Sales Tips

The Ultimate Guide to Setting Sales Targets

sales targets
Kimberlee Meier

Have you ever grasped for something that always seemed beyond reach?

For many sales reps, that shiny object they’re reaching for in the distance is their sales target. And many struggle to reach it.

Whether that sales target is unrealistic or inaccurate, the reality is that setting a sales target incorrectly can have a massive effect on your business and those who work for you. It can completely derail their morale and their motivation.

Let's take a look at the ways to make sure you have a sales target that perfectly fits your business goals and what you are trying to achieve.

Before you dive in, let's look at what a sales target actually involves.

Traditionally, a sales target involved setting a specific amount of revenue a company had to reach in a set period of time. However, there's a lot more to it than just slapping a dollar figure on a timeline.

Now, sales targets must be set on monthly goals, and have an incentive and a clear path of progression to be accurate and reliable.

The most common types of sales targets are:

1. Monthly targets

This type of sales target will be determined largely by the revenue you or your company hopes to make for the year.

Once you have a ballpark figure for each month, it’ll make your life so much easier being able to break these targets down into each department or product.

2. Waterfall targets

Waterfall targets are all about not overwhelming your sales team and allowing them to adjust to larger targets more easily.

This type of sales target allows you to gradually build up to your desired target through timed increments.

Let's say you’ve figured out your sales team needs to be making 20 calls a day to achieve targets, but they’re only making 10. Instead of telling them to make 20 calls off the bat, try building them up to 12, then 14, then gradually keep building until they hit 20. Easy!

3.Incentivized targets

At the end of the day, if you offer your sales rep an incentive, it can push them to work that little bit harder to hit their sales target.

Incentives to reach a certain target could be anything from a bonus to more annual leave, to something more creative like a spa day.

4. Goal targets

Setting goal targets will vary from sales rep to sales rep, but this means they’ll also be a lot more accurate in the long run.

Breaking down how many leads each sales rep converts into how many calls and emails it took to lock down that sale will give you a unique insight into their selling capabilities. This allows you to break down exactly where your sales reps need to focus their energy to meet their goal for the month, quarter, or year.

5. A sequence target

Sequence sales targets focus on prioritizing goals for your sales rep.

If you decide on a sequence of sales targets (with the most important at the top and the least important at the bottom), it means if your sales rep doesn’t hit every single target, at least they would’ve hit the ones that matter the most.

So, how do you know which model can benefit your business the most?

Each of the sales target models above can motivate your business and reps in a different way. The main aim is to get your team working towards an overall target, but the best way to ensure that happens (and to keep your team motivated) is having a sales target that’s attainable.

3 steps for setting the perfect sales target:

To set the perfect sales target for your business goals, you need to break down each step of your company's model—and be completely realistic with each step.

To do this, be perfectly honest with your past performances and be equally realistic about the capabilities of your business in the future.

1. Set out your goals and look into your past.

The idea of this step is to give yourself a baseline to build on. Take a hard, honest look at your performance over the last year. Look at everything from whether your revenue was affected by things such as a volatile market to areas where you didn’t quite capitalize on a growth point in your product.

What is your strongest revenue stream? Is it subscriptions or contracts?

If so, did they jump or decline at a certain time in the year? Did you introduce a new product or feature?

These are all things you need to not only write down but also dig deeper into the reasons why they made a change in your revenue.

On the flipside, make sure to look into areas where you can see growth and opportunities to build revenue as well.

Map out the current potential in your target market as this might have fluctuated from when you first started your business (so it’s important to adjust this accordingly).

2. Calculate your ideal sales goal for a month.

Set out what you would ideally like your business to make in a month. Now, break them down even further: into company sales goals, department sales goals, and even individual sales goals.

Remember the different types of sales targets we talked about earlier? This is where they come into play.

Maybe one of your sales reps just needs clear call targets to hit, or perhaps they’d benefit more from having a clear set of priority sequences laid out for them each month.

Whatever is it, take time to figure out which strategy would work best for each department or individual.

3. Empower your sales team and give them the incentives they deserve.

We touched on incentives earlier, but building an incentives scheme into your sales target plan can also mean that you’re demanding more from your sales team’s overall performance.

To be successful with this, the key is to equip your sales team with the best training possible. This should focus on making sure they know all the aspects of your company’s unique product. And then, checking to make what they’re doing is actually working.

From there, you can decide on an incentives plan that’ll work for both you and your sales team. (Here’s a list of ideas that are a bit more adventurous!)

Now, set a target that’s absolutely realistic for your team and something that they can hit every month. This will keep not only their morale high but also your target on track.

The blueprint for figuring out your sales target:

Calculating your average close rate for leads is a crucial starting point to figuring out your sales target . Doing this isn’t difficult and you should have all the data on hand to be able to do so quickly. Just take the last month of your sales team’s total amount of emails and calls to clients.

Now, pinpoint how many sales they closed. If your team sent 500 emails, for example, and made 10 sales from those emails, then your close rate is 2%.

If this number is low for what you need, don’t panic just yet.

Using the same data, forecast exactly what your sales team needs to do to hit your desired target. If you ideally need 15 sales a month instead of 10, then your sales team needs to send 750 emails a month instead of 500 to realistically meet the target.

Final word of advice on targets: on paper, this may seem reasonable, but it’s also important to discuss these figures with your sales team to see if they are realistic.

Keep on top of your targets and change them up when you need to.

It’s all about being informed and staying on top of your numbers when you’re setting your sales targets.

The easiest way to do this is to have a ‘rolling forecast’ structure set up within your team so they can see not only opportunities for sales, but also when something just isn’t working out. Avoid using traditional methods of forecasting where targets are looked at every quarter, or worse, annually, as you lose the opportunity to forecast risk and opportunities that may lie ahead.

Make sure the targets are presented visually for the whole team’s ease of understanding.

Keeping a tracked visual of your rolling forecasts can also be a great way to keep your sales team motivated and let them see their progress more easily than traditional forecasts.

A simple tool like Copper can keep your team on track and show them just how much they are selling each day, week, or month.

copper tracks your team's sales performance

Try using a CRM tool to keep your team organized and on track.

If you’re serious about setting your sales targets correctly and getting the most out of your team, it only makes sense to have a decent Customer Relationship Management (CRM) software to support your team to hit their goals.

A decent CRM can do anything from mundane data input for your sales reps to actually suggesting new leads and engagements to help them get the absolute most out of their time.

Some CRMs even go a step further and help you maximize your sales pipeline by giving you critical insights into your leads through data reporting.

copper crm data reports and analytics

Fix your forecasts and start building your perfect sales target now.

If you’ve been dragging your heels with your sales targets for a few months and you know yourself that they aren’t quite right, you should start fixing them now.

Avoid an unhealthy environment in your sales team by being brutally honest when you’re setting out your sales goals and looking at your previous reports. If you aren’t hitting your targets—try and weed out if something has happened (either in-house or in your target market) that can explain the change in revenue.

Setting a realistic sales target from the start can help to keep your staff motivated, as well as using target techniques that suit their selling strengths.

Finally, by keeping your team informed on their progress through rolling forecasts, you're giving your business the best shot at hitting your target—every month, every quarter and every year. Happy forecasting!