How to set targets for your sales team

Written by: James White

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I get asked a lot by my clients about targets and how they should consider increasing the targets for their teams.

It’s an emotive subject with lots of pitfalls. Here are a few thoughts which I shared with them.

LOOK AT YOUR INDUSTRY

A perception that exists is that a target for a sales team should be a certain figure, and when I ask “well, how does that compare with your industry?”, the response is always “that’s not got anything to do with me”. Well, it does matter.

When I was selling double glazing on the phone, we were happy at getting 2 appointments in every 100 calls. Someone working in a more niche area will have a different number.

From a marketing perspective, it matters how targeted you are. The more niche and focused you are, the more chance of your salesperson having a more successful conversion.

Look at your industry and see what the targets are. What is realistic?

On average I’d say salespeople will convert maybe one in three or one in four deals. If you’re converting at a much higher level than that, then maybe your pricing is a little bit too cheap. It will all depend on your industry, so let the first thing you do be some industry research.

DON'T MAKE ASSUMPTIONS

Are you starting to record how many calls are being made per day? How many clients or potential clients you’re converting every week or month? How many conversions were made over a period?

When you’re trying to create a target, putting your finger in the air and guessing isn’t what you want to do. It’s better to look at what has happened in the past and then make an informed decision from there.

Look at numbers and stats that you have in your business right now or from when you were making calls. How many calls were you able to make? How many people did you convert? When you were having conversations, what conversion was realistic?

Once you have this, you can then start to feed those into a target outline to drive results. The key thing about targets is they have to be something that people feel they can achieve. If they’re too far-fetched, you’ll just get disinterested salespeople that cost you time and money. We want to avoid that.

GET YOUR TEAM INVOLVED

Ask your sales team some questions around the target, and what they think is realistic. You’re making them accountable for the target without having to enforce it on them and that always gets people to buy in more than you just telling them the target.

It also creates an opportunity for a conversation to explain why a larger target than they may have thought is needed for operational requirements. You’ve got to achieve a higher number to make a certain profit margin that your salesperson simply may not be aware of.

DON'T FORGET YOUR TARGET

People are known for setting targets and then just forget all about them. Targets and numbers should be things you live and breathe every day in a sales related environment, and that might mean that you need to adjust or take action to make targets happen.

For example: I would set a target for a month and then look to monitor on a daily basis to see how that person is getting towards that target. Review their numbers to see what needs to be done based upon the stats.

If you’re not seeing the actions, have the difficult conversation in order to make sure they know what needs to be done to get the right results. Maybe you need to do some training? Knowing your numbers and seeing them on a regular basis enables you to assess whether that person’s on track or not.

RETURN FOR YOUR BUSINESS

You should expect to see the total cost of a salesperson give a return of three to (ideally) five times their cost of being employed. For example, if I know that I’m bringing a sales person in whose total cost is £50,000pa, I’d expect that person to be bringing in at least £200,000 to £250,000 per year.

In order to provide a return on the investment I put in if I know that cost and I know what return I’m expecting, I can then break that target down into a monthly and yearly figure that the salesperson can work towards.

Your target could be based on different things, such as:

  • Profit: there’s a certain amount of money you’ve got to make to cover other costs in your business;
  • Total Number of new clients: if you’re looking for top line revenue growth rather than profit.

CREATE A BRILLIANT COMISSION PLAN

If you don’t have a commission plan that incentivizes your salesperson to achieve their target and beyond, you’re going to struggle as a business owner.

So many business owners don’t want to give too much money away. Don’t be one of those! Put in place a structure that enables your salesperson to not be overly rewarded for doing their day-to-day job, but if they do additional work and get results on a consistent basis, then they get a financial return that helps them lead the life they aspire to.

My key tip is make commission unlimited. Let them earn as much as they want to! You’ll soon see your business and your salespeople grow. They will do fantastically well which benefits both you and them.

THROW IN SOME SALES INCENTIVES

Incentives such as a box of cakes, a crate of wine, or a dinner out with the family, give a boost to help that target being hit. Incentives create a fun environment to encourage healthy competition and excitement.

ARE THEY SMART?

Is your target specific, measurable, achievable, realistic, and timely?

What do I mean?
  • Specific: this should mean that they know you want them to achieve 10 new clients by the end of the quarter.
  • Measurable: Set something that can be counted. A target of “10 times you did a good job” doesn’t work.
  • Achievable: If you achieved 10 sales this quarter last year, don’t expect 200 this year!
  • Realistic: Can they realistically bring on board 10 new clients in three months? Have you supported their pipeline with the right marketing mix that their prospect pipeline is full?
  • Timely:  Set a clearly defined timeline, including a starting date and a target date. The purpose of this is to create urgency.

Make targes SMART so that your salespeople know what they’ve got to do to become successful. It’s going to help you see whether they’re doing the work and staying on track to hit their target.

Has this been helpful for how you could approach targets for your sales team?  Don’t fall victim to our reptilian brain that makes us act in our own interest of self-preservation.  Set targets that excite your team and will help your business reach it’s next level.

Do you need help implementing an effective target in your business?  Reach out to James at james@thesbsa.com and let’s talk.

Publish date: 2 April 2022

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