Sales great Zig Ziglar once wrote, “If you aim at nothing, you will hit it every time.” That’s the struggle of every team without clear sales targets: no clarity, no progress, no growth.
The good news is, setting achievable targets is relatively straightforward. It comes down to regular examination of resources, performance, and potential.
Let’s dig into the most important things I’ve learned about target-setting from more than 20 years in sales and business so you can start clocking revenue.
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What are sales targets?
Sales targets, set by sales leaders, are goals for total company sales revenue within a year or quarter. These targets are used to guide the quota-setting, territory mapping, and sales team strategies.
Sales metrics and sales KPIs (key performance indicators) are sometimes confused with sales targets, but there are key differences. Think of sales metrics as the “umbrella” for any measurable part of the sales process — like calls made in a month or sales cycle speed. There are dozens of sales metrics, and many of them are specific to individual industries or business types. Sales KPIs, on the other hand, are sales metrics that directly measure progress toward sales targets. These include things like quota attainment for a sales team and the numbers of deals in reps’ pipelines.
Why are sales targets important?
In one of his more philosophical moments, a friend asked me: Are sales targets really necessary? Sure, you could hand off your product or service information to sellers and just have them sell as much as possible. But will they? No.
Here’s what happens: Sellers get lazy, unmotivated, or confused, then your company growth plateaus. It’s kind of like a poorly planned race. Without a destination, everyone runs aimlessly. How do you know you’ll even finish the race — or for that matter, where to run?
With sales targets in place, your team can create quotas to strive for and specific strategies for hitting those quotas. The destination is set and the path is clear. All they have to do is start running.
Bonus: Sales targets take advantage of sellers’ competitive nature. With a goal in front of them, it’s hard not for them not to race each other to cross the finish line first.
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How do you set sales targets?
Processes will vary, but generally, sales leaders review sales targets from the previous year and adjust depending on business and market circumstances. After executive review, they’re delivered to sales managers and teams for strategy development, quota-setting, and execution. Here’s a quick run-down of how companies set sales targets:
- Review sales performance in Q4. At the end of every year, sales leaders look at how their sales teams have performed against yearly targets. If performance lags behind, it’s helpful to look at resourcing (number of salespeople) and any changes in the business or the market that may have kept teams from hitting targets. If sales teams are easily beating targets, it’s a sign leaders should be more aggressive in their target-setting.
- Climb the “ROPE.” In order to set achievable targets, sales leaders should account for anything that might impact the performance of their sales teams in the year ahead. I like to call this “climbing the ROPE” — assessing Resourcing, Onboarding/training, Product(s), and Economy. Will there be significant changes to headcount on sales teams? Is additional product or sales training needed before teams can sell? Is there a new product line being released next year? Are there likely to be significant changes to the economy based on recent legislation or market shifts?
- Set targets that allow for growth. Considering both past performance and likely changes in the year ahead, set a target that allows for some growth but is also achievable. As a baseline, many companies aim for a 15-20% increase in sales targets, but this heavily depends on your business and circumstances. If you need some guidance, I recommend asking a fellow Salesblazer for their tips.
- Assign sales targets to each sales team (if relevant). If you have multiple sales teams, break out your company sales target into team-specific targets. Most companies do this based on past team performance (see step one), ensuring that the sum total of all team targets equals the company sales target.
- Assign territories to reps based on team targets. This is where the rubber meets the road. Once you have team sales targets in place, start assigning territories to reps based on their experience, capabilities, expertise, and past performance. Read our article on territory management best practices for more guidance.
Sales target example
John is the CEO of a small dog house manufacturing company in the Midwest. His sales team is small but mighty, consisting of four sales reps who regularly visit pet stores and attend dog shows to scout out potential prospects. Last year, they increased their sales by about 10% year over year, totaling $1.5 million in total sales. John was thrilled, but he knew the company could do better.
During a Q4 meeting with Mary, the CFO of the company, John proposes an ambitious sales target for the coming year: a 20% increase in total sales. Mary hesitates, knowing from recent reports that sales have plateaued and one of the reps is struggling to hit quota. She also knows from her own research that demand for the company’s dog houses hasn’t increased significantly over the last year. Given these factors, she suggests that John pull back on the 20% target.
Together, they review rep performance and overall sales numbers from the last two years. Two years prior, sales only increased 8% year over year, but the company was working with three reps instead of four. Last year, the fourth rep was hired, allowing the company to increase sales growth to 10%. That number could have been higher, but the new rep spent a quarter onboarding so wasn’t focused on closing deals.
