January 25, 2021
by Mary Clare Novak / January 25, 2021
At the start of a new day, week, month, or year, it’s always nice to look forward and set expectations for yourself.
Whether it be a set number of books you want to read or recipes you want to master, setting goals is an integral part of any journey. The same goes for your professional life. If work-based goals didn’t exist, there would be a lot of unclear agendas, wasted time, and unfulfilling days.
For sales teams, the stakes are high. Assuming the role of revenue generator for a business is nothing to be taken lightly. Whether or not a sales team is successful will ultimately affect the rest of the organization. A good quarter can offer room for growth, and a bad one can hold the business back in future endeavors.
Safe to say, it’s best to start off a new stretch of business activity with some ambitious, realistic, and thoughtfully-set sales goals.
You can dream of selling more or selling faster all you want, but without a well-articulated sales goal to back it up, you’ll lack the ability to envision the path it takes to achieve it. Those ideas can most certainly act as the root of your sales goals, but there are some specific steps you’ll need to take to ensure success.
A business can’t succeed without ambition. However, the idea of shooting for the moon can result in getting carried away. That doesn’t mean you shouldn’t set challenging goals. By all means, aim high. But first, you need to define what “realistic” means in the realm of your goal-setting.
Determining what’s realistic to expect of your sales org requires looking at a few things. The first is past data. Analyze how your sales department has performed in the past by looking at key performance indicators (KPIs) like revenue, profit margins, and sales funnel conversion rates. While you shouldn’t count out seeing improvements in those metrics, your business isn’t going to change overnight, so past performance will offer a good starting point.
Next, take a look at growth rates. Choosing a consistent time period to measure here is crucial. If you’re setting sales goals for a new month, look at month over month growth. The same goes for quarters, years, etc. Incorporate average growth rates with your past sales data to generate ideas of what’s attainable and what’s entirely out of reach. Remember, there’s a difference between challenging goals and unrealistic goals.
Finally, take a look at your sales team and assess their skills and potential. Determine if the goals you have in mind are realistic for that specific group. If you have a lot of new sales reps to onboard, you might want to go easy on goals until they’re fully ramped. On the other hand, if you have a department full of strong sales professionals ready to contribute, you’ll want to incorporate that into your objectives.
Now it’s time to set the goals. Depending on your business model, you can do this on a monthly, quarterly, or yearly basis. However, keep in mind that while long term goals are important, it’s also beneficial to offer small and more frequent wins for sales teams.
Take seasonality into account. If your business has a slow or busy season, reflect the usual impact on your sales goals.
An important thing to keep in mind is the cost of keeping your business alive. Salaries, production costs, marketing expenses, and general overhead all add up, and your revenue is going to have to cover that and then some.
While the thoughts of increasing revenue or reducing sales cycle length are nice, they aren’t solid business goals. They’re just ideas. A proper sales goal needs to be specific, measurable, achievable, relevant, and time bound (SMART).
Reevaluate each sales goal you’ve made and ensure they meet the following criteria:
Let’s look at an example.
Here’s a non-SMART goal: Let’s generate more revenue.
Here’s the SMART version of that goal: By the end of the second quarter, we will increase annual recurring revenue by 3% by reevaluating our customer retention strategy.
While the overall goals of any sales team usually revolve around money, the chosen angle will depend on the focus of the organization for that time period. This might come in the form of an emphasis on lowering churn rates, decreasing cost of goods sold, and so on. These will be reflected in your sales goals.
Newly structured sales goals must be accompanied with a new strategy. You can’t achieve a recent objective without changing something about your approach.
Take a look at each new sales goal and identify actionable items your team can implement to help achieve it. Make sure you have a defined set of sales metrics that will reflect your progress, success, or failure(s) along the way. Once you’ve determined what you need to do to accomplish the sales goals ahead of you, evaluate your sales strategy to see what’s working, what’s not, and anything that can be further optimized.
Using sales performance management tools, answer the following questions and strategize accordingly:
With answers to those questions, you’ll have a set stack of smaller goals to accomplish that will make progress towards your bigger goals. These more frequent wins will motivate sales reps to work towards long-term objectives.
Like with any new business initiative, you’ll want to track your progress along the way. Sales goals should include benchmarks and milestones so growth can be measured periodically. This will help point out if you are likely to hit sales goals or not, which might call for another round of strategizing.
With a set of sales metrics to track each goal, use real-time data and insights to carefully monitor and evaluate progress. Make sure all team members are on the same page with what’s being tracked and why. Use that data in strategy sessions to make even more improvements throughout the time period you’re tracking.
At the end of the month, quarter, or year, calculate final metrics and determine if you hit your sales goals. Hold on to that data as it will come in handy when you have to plan for future time periods.
Your sales goals will adapt to reflect the changing focuses of your business. However, there are a few common sales goal examples that will be recurring themes in your strategy. Even if they aren’t a current focus, the following eight sales goals will likely always be tracked, measured, and highly valued within your business.
