Whether or not you’ve made New Year resolutions, setting goals for the upcoming month, quarter, and year is a must for any sales leader.
Choosing long-term and shorter term goals that will actually motivate your team is tricky, though. You have to strike a balance between stretching your sales reps and staying realistic.
How do you set the best sales goals? We’ve got the information you need to work through the process, including:
- What are sales goals?
- What are SMART sales goals?
- Why do sales goals matter?
- 12 examples of sales goals
- How to calculate your sales goals
- How to achieve your sales goals
- How to write a sales goal
What Are Sales Goals?
Sales goals are clearly defined targets designed to help individual salespeople and sales teams improve their performance. Done right, they can correct common mistakes and poorly executed strategies and provide a pathway to lift good sales numbers even higher.
But creating a sales goal that actually motivates your team isn’t easy. You can’t just say, “We need to sell more products” or, “Let’s make more money this quarter.” You need to set goals that fit your current situation and give your team a roadmap to get better results.
In other words, you need to follow the SMART formula.
What Are SMART Sales Goals?
SMART sales goals are objectives defined by sales managers and C-suite leadership to guide sales teams and departments. Following the SMART acronym, these goals use five criteria – Specific, Measurable, Achievable, Realistic, and Time-Based – to create a clear target for employees to work toward together.
Here’s how you apply the SMART style of goal setting:
- Specific: Don’t just say you want to grow your customer base or increase your sales revenue – explain how you plan to accomplish it. For example, you can say: We’re going to increase our core product’s revenue using a consultative sales approach.
- Measurable: Define the exact number you’re shooting for (i.e. increase revenue by $1M) so that you can benchmark your performance, and have your tools and software set up to track your progress toward the goal (i.e. new deals closed, repeat purchases, and customer churn).
- Achievable: While stretch goals are a great way to push yourself and your employees, you don’t want to set objectives that are impossible to achieve. If you only brought in $700,000 in revenue last year, you shouldn’t set a goal to bring in $5M this year. Instead, you should set a target that you and your team know is achievable.
- Realistic: Goals need to fit your current situation and sales strategy. If your company has never done social media selling and your customers don’t bother with Instagram, you shouldn’t set a goal to generate 100 new clients via Instagram selling. As with all other types of goals, context matters.
- Time-Based: When you set sales goals, you need to make sure there’s a finish line. Otherwise, you can wind up plodding on for years without much change or growth. In the case of sales goals, quarterly and yearly markers are the easiest to set since they naturally follow fiscal start and stop dates.
Why Do Sales Goals Matter?
Sales goals work a lot like Google Maps. Once you figure out where you want to go, they chart a path for you to reach your destination. And with the right amount of detail (i.e. the SMART goal formula), you can estimate your arrival time as well.
On the other hand, without a clearly defined objective, you risk taking wrong turns, traveling the long way, or even heading in the wrong direction. This can make a big difference to your business growth, annual revenue, and customer acquisition and retention.
12 Examples of Sales Goals
Sales teams have lots of options when it comes to setting sales targets. Looking for some inspiration? Here are a few types of sales goals to kick off the brainstorming process.
1. Increase Sales Revenue
Revenue goals are among the most valuable targets for measuring sales performance. And since revenue is both quantitative and aggressively tracked against monthly, quarterly, and annual benchmarks, they’re also easy to set.
For a SaaS (software-as-a-service) company, revenue goals might look like this:
Increase our MRR (monthly recurring revenue) by 15% within 6 months by improving our cross-selling tactics and customising our sales pitch to each of our buyer personas.
How to Calculate Sales Revenue
Most of the time, businesses have tools in place to calculate revenue KPIs and sales goals automatically. But if you find yourself doing it by hand, here’s the formula you should use:
Number of Product Sales x Unit Price of Each Product Sold = Revenue
Just be aware that if you sell multiple products at different price points, you will need to add up the total revenue for each one to get the overall sales total.
