Setting Accurate – but Challenging – Sales Goals

Every rep on your sales team needs a goal. It is essential to accurately assess each individual according to their sales abilities, and then set a tough, but fair, sales goal to hit in the coming selling period.

This is more difficult to accomplish than you might think. Many organizations set a static goal and leave it, but that ignores a number of constantly-changing factors. Also, historical performance does not necessarily mean that you’ve reached your team’s full potential.

Rather than staying stagnant or only using previous sales performance, here’s how to analyze your sales team’s variables and capabilities to set more challenging and attainable sales goals.

Know Your Metrics

Setting sales goals is all about the metrics. You need to fully understand all of the aspects of your sales team, from the rep level up. This means you need to deeply analyze historical data, including:

  • # of opps created/month
  • # of leads handed to each rep
  • % of pipeline created by rep vs. being created for them by marketing or demand gen
  • Win rates by rep
  • Sales cycles overall and per rep
  • Average Selling Price (ASP)

This information is useful, because it accurately tells you about the current capabilities of the team. For example, if a rep’s pipeline creation today stands at about 30 new opportunities created per month, his win rate sits around 10%, his ASP is $10K, and his sales cycle is about a month, it’s a safe assumption that thirty new opps will net $30K in bookings. Start monitoring his pipeline creation; 30 new opps should generally keep him at a reachable target of $30K.

Evaluate Strengths and Weaknesses

Once you understand and analyze your current sales metrics, you can start working to get more out of the business. It’s the responsibility of the individual rep and the manager to push for better production. Higher win rates, shorter sales cycles, bigger ASPs and more pipeline creation are the keys.

You can push that same rep to produce more by setting a challenge for him in the upcoming month. The unit economics matter, and you can’t settle. If you’re going to stick with handing over 30 qualified opps, his new quota might be set to $40k. How can you expect that same rep to produce more, yet receive the same inputs?

  • He can create some pipeline on his own. Coach him on prospecting and networking.
  • He can increase his win rates. Work on his skills and process. Do you have a real coaching and development program in place?
  • Increase his average sale price. Stop leaving meat on the bone – cross sell, upsell, stop discounting so easily.
  • Shorten the sales cycle. If the sales cycle is a month on average, that means he’s probably winning some quickly but letting others push to the following month. Get those deals in now, and start working on new stuff for next time.

Re-evaluate and Pivot

You have to remain open-minded and continue to adapt as you implement these changes on your sales team. Some new tactics may work, and others may not. You don’t want to stay married to your original plan if it’s not working.

This is all about ongoing coaching, ongoing course correcting, and confirming whether you were right in your decision-making. Should I make changes again? What should my team work on? I ask myself these things over and over again, especially at the end of each quarter. You have to just keep making incremental improvements, to slowly drive up revenue, improve the win rate and decrease the sales cycle. It’s my job as much as it is his to make sure he’s successful – and it’s my failure as much as it is his if he’s not.

I really think the biggest part of this is having a culture where you’re in it together. Invite your team on a journey where everybody’s “all in.” Let’s all find areas to improve, let’s work hard, and let’s learn skills that we can carry with us forever. Last month is last month, and now that’s the new baseline. Nobody settles, and nobody stops learning. Get your team on the same page and you’re on your way.