How to Set Sales Goals in 7 Steps

Sales goals are targets businesses use to motivate and measure the performance of their salespeople. Setting effective sales goals means starting with the end in mind, creating SMART team and individual goals, evaluating performance, and adjusting goals accordingly. Following these steps will ensure you set goals that positively impact the overall success of your business.

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Here’s how to set sales goals in 7 steps:

1. Start With The End In Mind

The first thing I would encourage any business to do when setting sales goals is to think about what it wants to accomplish overall. Ask yourself what the end result you’re looking to realize is so that you can make decisions and set goals that will help you get there. Too often businesses set goals that aren’t connected to the overall vision of where they want their business to be in a year, or even the next quarter.

For example, If you are looking to have your business expand your customer-base over the next 18 months, the incremental goals you set will be designed to support that larger outcome by defining the activities and results that will help you get there. The key at this stage isn’t to pick the specific goals, but rather to define the desired outcome for your business. Write it down and use it as a guide to evaluate and measure the goals you will be creating in this process.

When developing your sales goals, understand they can be broken into two categories: outcome goals and activity goals. Both are important as you consider the results you want to generate and the performance you’re trying to motivate. Therefore, most businesses will benefit from setting a combination of both types of sales goals for their team.

The difference between the types of sales goals is this:

Outcome-Oriented Goals

Outcome-oriented goals are straightforward in that they are based on the desired end-result of a salesperson’s efforts: increased sales revenue. These goals are often defined by the total amount of sales generated by the customers in a salesperson’s portfolio or territory. They can also be based on outcomes like increased sales in existing customers, new revenue generated, or the number of deals closed.

The key is that these are outcome-driven goals, and are measured by the resulting performance, not the effort. The salesperson is measured and evaluated on whether their sales efforts have produced the expected level of corresponding results, most often in revenue generated.

Pipedrive Revenue Goal Tracking

Activity Goals

On the other hand, activity goals are based on completing specific sales activities like the number of customer appointments, prospecting phone calls, or new leads generated. These goals aren’t directly related to outcomes but are just as important to sales management as keeping your sales pipeline full or your sales process moving forward. In fact, in some circumstances, they can actually be more important than outcome-oriented goals at improving your sales performance.

For example, when I worked for FedEx Kinkos (now Office), our sales organization went through a major realignment. As a result, I managed a sales portfolio of new businesses that had not previously had sales representation. Since there was no historical performance data in terms of sales revenue, our primary sales goals were instead based on activities. We were evaluated and compensated based on the number of appointments and contracts instead of purely sales.

Pipedrive Activity Goal Tracking

2. Evaluate Your Current Situation

After you’ve spent some time imagining the future you want for your business, the next step is to take an honest look at where you are now. Evaluate your business based on your current sales strategy, customers, resources, and personnel. Ask yourself how equipped you are to reach your vision, and what you’ll need to get there. These reflections will inform the goals you set by helping you define the performance and activities that will support your company strategy.

In order for goals to be effective, they have to be grounded in both your desired future, and your current reality. A good sales goal is a bridge between where you are at now, and where you see yourself in the future. In the example I mentioned about expanding your customer base, if a large portion of your current business comes from existing long-standing customers, you might start by focusing on cultivating three referrals from each customer and set that as a goal.

3. Consider SMART Goals

To make sure goals can be easily understood and have the greatest chance of success, set SMART goals in your sales plan. SMART goals are specific, measurable, actionable, realistic, and time-sensitive. For example, “increase sales by 15% this quarter compared to last” is a SMART goal.

SMART goals meet the following criteria:

Specific

In order to be helpful, goals must be specific. For example, “do better,” is not a specific goal. Do better at what? Your goal should lay out exactly what it is you intend to accomplish without ambiguity or confusion. If it’s an activity goal, it should lay out exactly what activities you are measuring, and how many you expect a salesperson to complete. If it’s an outcome goal, it should define the desired outcome and clearly articulate what will be considered a success.

Measurable

The goals you set also need to be measurable. If your objective is to grow sales revenue, the goals you set should be clear about exactly how much. That allows you to measure the results and determine whether you are meeting your goals. “Increase sales by 15%,” tells you exactly how much to increase sales, and everyone is able to recognize whether that goal has been met by simply measuring the sales revenue and comparing it the baseline standard (last quarter).

