Here's how to set more realistic sales goals

Goal setting is an important part of motivating and holding salespeople accountable. The right goals give salespeople something to stretch for, plus the satisfaction of achievement when they do. When goals are realistic, they will also improve forecasting. Unfortunately, many sales teams struggle to hit the sweet spot between “challenging” and “achievable.”

If you’d like next quarter’s sales goals to be more realistic, here’s how.

Consider company needs, but don’t stop there

Sometimes sales goals are set based on the numbers that the company needs to hit, rather than what is achievable by the sales team. While you have to consider company needs when setting sales goals, it’s a mistake to stop there. If the goals are not achievable with existing resources, you run the risk of demotivating salespeople and missing your projections. Plus, you miss the opportunity to reorganize resources to make achieving your company targets possible.

Consider average salesperson performance, but don’t stop there, either

Average salesperson performance can be a useful metric for determining what is possible and which salespeople are outperforming or lagging. However, it’s a mistake to set goals solely based on these numbers. Factors such as territories, skill sets, time on the job, seniority at company, level of training, and many others impact what is achievable for each salesperson. If you set targets based on average performance alone, you will fail to challenge some employees while demotivating others.

Measure the right things

Metrics will be a critical tool in setting realistic and challenging sales goals, if you focus on the right KPIs. Activity numbers are important, but only if you know your salespeople are engaging in the right activities. Make sure you’re also looking at progress through the sales process and activities that you know produce results, such as reaching decision makers and qualifying opportunities early. You can use these metrics to help determine the factors impacting each salesperson’s performance, in order to identify whether a more or less challenging goal is appropriate with the right training and support.

Take time into consideration

One of the mistakes organizations often make in setting overly optimistic sales goals is overestimating the amount of time at their disposal. Consider that a year has 365 days, but not all of those are work days. When you calculate weekends, holidays, and sick days, the numbers are significantly smaller. Now take out the number of hours spent in internal meetings and on administrative tasks, and we begin to see just how limited are the number of productive “sales hours” in a salesperson’s year.

One useful way to help determine whether a sales goal is realistic, is to calculate the number of hours it takes to win an average deal, and divide that into the number of available sales hours in a salesperson’s year.

This will give you a solid idea of whether, under current conditions, assuming a steady stream of prospects, the target is achievable by that salesperson. If it is not achievable, then it also provides you with information about how to make it potentially achievable. For instance, in many companies a large deal does not require a lot more time to close than a small deal. If your salespeople reprioritize their time to focus on larger deals, it make make it possible for them to achieve your aggressive targets.

Another way that a goal can be made more realistic is to refocus the salesperson’s attention on accounts where new business can be generated relatively quickly. Identifying these low hanging fruit and then training and supporting salespeople to go after them can quickly increase your existing sales team’s capacity to meet quotas.

At the same time, some organizations will discover that their aggressive goals are not achievable under current conditions. Learning this at the outset is valuable, as it makes it possible to course correct earlier rather than later.

For more guidance on this process, along with sample numbers and calculations, download our goal setting white paper here.

We think Membrain is the right tool to help sales teams measure the right metrics and set appropriate goals, and we’d love to demonstrate how it can help you. Get in touch today.