How to Achieve a Revenue Goal
Achieving a new revenue goal is all about finding creative ways to make more money. You can do that by funnelling more leads into your sales cycle – via cold calling and emailing – or increasing your conversion rates. No matter your approach, there’s a strategy out there that will work for you.
2. Close More Deals
If you want to increase win rates, you have a few different options to choose from. You can track the number of deals your sales team closes overall, or you can see how many each sales rep closes individually. If you want a clear picture of your team’s success, though, it’s best to do both. Here’s what the combination of team and personal goals might look like:
As a team, close 15 deals per month by the end of Q2, using a consultative selling approach.
Individually, use sales best practices to close 3 deals each month by the time we start Q3.
How to Calculate Deals Closed
Deals closed is an easy KPI to calculate. Here’s a simple formula you can use:
(Number of Deals Closed ÷ Number of Leads) x 100 = Deals Closed Rate
How to Achieve a Deals Closed Goal
There isn’t just one way to increase the number of deals you close. For some businesses, the trick may be qualifying leads more thoroughly, and for others, the solution could be your sales pitch presentation or sales strategy. With this one, it’s up to you to figure out what’s working and what isn’t.
3. Boost Booking Rate
To turn leads into new customers, you need to talk to people in person. Naturally, this makes your booking rate extremely important. By boosting your meeting scheduling success, you can increase your conversion rate and decrease lead drop-off during the sales cycle too. Here’s an example of what a monthly sales goal in this category might look like:
Double our team’s monthly booking rate from Q4 2021 in Q1 2022 by optimising all sales email campaigns.
How to Calculate Your Booking Rate
Keeping tabs on your booking rate takes a little more effort, since you have to measure the ongoing conversion rate for individual emails that your sales people send out (not a dedicated campaign). But you need to do it if you’re going to increase the number of sales conversations your team has. Here’s how to calculate it:
(Meetings Booked ÷ Meeting Invites Sent) x 100 = Booking Rate
How to Achieve a Booking Rate Goal
Your booking rate really boils down to two things: how well you’ve qualified the leads you send invitations to and how well you write your invite. By optimising both, you can increase the number of meetings you schedule.
4. Boost the Number of Cold Calls
Motivating your team to make lots of cold calls is difficult to do – especially if sales reps are constantly getting yelled at or hung up on. As a result, setting a goal with an incentive can help you increase the number of outbound calls your team makes. Like so:
Make 100 cold calls each day this week [500 total] using the contact sheets we’ve put together for potential leads, and get a $50 gift card to [restaurant] when you reach 500.
How to Calculate a Reasonable Number of Cold Calls
Calculating cold calls is simple. All you need to do is figure out the average length of each cold call. Then you can divide it by 60 minutes to get your hourly cold call rate. Here’s how it might look:
60 Minutes ÷ Average Call Length = Number of Calls Per Hour
That being said, not all of your reps will be maxing out their phone calls per hour, so you may need to do some quick counting to figure out what your sales reps are actually averaging.
How to Achieve a Cold Call Goal
When you’re trying to up the number of cold calls you make, you need to do three things: 1.) Give your reps the time to be on the phone, 2.) Give them a clear script to walk through with leads, 3.) Offer incentives (like gift cards or bonuses), so they’ll be motivated to meet or exceed the quota. If you do all of them, you can let your reps take it from there.
5. Increase Average Deal Size
Closing a lot of deals isn’t enough to keep your business afloat if all the deals are small. If you’re in this position, it’s a good idea to set a team goal to increase your deal size and average order value. Here’s how a small business might do that:
Increase the average order size to $350 by the end of the year by adding at least one upselling or cross-selling pitch to every customer interaction.
How to Calculate Average Deal Size
To calculate the average deal size, you need the revenue total and the number of deals closed in a specific period of time. (The period of time doesn’t matter as long as it’s the same for both values.) Once you have both numbers, you divide the revenue amount by the number of deals closed, like this:
Total Revenue Generated by Deals ÷ Number of Deals Closed
For example, if you made $5,000 this quarter between 10 deals, you would divide $5,000 by 10 to get a $500 average deal size.
