Several times throughout each fiscal year, sales leaders are tasked with a nearly impossible task: determine sales targets for their sales organization as a whole, for specific teams, and for individual contributors. While targets are usually set for the upcoming year or quarter before the last one even ends, getting the numbers right is crucial—but also extremely tricky.
Most sales organizations experience volatility in several ways throughout a year (or even a quarter) that can make sales targets seem unachievable:
- Sales rep turnover or new sales leader replacement
- Updates to contracts, SOWs and product and service offerings
- New territories or geographies
- Seasonality and varying sales cycles depending on deal size
- And so on
The factors that can turn a sales process upside down are many, and sales leaders rarely get the luxury of tweaking quotas or re-visiting goals to accommodate for the changes. Once targets have been set and communicated to the executive team and Board of Directors, then all that’s left for the sales leader to do is coach proactively and help the team members perform their best in every single prospective customer conversation.
In order to set the most aggressive yet achievable sales targets, leaders should consider these 7 factors as a starting point:
Of course, the most obvious place to start when setting sales targets for the upcoming year or quarter is to evaluate past performance of the entire sales organization, the team (SMB or enterprise), and the individual quota bearing sales rep. Rather than look a quarter in reverse, it’s key to pull in at least an entire year’s worth of data so to capture seasonality, market trends, and even new product or service launches, which we’ll cover later on. By understanding how the team and the individual on the team performed and whether they were below, met, or exceeded quota should serve as a baseline for setting new goals.
Strategic Account Plans
Strategic account planning is a major undertaking for sales professionals who specifically target complex or enterprise accounts. It can take days or weeks to develop a plan that includes who they will target, how they will target them, and which messages they will use. Strategic account planning is no small task, and the effort that’s put into these sessions can be extremely helpful to sales leaders that are attempting to forecast deals several quarters (or even a year) out. With so much thought and strategy going into these individual rep plans, sales leaders looking to set aggressive yet achievable targets should consider using these plans as a starting point for determining goals—or at least including the target accounts as longshots in the plan.
Products or Service Model Updates
Sales organizations continually experience interruptions to sales velocity: messaging roll-outs, leader turnover, company acquisitions, and so on. But perhaps one of the most common interruptions happens on a frequent basis: product or service model updates. Not only does this require training (time away from selling), but it can also add a layer of confusion since the team has to adopt new messaging and roll the value prop into the overall mission of the company. However, product or service model updates can also provide a huge opportunity for revenue growth. If a company re-packages a solution into one that customers have been asking for or adds a full-service model that sales professionals can bundle into their deals, then the new revenue stream can prove to be lucrative and should be considered when forming new sales targets.
In today’s growing technology landscape, teams are scaling faster than ever before. Where once a company may have had a handful of sales development reps and a few corporate sales reps, many organizations are also adding field-based sales professionals who exclusively work on enterprise-level accounts. Regardless of the segmentation, when teams grow, geographies and territories inevitably change, which means that many sales professionals have to start prospecting from scratch and, in many cases, have a smaller pool of prospective customers in which they can call. While territory changes are often good decisions in the long run, they can certainly shake up sales targets if the changes aren’t considered.
Ramp Up Time or Length In Position
Turnover is simply an expected change that regularly occurs in sales organizations for a variety of reasons: promotion to a new team, a movement to a new department, or in some cases, a complete churn out. When this turnover occurs, sales leaders have to spend significant time and resources onboarding new sales professionals and making sure they have the tools and resources they need to be successful. While the data and sources vary, it can take up to a year for a new sales rep to start performing at the level that they’re expected. This means that sales leaders need to factor in quota ramp-up time so that new team members are set up for success—not disaster.
Seasonality and Sales Cycles
Most sales leaders that have been with a company for over a year have experienced an annual slump in sales and, hopefully, a corresponding spike. While seasonality and sales cycles almost always depend on the industries targeted (like retail or travel and hospitality, for instance), it can also be prevalent when selling into different geographies (like the U.K. where a traditional holiday break can span upwards of a month). Sales leaders should also look at data in arrears to determine when industries typically buy, when the budget season is, when they shut down, and also look at corresponding data as it relates to titles and personas. This type of analysis will help sales leaders set up the sales targets that are realistic for each quarter.
Size of Target Accounts
Finally, the split between sales team segments can be one of the most important factors to consider. For instance, an SMB-focused sales rep is likely working tens of deals—if not more. A sales professional who focuses on small clients generally needs a larger volume than an individual focused on mid-market or enterprise accounts. In contrast, an enterprise-focused sales professional may only be working a handful of accounts at any given time due to the sheer complexity and number of stakeholders involved. But one of those enterprise deals may add up to the revenue equivalent of 25 or more SMB deals. While one enterprise deal close can mean great success for an organization, it can also be a huge risk—if one deal falls through, that sales professional may miss their quota by a huge margin. Sales leaders need to consider variables and equations to make sure that sales targets don’t hinge on a single deal (or even 2 or 3 deals) closing.
Setting aggressive yet achievable sales targets can seem like an impossible art. One quarter may be spot on, but the next may be a total disaster. Thankfully, sales leaders can adopt a real-time sales playbook software that not only helps sales professionals have great conversations every single time but gives sales leader the data (and confidence) to make the right decisions in real-time and to coach more effectively throughout the entire quarter.
Ready to Learn More?
For more information on best practices of great sales leaders, check out the Costello resources below. If you’d like to see Costello in action, request a personalized demo of our real-time sales playbook software.