Setting sales targets
Set clear sales targets linked to incentives such as commissions and bonuses for your sales team, covering new sales, renewals, and converting lapsed customers.
You need to set clear data-driven sales targets for your salespeople, linked to incentives such as commissions and bonuse. This motivates your team and provides a clear indication of the kind of performance expected of them.
This process is crucial to business success and should be closely integrated with your overall business strategy and planning.
Be specific when setting targets for sales staff. Break your requirements down into different areas, for example:
- New sales - base targets on projections from your business plan and sales forecasts, which should incorporate market analysis and economic trends.
- Renewals - selling isn't only about new business - it's also about retaining your existing customers. A typical renewals rate is in the region of 60% to 70%.
- Lapsed customers - a good salesperson should be able to recover some of your past customers who have not bought from you for some time.
Balance short-term and long-term sales targets to sustain growth. Short-term targets can help achieve immediate results, while long-term targets focus on strategic growth and development.
Look at your business and identify the factors driving its profitability. You should use these to drive your sales targets too. Different businesses may require very different targets. For instance, winning 200 new customers in a year might be a poor performance for a supplier of low-margin foodstuffs. On the other hand, recruiting just two new customers might be a very good performance for a manufacturer of luxury yachts.
Make sure that the targets you set for your new sales staff are reasonable for the territory they've been allocated. Making targets too easy may lead to complacency and lost sales, while making them too difficult can be demotivating.