How to Achieve a Deal Size Goal
There are a lot of effective ways to increase your average deal size. You can target larger clients, capitalise on more upselling and cross-selling opportunities, or incentivise larger purchases by throwing in extra features or products if your customers spend over a certain amount.
6. Reduce Customer Churn
If your churn rate is higher than it should be, you should take steps to lower it. Setting a goal is one way you can focus your reps’ attention on important sales activities that may otherwise fall through the cracks. Here’s how a goal in this category could look:
Increase our customer retention rate (i.e. decrease our churn rate) by 20% in the next two quarters by improving our hand-offs to the customer service team.
How to Calculate Customer Churn
To calculate customer churn, all you do is divide the number of customers you lost in a certain period of time (i.e. month, quarter, or year) from the total you had at the start of that time period. Then, you multiply the answer by 100 to get the percentage.
(Customers Lost ÷ Total Customers) x 100 = Churn Rate
How to Achieve a Customer Churn Goal
Sales teams are the first line of defence in customer churn. By thoroughly qualifying leads before wasting the time and resources to win them over, you can increase your odds of landing customers who will stick around for years to come.
7. Increase Customer Lifetime Value (CLV)
Many factors impact your customer lifetime value, such as prospecting, qualification, upselling and cross-selling, and retention. So, if your CLV is lower than it should be, you need to figure out what’s impacting it the most and set a goal (or two) to improve. Here’s an example of an annual sales goal:
Boost our customer lifetime value to $3,000 over the next 12 months by decreasing our customer acquisition cost (through better lead qualification) and aggressively pursuing cross-selling opportunities.
How to Calculate Customer Lifetime Value
Calculating your customer lifetime value is complicated. First, you have to average each customer’s transaction value. Then, you have to multiply it by the number of orders they place annually, and number of years they’ve stayed with your brand:
Customer’s Average Transaction Amount x Number of Transactions Per Year x Number of Years With Your Business = CLV
Keep in mind that if you want an accurate picture of several (or many) customers, you will need to do the same calculation for each one – and that can take a while.
How to Achieve a CLV Goal
This will probably come as no surprise, but customer lifetime value boils down to a few simple things – the amount of money your customers spend with you every year and the amount of time they stick around. So if you want to boost your CLV, you should choose an important activity that will boost your customer retention rate, increase their spending, or both.
8. Lower Customer Acquisition Cost (CAC)
The longer it takes to convert a lead into a customer, the more money it costs you in ad spending, customer outreach campaigns, and employee time. To decrease your CAC, you need to set sales goals to streamline and optimise your sales process, like so:
Slash our CAC by 15% next month by adding more potential entry points into our sales funnel that would eliminate redundancies and wasted time.
How to Calculate Customer Acquisition Cost
CAC is one of the most well-known KPIs out there for sales and marketing teams. Here’s a quick refresher on how to calculate it:
Total Cost to Acquire Customers (from certain campaign or time period) ÷ Total Number of Customers Acquired = CAC
You can also compare this number with the CLV to see if you’re earning or losing money by acquiring customers. Just make sure you consider the amount of time they’ve been your customer.
How to Achieve a CAC Goal
Achieving a CAC goal is tricky, since there are so many factors involved. But a few ways you can move closer to reaching it include using less expensive (but more skilled) methods to win customers, making sure your product matches your customer’s needs and situation, and optimising your sales processes.
9. Shorten Time to Close
Time is money. The longer you spend trying to close a deal, the fewer opportunities you can create and capitalise on. On the flip side, the more streamlined your sales cycle is, the fewer opportunity costs you have to deal with. Here’s a goal you might set to accelerate your time to close:
Decrease time to close by 15% next quarter by vigorously weeding out unqualified leads and simplifying and personalising sales pitches for qualified leads.
How to Calculate Time to Close
It’d probably be easier to use sales software that automatically calculates your average time to close. But you can count the months and days between the first contact and customer payment by hand if you’d prefer to go that route.
