals that bring the greatest value upon achievement.
Let’s say you were setting goals for a junior sales executive; it would help you to set goals around where there is a scope for improvement. If they need to work on generating leads, then their goal should something like increasing the number of leads by 15% on a weekly basis.
When you do this, you are essentially sequencing the goals, which means that in case your team is unable to meet all the goals that are listed out for them, they would at least be meeting the goals that are most critical to the company and their path to success.
4. Establish activity goals
When you are assigning sales goals to the individual contributors in your team, it is important that you convert the numbers they need to meet into activity goals.
You would need to do some ground work beforehand, which includes the individual’s record and performance history all through the sales funnel. It is on the basis of this information that you would be able to come up with a realistic number of contact points, emails, calls, or meetings that they would need to achieve the sales numbers.
For example, let’s consider that the individuals need to close four deals per month on an average to be able to reach their monthly target. In case their performance history indicates that 50% of their demos convert to deals, it is only logical that they should schedule 8 demos for that month. And, if 30% of their emails get them the demos, then they should send out 27 emails.
When you work backwards, you can easily turn (what might seem a humungous task) into a metrics that is a lot more manageable.
5. Incentivize the goals
It is almost a norm to offer incentives to individuals who meet their targets or quotas. These incentives however vary from case to case and can be anything from money to vouchers, gifts to vacations, or anything else that you feel might motivate your team to perform better as individuals and as a team.
It is understandable if you, as a startup or a small sized business do not have the budget to offer some of these rewards. You can always offer recognition within the organization or some extra vacation time as a lucrative incentive for your employees.
6. Track the progress of goals
Any goal left untracked or un-monitored is bound to fall flat and stay unmet. It is impossible to monitor it without a proper system in place.
You can monitor this using the dashboard in your CRM, or if you prefer the old school ways to do this, you can train your team members to enter their weekly numbers in an Excel spreadsheet.
In this way you can quickly spot those employees who are unable to meet their weekly numbers before it leads to unmet monthly goals!
Though, in the short term, you may feel tempted to skip this step, but believe me, it is worth the trouble in long term.
7. Establish stretch goals
This one might not work for everyone. If you see that one of your team members is already having trouble trying to meet their monthly goals, adding a stretch goal can only increase the anxiety level.
Anxiety never helps in meeting goals!
However, this works wonderfully well when you have a high performing employee. You can easily stretch the goals (realistically, of course) like maybe to a 125%. This percentage should be just enough to present a challenge to motivate them towards performing better.
8. Propose mentor goals
If a team member is struggling with a certain goal or going through a tough phase (it happens to the best of us!) you can suggest that they find a suitable mentor or team of mentors.
Create a framework, laying out all the areas that you would like them to work upon, or suggest them to create one on their own with the help of their mentor.
It can be great when you have someone to confide in, apart from their manager. Sometimes this is exactly what they need to thrive!
In your process of setting new goals or in revisiting old ones, it is of great importance to check in with your team members and try and figure out how they feel about the way things are going for them. This way, you would be able to ensure that they are comfortable with the existing and the new sales goals that you are setting for them. The goals should excite them, challenge them, but still remain attainable.
A great way to set targets and manage your teams, you can also create your own mobile app so that everyone, at desk or on site can be on the same page, making the goals easier to understand and access.