Since the market has remained relatively steady and the three core reps have performed consistently, John and Mary use their performance as a good benchmark. Individually, they increased their sales 10-12% on average every year. Mary recommends 12% as a good goal for the coming year, but John wants a stretch goal, so they agree to 13%.
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Tips for hitting sales targets
A sales target is likely going to be ambitious. Businesses want to grow, after all. How do you hit them, even as you face curveballs? It comes down to strategy, planning, and consistent execution. Here’s what I would recommend to sales teams needing tactical guidance:
Break big goals into smaller ones
Sales targets seem like pie-in-the-sky dreams at the start of every year. That’s why managers break them down into rep-specific quotas. But even these can seem ambitious, especially to green reps. The key is to engineer a game plan with smaller, bite-sized goals.
Start by figuring out your team’s average deal size to date, then use that to determine how many leads each rep will need to hit quota. Based on past deals, you can figure out the average time it took to get each deal through the pipeline and what calls, emails, demos, or other nurturing actions were needed to get there.
That’s really all you need: a collection of smaller goals, like calls to make or emails to send, that you can break out by week or day. When reps perform these actions consistently, you can be confident they’ll make progress toward quota, which moves your team closer to the company sales target.
Set stretch goals for high-performing reps
What if you have experienced reps who crush quota constantly? Don’t give them the average quota for reps on your team. Push them. Much like your company targets sales revenue 15-20% higher than the previous year, give your high-performers stretch goals that are 15-20% higher than the amount they hit in the previous year (taking into account anything that might hamper performance).
Build forecasts and pipeline dashboards with team-wide visibility
Part of the not-so-secret secret to sales success is real-time analytics. You have to know where deals are at every moment, and how reps are tracking toward their quotas. Why? It fosters accountability and allows for proactive problem-solving. If reps know their deals are visible to managers and sales leaders, they’ll be more likely to stay on top of them, keeping them moving through their pipeline to close. And if stalled deals or empty pipelines threaten progress toward sales targets? Forecasts will give managers a clue early so they can course-correct with new strategies or coaching.
This is only possible if you have a tool that’s updated with deal information in real time, visible to everyone from rep to sales leader. Some managers have told me this kind of tech is a luxury, but it’s a big reason why top teams hit sales targets and others come up (woefully) short.
Create a regular pipeline review cadence
Real-time deal data is useless if reps and managers don’t do anything with the information. Managers should have weekly one-on-one pipeline reviews to discuss the status of each rep’s deals, surfacing blockers, stallers, and sinkers.
“Every time [reps] have a meeting with their manager, they should examine where they’ll fall short and why. The sales manager’s job is to help the reps identify the issues and solve them,” noted Shuang Stoppe, vice president of revenue operations at The Channel Company.
The key to successful pipeline reviews is to cut the chit-chat and keep the meeting focused. What are the three biggest deal concerns the rep has? Give them a few minutes to walk through the issues, then help them identify concrete action items they can take to resolve them before the next pipeline review.
This is just the tip of the iceberg. You can find more guidance in our article on pipeline reviews.
Update your training
Sales isn’t all about hustle. Reps need to be prepared with product knowledge, up-to-date sales strategies, and the latest tactics if they’re going to succeed. They also need to understand their tools inside and out — especially their CRM. Take time every quarter to revisit your enablement and coaching programs to make sure you’re setting your reps up for success. And ask for feedback during monthly or quarterly team meetings: What’s missing from your training? What information or guidance do reps need to sell more effectively? Take these into account when updating your training.
Offer juicy incentives
Salespeople are more likely to go the extra mile if they know they’ll receive bonuses on top of their commission. There are two common approaches here: Offering a flat-rate bonus for hitting a specific goal, like $1,000 for any rep who gets a 75%+ win rate in a specific quarter; or a variable-rate bonus that depends on specific sales metrics, like offering a percentage of total sales as a bonus.
Whatever your approach, don’t think of bonuses as the way to shore up sales teams that are under-performing. Take a close look at their tools, training, and resources first. If it looks like motivation — not enablement and support — is the issue, then consider bonuses to encourage higher sales.
Get started with sales targets
Sales targets may seem like guesswork, but thoughtfully mapping out these concrete goals opens the door to successful sales strategy development, quota-setting — even day-to-day activity planning for reps. Revisit them yearly at a minimum, and make sure they give your teams — and company — an opportunity to grow.
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