The following is a guest post by Inside Sales trainer, Danna Zakai.
For some people, goals and targets present an instant source of stress. For others (myself included), settings goals and targets is the only way to ensure that things will get done, and it actually reduces stress and uncertainty because it spells out what you need to do to achieve what you want. The question is: How do startups that have no previous sales benchmarks to refer to, set realistic targets, and how can they ensure their salespeople reach them?
Before I dive into this, I just want to clarify the difference between goals and targets. A goal is representation of a vision of the “bigger picture”, of what we want to achieve within a certain timeframe. Targets are similar, but they refer to smaller, faster-to-reach milestones that help us reach the goals. For the purpose of this post, I’ll refer to monthly results as “goals”, and the “targets” as the steps needed to get there.
Why are goals and targets so important for a sales team?
Goals and targets help set parameters for the results you’re expected to achieve, what you should strive for, and where you stand compared to where you need to be. Goals are meant to create motivation, satisfaction and results.
Here are a few guidelines to setting goals and targets:
1. Challenging but achievable.
Goals should be ambitious enough to create motivation and “hunger”, but not so unattainable as to cause despair, and an attitude of “I have absolutely no chance of reaching this goal, so I’m not even going to try”.
In many companies, sales goals are set based on a company’s annual revenue expectations, so they can sometimes seem intimidating. When they are set in the right way, however, they can be motivating and give you a sense of satisfaction and achievement once you reach them, but you need to find the right balance. If the goals are unrealistic, they can be discouraging or even make you give up – as you can never reach them. But if they are set too low – there’s no real challenge, so you don’t put as much effort into achieving them, and even when you do reach them, the outcome is unimpressive.
2. Monthly or quarterly, not annual.
Although it is not uncommon to set annual goals, if the only goals you’re working towards are set too far into the future, it may detract from your commitment to conquering short-term milestones.
Whether you’re in a small business, short-cycle sale, or in a long-cycle enterprise business, goals and targets should be measured regularly enough to be “checked off” a “To Do” list. The rush of Adrenalin you feel as a result of accomplishing something you set out to achieve is what makes you want more, and achieve more.
If the only goal you keep in mind is the annual one, you might be too “forgiving” (of yourself) if you fail to reach monthly goals, because you think “I’ll just make up for it next month”. But will you? Or will this just create a habit of rolling it over to the next month?
3. Your goal doesn’t necessarily need to be monetary.
It can include all the steps prior to the sale. For SDRs, for example, the goal can be how many leads they produce for the sales team (qualified leads, that is).
But how many leads should we set as the monthly goal? That’s the million-dollar question! You can either set your quota based on industry research of similar companies with similar products at similar stages, or you can create your own targets based on the company’s revenue goals.
I like making salespeople ‘hungry’. Meaning – they should be self-motivated and want to sell much more than their goals. However, if you don’t pave the way for your sales team – they might not know how to get there. So the best way is to give them a number you can both measure and know at any time.
I start by setting a goal for daily calls. Unfortunately, in some companies – salespeople have convinced themselves that sales can be done solely via email, and while it’s true that some leads will convert via correspondence alone, it’s not enough. An email can never create the same interaction, dialogue, relationship, explanation, negotiation, intonation and momentum as a phone call, so you’ll get comfortable making them. The first calls might be tough, but it gets easier, and I daresay – even addictive. One of the most satisfying things in sales is the relationships you build with your customers: the interesting conversations, getting to know each other and eventually caring about them. If you’re not talking to them – you’re not only making it harder for yourself to achieve your goals, but also missing out on a part of the job that you might discover is actually fun. Yes, fun!
If you’re setting goals and targets for SDRs, start with the target of 50 call attempts per day, meaning, picking up the phone and making at least 50 calls in an effort to reach a contact. Once your SDRs have developed their pipeline, the target can go up to 100 call attempts or more.
The logic behind setting targets for calls and not only for actual sales is essentially based on a numbers game. The more calls you make, the more people you reach, the more opportunities you create and the more sales you are likely to close.
Setting the goal for actual leads or sales is more of a case of trial and error. At the beginning, they are just starting to build their pipeline, the goals will be lower, but as they progress, they will have more and more opportunities and warm leads in their pipeline, so they will start reaching the right people and will succeed in scheduling a call with them, and eventually selling to them.
4. Create targets and goals that take into account each stage of the sale process.
What are the steps to making a sale in your company? Let’s say you offer a free trial or a pilot period. If you demo your product as part of the sale cycle, you could use that as one of your targets.
For example, SDR targets can include making 50 calls/day and speaking with 5 people/day in order to reach the goal of scheduling 10 demos for salespeople every month.
For a salesperson, the targets can be to process 300 leads/month, conduct 40 demos/month, create 30 opportunities/month (hot leads with a high probability to buy, based on the criteria/qualifications you set), in order to reach the goal of closing 20 sales/month.
The numbers I’ve used here are just an example and aren’t necessarily relevant to your company, but hopefully you get the gist.
5. Reach an agreement on the goal and target expectations.
While I don’t think the salesperson should set his own targets, I know that many people don’t like being dictated to. In order to maintain motivation and cooperation, I would set expectations for each salesperson by explaining the goals and asking whether they make sense to him. Whether the answer is yes or no, I would also discuss how those goals can be reached, i.e. Set a realistic daily plan of action.
If a salesperson finds the goals “scary” or unattainable, I like to give examples of people who have actually reached them, salespeople who make 50-100 calls/day and enjoy it, and achieve excellent results. Break it down to the number of calls they should aim to make, for example, before and after lunch. Just as 30 sales/month can seem like an unattainable goal, so can 50 call/day, but by breaking it down to a more detailed plan of action, the goals can appear a lot more attainable.
6. Follow up with your team and establish ownership, accountability and recognition.
As salespeople, if nobody in the company recognizes our great achievements or if there is no one to motivate and help us to improve, our goals might not be as meaningful, and therefore not effective.
If you’re a manager, then at least at the beginning (or until your team members become the ‘selling machines’ you want them to be) – meet with your salespeople regularly and review their pipeline together: How many calls did they make? How many leads are they actively in contact with? How many opportunities do they have? What difficulties have they encountered that you can help with? This is also your opportunity as sales manager, to strengthen your relationship with your team and boost their confidence, which is so crucial to their success.
I believe that salespeople do a better job if they like and respect their manager. It creates a kind of an emotional-professional commitment, so my tip to managers is this: Love your salespeople, care about them and give them the attention they need. They really are your most valuable resource.
7. Lastly – goals should be translated into compensation. There is so much to say about this point, I’ll revisit this one in a separate post (so stay tuned!).
My ultimate advice to salespeople regarding goals and targets is this: Regardless of the goals your managers set for you, set your own goals and targets as well, and have fun with it, even if it means setting your own goals even higher. A salesperson who isn’t “hungry” to succeed probably shouldn’t be in sales in the first place, so if you’re not ambitious and aiming high, then the art of Sales probably isn’t for you. Your real competition should be with yourself, so challenge yourself to always break your own records.
“A salesperson who isn’t “hungry” to succeed probably shouldn’t be in sales in the first place, so if you’re not ambitious and aiming high, then the art of Sales probably isn’t for you. Your real competition should be with yourself, so challenge yourself to always break your own records.”