Actionable

Sales goals should be actionable, meaning a sales rep should be reasonably capable of reaching their goal based on their effort and activity. Creating a goal that a salesperson isn’t able to achieve isn’t helpful since it doesn’t motivate or hold that person accountable for their performance.

For example, setting a goal for a salesperson based on profit margin, if the salesperson has no control over pricing negotiations, isn’t actionable since he or she isn’t able to directly accomplish this goal through their own actions. Instead, find goals that measure your team member’s ability to actually affect the outcome

Realistic

Not only should a goal be something a salesperson can affect by their actions, it should also be realistic. You may have the most talented salesperson in the world, but her performance is still limited to some extent by external circumstances like the companies in her portfolio. Expecting a sales rep in an urban area to sign 10 new contracts a month could be realistic, however, expecting the same from a rural territory might not be.

In the same way, if you have a brand-new salesperson, it’s not realistic to expect the same performance that you would from a veteran top-performer. The goals you set for each should be realistic and reflect both individual capabilities and the overall circumstances of their portfolio.

Time-Sensitive

The final aspect of setting SMART goals is that they must be time-sensitive. I once heard someone say that a goal without a deadline is just a dream. It’s true. If you don’t have a timeline for accomplishing your goal, chances are good that you never will. It’s also much harder to measure your goals without a time frame to compare them to.

For example, if your goal is to sign 10 new customers, the question you have to ask is “by when?” A good SMART goal will clearly define the time-frame for accomplishing the goal. “Sign 10 new customers each quarter,” makes it easy to determine when this goal should be completed, and the timeframe when you’ll review whether you’ve met the goal.

4. Create Companywide Goals

Before you assign goals to individuals on your sales team, first establish the overall goals for your sales organization. Look at both your current situation and your desired outcome and create big-picture goals that you can use to drive your overall business performance. This will help you determine whether or not the specific goals you create for each rep are going to help you meet your company and team objectives.

Most businesses set their current goals based on a comparison to their previous goals and performance. For example, a company might set a goal to increase sales this year by 15% compared to last year based on past company trends, current market conditions, and forecasts made by the sales team. Likewise, you might create an overall company goal to diversify your current customer base by increasing your prospects and qualified leads by 20%.

“In considering the monthly sales goals which I set for my team, I take into consideration a number of key factors which converge to influence the sales process. Initially, I consider company needs to decide the targets we need to hit and if we have adequate resources in-house which will enable us to achieve these goals. Secondly, I measure team performance ― what does the average individual and collective performance look like and what are the skill sets available to me?”

— Ollie Smith, CEO, ExpertSure

5. Assign Individual Goals

Now that you’ve established goals for your team, you can assign individual goals that will help your team accomplish the larger objectives. Keep in mind that like company-wide goals, individual goals should be SMART and based on both the individual’s capabilities and portfolio.

An individual team member’s goals should be a combination of outcome-oriented goals and activity goals and should be challenging, but attainable. It’s important to set goals that motivate your team members to achieve more than they thought they could, but that reasonably can be reached with the time and resources available. Also, remember that sales goals are usually the primary driver of salesperson compensation, and should be set accordingly.

For example, your overall business goal may be to increase sales 15% this year. If that’s the case, you might look at each reps portfolio and create a goal of increasing revenue by 4% each quarter. You might also set goals for the activities that will help make that possible. For example, setting six customer appointments each day, or signing up 10 new customers each week.

6. Provide Necessary Resources

One of the most important aspects of setting goals is setting up your team for success. If your team doesn’t have the resources it needs to accomplish its goals, then the entire exercise is a waste of time and is sure to only create frustration and disappointment. As a sales leader, it’s your responsibility to make sure your team has everything it needs to meet its goals.

Resources can take the form of technology tools, but don’t overlook the value of adequate training and ongoing coaching. Since the success of your business or organization depends collectively on the success of each individual salesperson, it just makes good business sense to train and equip your team for the job.

A few of the important resources include:

Software Tools

A customer relationship management (CRM) tool can help your salespeople stay organized and on task. One of the most important aspects of a CRM, in addition to the lead and deal management features, is the ability to record your activity and generate reports that help you see where you are at in relation to your goals.