Increased revenue streams, whether they be monthly or annually, are always going to be a key performance indicator for your sales team. Revenue goals will be set for the entire team, but can also be done on an individual basis with sales quotas as well.
Revenue is the oil that keeps your business machine running. To succeed, you need to ensure profitability and continuous growth through revenue streams. Because of its influence, your revenue goal will likely be reflected in the rest of your sales goals. If you aren’t hitting revenue goals, you likely aren’t hitting others.
SMART revenue goal example:
To increase monthly recurring revenue by 2% year over year.
How to achieve it:
Revenue is arguably your most important sales goal for any month, quarter, or year. Stressing its weight on the success of the business is important, but you don’t want to overwhelm the sales team too much. A good way to avoid this is pairing annual goals with sales activity goals that are achievable for reps. For example, you might set individual goals for sales calls made, emails sent, and meetings scheduled. When doing this, make sure to take your typical conversion rate into account so these activities metrics can support the revenue goal.
The only way to keep your company afloat is through loyal customers, and if they churn, you’ll sink. Churn rate refers to the rate at which customers stop doing business with your company. Because you need customers to survive, you want your churn rate to be as low as possible.
If your company has a subscription-based revenue model, keeping churn rate at bay can make or break your business. You will eventually start to rely on that recurring revenue and might even incorporate it into your sales forecasts. If you lose out on that income you counted on, you could run into trouble.
Solid customer relationships can be incredibly valuable to your business. Not only does it create a reliable stream of income, but it also relieves the pressure you might feel to generate new business. After all, acquiring a new customer can cost five times more than retaining an existing one.
SMART churn rate goal example:
To reduce monthly customer churn to less than 2%.
How to achieve it:
Customers churn for a variety of reasons. Some are no longer getting value from your business’ offerings, and others might have just forgotten that their subscription ended or payment method expired. Whatever the case may be, it’s up to your sales team to keep this from happening.
Your sales reps aren’t just responsible for closing deals, but also establishing mutually beneficial relationships with customers. Relationships require communication, and even after a sale is made, these conversations should not end. Your customers’ needs will change as their business evolves, and reps need to understand how to meet these expectations.
Another way you can keep customers from churning is determining the point of churn and getting critical with the actions you’re taking at that point. Evaluate if there’s anything you’re doing or not doing that could help reduce churn rate.
Your company’s profit margin refers to the income leftover after the expense of selling is taken into account. Essentially, increasing your profit margin is boosting the amount of money you get to keep after paying off expenses.
The purpose of increasing profit margins is to create more room for your business to grow and expand. Selling more units is always valuable, but if the cost of making that happen cancels out the revenue, was it really worth it? You need enough revenue to cover those costs, and would benefit from more to hire more personnel, offer career development options for employees, and expand to new markets.
SMART profit margins goal example:
To increase profit margins year over year by 5%.
How to achieve it:
Your team can achieve an increase in profit margins in a variety of ways. One of these ways being to simply sell more units, which will result in more revenue.
Selling more units can come as a result of more sales activity, such as cold calls, cold emails, and meetings with prospective customers. There are only so many hours in a work day, and adding more expectations to an already full day is a recipe for burnout.
The best way to go about this is to incorporate technology that takes care of the menial tasks a sales rep is responsible for. There are a plethora of sales acceleration tools that can do this for your business.
Another approach for increasing profit margins is to rethink your pricing strategy. If you’re selling an acceptable amount of units, but the cost of selling continuously outweighs generated revenue, it’s possible that you aren’t charging enough for your solution.
Customer lifetime value (CLV) refers to the potential value that a client can offer throughout their entire relationship with your business. This is an important metric for businesses where salespeople handle an account for the duration of your business with them.
Again, generating revenue from existing customers is a lot cheaper than acquiring new ones, so CLV should be a high priority. Focusing on your current relationships will not only result in a positive experience for customers, but it can also lead to lower selling expenses. Wouldn’t you rather strengthen the connection with someone you already know than market to a stranger?
SMART CLV goal example:
To increase customer lifetime value by 10% year over year.
How to achieve it:
The first thing you need to do to achieve a higher CLV is get to know your customers. Conduct regular research about what’s going on with their business, and identify any pain points. Match those needs to a benefit your solution can offer. Businesses change, so this is necessary even after the initial discovery.
Throughout your interactions with their business, make sure you’re tracking everything in a customer relationship management (CRM) system to stay up to date on their data, preferences, and expectations.
Showing you truly understand your customers will establish trust and help you sell to them better. Once that baseline is established, find ways to upsell (getting customers to upgrade their current plan) and cross-sell (getting customers to also invest in another solution you or a partner offers). Don’t be sneaky about it, and only ever offer it if you think their business could benefit from it.
You can’t have a successful sales cycle if it doesn’t start strong. And the best way to make sure your sales funnel is equipped for wins is with qualified leads. A qualified lead is a prospect who has been identified as worthy of pursuing because they fit the criteria of your target persona. After initial discovery, a qualified lead is someone who has the budget, authority, need, and time to buy your solution.
