The end of a quarter is a hard time to be a sales leader.
You’re stressed about getting in those last vital deals for this quarter. Your CEO needs next quarter’s sales forecast. Your reps want to take off time for the holidays. And to top it all off, you need a new sales strategy to achieve quota.
The pressure is real. That’s why we put together three simple steps to define, calculate and assign sales goals to your team.
3 steps to set sales goals
1. Document your current sales process.
What are the strategic steps your reps take to close a deal? These must be controllable, day-to-day activities. We’ll use these common activities for an inside sales rep as an example: conversations, opportunities created, proposals and wins. Make your activities very specific to your actual sales process; otherwise they won’t be effective. (Click here for a guide to help define your key activity metrics).
Record the average monthly activity levels for those behaviors. Here’s how that might look in our example:
- Conversations: 60
- Opportunities Created: 10
- Proposals: 5
- Wins: 2
In order to calculate the average conversion from one activity to next, divide the first activity by the second. To find the proposal-to-win conversion for our example, we would divide proposals by wins.
5 proposals / 2 wins = 2.5 proposals per win
This tells you that for every 2.5 proposals sent out, you get one win. Another way to express this is with a conversion rate: divide wins by proposals, and then multiply by 100.
(2 wins / 5 proposals) x 100 = 40%
Work your way through your sales process until you understand conversion rates between each step.
2. Work backward from your end goal.
Determine your average rep quota and average deal size. Of course, those numbers probably change based on a number of factors. But do your best to pick numbers that represent what typically happens.
Grab a calculator. Divide the average rep quota by the average deal size. That tells you the number of deals that need to be won. Then use that number with the conversion rates you found to walk backward through the process.
In our example, we would divide the number of opportunities by the conversation-to-opportunity conversion rate to determine how many conversations are needed. Here’s what our example metrics would look like.
- Average rep quota: $500,000
- Average deal size: $25,000
- Number of deals needed to hit quota: 20
- Number of proposals needed to win those deals: 50
- Number of opportunities needed to get those proposals: 100
- Number of conversations needed to generate opportunities: 600
These are activity levels you need from each rep for the entire year.
3. Assign personalized scorecards.
You don’t want to just tell reps to make 600 conversations by the end of 12 months. Break down the data to bite-size pieces.
A best practice is to turn these annual metrics into daily, weekly and monthly goals. Metrics like deals won and proposals sent are probably best measured on a monthly basis. But opportunities created and conversations can be measured at a weekly, or even daily, frequency.
To break activities into monthly timeframes, simply divide the goal by 12. For weekly, divide by 50 (average number of working weeks per year). For daily, divide by 240 (conservative number of working days per year). Consider adding cushion to your goals so you can aim to overachieve.
Here’s what our final sales goals for each rep would look like:
- Conversations: 3 / day
- Opportunities Created: 2 / week
- Proposals: 4 / month
- Wins: 2 / month
Provide reps with personalized sales scorecards so they can track their day-to-day activities and progress to sales goals. Keep in mind that a sales activity management system automates all of that for you.
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