Pipedrive CRM Dashboard

Pro Tip: Pipedrive is an easy-to-use CRM that allows you to set up individual and team sales goals, and monitor your performance against them. Plans begin at $12.50 per month, per user, and include a visual pipeline tool to move sales opportunities through your sales process. Pipedrive offers a 14-day free trial of each of its plans. Visit Pipedrive to start your trial today.

“It’s important to provide salespeople with the tools they need for success: A proper CRM to track contacts, companies, and pipelines, and a way to find that information. I also recommend using a service or tool for finding phone numbers and email addresses for prospects.”

— Meghan McKenzie, Director of Enterprise Sales, Crowd Content Media

Training

If you are setting goals to measure the number of customer appointments your team gains from cold-calls, you should be providing them with training and practice in converting prospects over the phone. It’s up to you to make sure that your team has not only the tools but the skill set to be successful. For example, you might check out these top sales training programs to help prepare and educate your team.

Accountability

Often the most important motivator for an individual to accomplish a goal is simply knowing that someone is going to ask them how they’re doing. Along with setting goals, good sales leaders create a system of accountability designed to help their team reach those goals. Regular check-in meetings that keep goals front-of-mind, as well as coaching and encouragement, help sales reps stay focused on the activities and outcomes that drive success.

7. Evaluate & Adjust Goals Based on Results

The final step of setting sales goals is to evaluate your actual performance compared to these goals and adjust your activities accordingly. I suggest scheduling regular review periods to look at your goal performance and having a plan in place to make adjustments as necessary based on areas where you are not reaching your goals. Making it a point to conduct regular sales meetings to evaluate your progress is an important factor in improving sales performance.

If you are a sales manager, knowing how your team should be performing on a weekly or monthly basis will allow you to make changes and corrections before you fall too far behind. Software tools such as customer relationship managers (CRMs) make it easy to generate reports that can help you quickly monitor and track your goal performance based on the metrics you define.

Frequently Asked Questions (FAQs)

Are sales goals the same as metrics?

They aren’t the same, but they are related. A metric is a measurement or key indicator that helps you evaluate an aspect of your sales process. Usually, metrics also provide insight toward the accomplishment of a goal. Goals are usually more formal and are used to measure performance and hold salespeople accountable, where metrics often help you evaluate activities and variables that ultimately lead to success in reaching those goals.

For example, you may set a sales goal of increasing revenue by 15% this quarter. To do this, you know that the salesperson will need to both increase current customer revenue, but also close 10 new customers. You know that to generate 10 new customers, he or she will need to generate 50 new leads, which will require contacting 150 prospects.

You can establish a metric that measures the sales reps activities each week. In this case, he or she will need to generate 10 prospects, convert three to four to leads, and close roughly one new sale. You might use a “prospects generated” metric to help keep your salespeople moving toward their ultimate goal of increasing revenue by 15% this quarter.

How many sales goals should I set?

In order to be effective, you should set three to five sales goals per individual, and a comparable number of goals for the team. Most people are only able to truly engage with a few goals at a time, and it can be counterproductive to make people accountable for more than that. Additionally, if you find that you are setting more goals, consider whether they are goals or metrics, or whether your sales process could be more focused and intentional.

How often should sales goals change?

As you evaluate performance on a regular basis, you’ll sometimes find that a goal that you set isn’t realistic or actionable. In that case, it makes sense to make adjustments accordingly. While it’s not a good idea to constantly be changing your goals, it can be necessary as business objectives or circumstances change. Most users should make changes, when needed, at the regularly scheduled review periods (monthly/quarterly/annually).

Bottom Line

Sales goals are an important way to measure performance and provide accountability for your sales team. Learning how to set sales goals and effectively measure performance will help you motivate your salespeople and keep them focused on the activities that make the biggest difference in accomplishing your company objectives.

If you’re looking for a helpful tool to set and monitor sales goals, Pipedrive CRM includes both individual and team goal reporting. Built around a highly-visual sales pipeline, Pipedrive makes it easy to generate leads and deals and move them through your sales process with plans that start at $12.50 per month, per user. Visit Pipedrive today to sign up.

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