Not all leads are going to end up buying your solution. Some will fall out along the way, and that’s perfectly normal. However, you need to make sure you’re fueling your pipeline with qualified leads, not just anyone that can help you hit an activity metric.
SMART qualified leads goal example:
To increase the number of qualified leads entering the sales funnel by 12% year over year.
How to achieve it:
Finding more qualified leads is a question of your prospecting methods and qualification process.
Start by looking at where you find your prospects. Hint: this should be the same place you discovered people who converted into customers. Looking at past data, focus on acquisition channels that you’ve seen success with in the past. Do some initial research to determine if this person is worth pursuing.
Then, take a look at your qualification process. Are you asking the right questions about the prospect’s budget, authority, need, and time to buy? Be critical. Use software to not only capture leads, but score them based on their likeliness to buy. This will help you prioritize your time to focus on more promising accounts.
Stress the importance of quality of leads over quantity. It’s much more beneficial to have a pipeline full of a smaller amount of qualified leads than one with a large number of prospects that’ll end up being dead leads.
Your win rate refers to the amount of deals you close. The higher your win rate, the better it is for your bottom line. This one is tough, because you can have a killer sales process and still not end up closing the deal due to external factors out of your control. However, it’s still important to focus on when creating, executing, and optimizing a sales strategy.
The cool thing about win rates is that they can vary depending on the expertise of a rep, opportunities available in a sales territory, and the particular solution being sold. Tailoring win rate goals to these categories is a great way to monitor progress. And while prospects can exit your sales funnel at any time without explanation, having a designated win rate can alert you when and where that tends to happen, allowing you to reevaluate your approach.
SMART increased win rate example:
To increase win rates by 5% year over year.
How to achieve it:
Obtaining and sustaining a high win rate requires taking a deep look at each stage in your sales process, funnel, and buyer journey. Certain stages might be more successful than others. For example, your sales team might do perfectly fine in converting leads to opportunities, but that might not be the case when converting those opportunities into customers. Discovering this might require establishing win rates for each stage of the sales funnel.
Increasing win rates can also happen as a result of sales coaching. Identify weaknesses in each of your sales reps and find a professional development method to enhance their skills in that area. This might include training on cold calling or value demonstrations.
Overall, you can increase your win rates by taking a good look at your sales process, aligning it with the buyer journey, and boosting your sales professionals’ skills.
Customer acquisition cost (CAC) refers to the amount of money it costs to obtain a new customer. To see a profit, your customer lifetime value must exceed your CAC. If this isn’t the case, you either need to find a more efficient way to sell or find a price point that will result in a profit.
While focusing on existing relationships is cheaper, getting new business is important, too. Setting a goal to reduce CAC can push sales reps and marketers to be more intentional with the way they go about acquiring new customers.
SMART customer acquisition cost goal:
To reduce customer acquisition cost by 3% month over month.
How to achieve it:
Decreasing the money you spend marketing and selling to customers requires examining your processes and seeing where you spend the most money. Yes, you have to spend money to make money, but this is more a question of determining if that spend is worth it. Are the areas where you spend the most money while selling producing results? Are you targeting the right audience with your marketing tools? Are the customers you’re acquiring offering substantial customer lifetime value?
You also need to think about tools that can make your sales strategy more efficient. Sales enablement software is crucial in reducing the time it takes to sell, and we all know time is money. This tool provides reps with all of the resources and content they could ever need to use during the sales cycle, all in the same place.
Sales cycle length is the amount of time it takes to convert a prospect into a customer. In the SaaS industry, these cycles are complex multi-step processes that will vary depending on the product and value of the deal.
The length of your sales cycle speaks to its efficiency. Hesitation from customers can lengthen the process, but so can inaccurate targeting, poor sales pipeline management, and lack of relevant sales content.
SMART sales cycle reduction goal:
To reduce the length of the sales cycle by 4-6% (subject to deal type).
How to achieve it:
A lot of times, reducing the length of your sales cycle takes research and planning. While it might take more time in the beginning, it will save you more time later on when you’re actually interacting with customers. A good example of this is identifying the key decision-maker at the prospective company. Getting passed around to multiple gatekeepers can result in losing steam, and researching to identify the key stakeholder beforehand can save loads of time.
Focusing on sales acceleration and automation can reduce the amount of time to convert a customer, as it includes implementing technology at every stage of the sales process, from lead generation to tracking customer conversations to general sales engagement.
There’s no point in setting a goal if you don’t plan on seeing it through. The example sales goals listed above will almost always be relevant, but that doesn’t mean they will always be your primary focus. Besides, focusing real hard on all of those at once is a recipe for burnout. To ensure they’re achieved, make sure your sales goals are specific, obtainable, and rewarding.
Want more examples to choose from? Here are 52 sales metrics.
Mary Clare Novak is a Content Marketing Specialist at G2 based in Burlington, Vermont, where she is currently exploring topics related to sales and customer relationship management. In her free time, you can find her doing a crossword puzzle, listening to cover bands, or eating fish tacos. (she/her/hers)
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