How to Achieve a Time to Close Goal
To shorten the sales cycle, you really only need to do one thing: persuade leads to buy from you sooner rather than later. But you can do this a few different ways. You can qualify your leads early on and weed out the ones that aren’t a good fit for your business, or you can streamline your pitch to get lead commitment faster.
10. Raise Sales Email Response Rate
If you use sales emails to create opportunities, your open and reply rates need to be high. Setting a target for email responses, whether you measure raw amount or percentage, helps you hone in on salespeople who need more coaching and find shared campaigns that need improvement. Here’s how this might look:
Increase each sales reps’ email response rate this month by pairing top performers with bottom performers for one-on-one mentoring.
How to Calculate Email Response Rate
Like many other KPIs on this list, calculating your email response rate is easy. Here’s how you go about it:
(Unique Email Responses ÷ Total Number of Emails Sent) x 100 = Email Response Rate
How to Achieve a Customer Response Rate Goal
In this case, you should take a leaf out of the marketing playbook. Certain email subject lines will certainly get you better open rates, but if you want people to respond, the email copy and call-to-action (CTA) need to be persuasive too.
11. Speed Up Response Time
You don’t want leads sitting around waiting for a response – not just because it hurts your brand image, but because it encourages potential customers to turn to your competitors instead. So, if you notice unanswered emails, phone calls, and social media direct messages sitting for days on end, it might be time to set a goal to speed up your response time. For example:
Respond to all warm lead communication (i.e. emails, messages, phone calls) within 3 hours of receiving it by creating a daily customer response schedule.
How to Calculate Average Response Time
To calculate your reps’ response time, you need to average the amount of time it takes for them to reply to emails. You can do this by dividing the time they spend responding to emails by the number of responses sent out in that timeframe. To see exactly how fast each customer gets a response to their specific message, you’ll need to look at responses one by one.
How to Achieve a Response Time Goal
There are a few reasons why emails and phone calls go answered. One is lack of time to respond, and the other is confusion about who should be responding. By solving these issues, you have a solid chance of improving your response time significantly.
12. Deepen Lead Engagement
Sometimes, the best way to share information with your leads is through content. But if you can’t get prospects to read or watch it, you’ve got a problem. That’s where setting a goal to use content more strategically in sales conversations is helpful. Here’s what that might look like:
Deepen customer engagement with our content by 30% in Q3 by training our sales professionals to select the right content and weave it into their sales conversations naturally.
How to Calculate Lead Engagement
Here again, the formula is incredibly simple. It looks like this:
(Number of People Who Read Your Content ÷ Number of People You Sent it to) x 100 = Lead Engagement Rate
How to Achieve a Lead Engagement Goal
To increase lead engagement, all you have to do is create useful, enjoyable content and work it into your sales conversations seamlessly. If you can do that, the content will do the rest of the heavy lifting.
How to Write a Sales Goal
Now that you’ve got an idea of what a great sales goal looks like, it’s time to start writing your own. Below, we’ve got a three-step guide to help you get started. Plus, we added a few helpful pointers to make the process a little easier.
Identify Areas of Improvement
The first step to solving any problem is recognising there is one. So, if you want to make noticeable improvements to your sales plays, you need to pinpoint the problems each team member is having. Here are a few ways you can do that:
- Review key performance indicators (KPIs)
- Measure the gap between your bottom and top performers and between your team’s current performance and desired performance
- Pinpoint areas in the sales cycle where your leads drop off and deals are lost
- Find the root cause of underperformance (it’s not always what it seems on the surface)
The faster and more accurately you can collect insights on your sales plays, the better able you are to set specific goals for your sales department and team and help your individual reps improve their performance.
Decide on a Reasonable Target
Once you’ve picked a KPI to work on, it’s time to set a clear target for your team to shoot for. Part of this process involves calculating your sales goals and determining a sustainable timeline for achieving them. As you go about it, you’ll decide on details such as:
- Whether you’ll use a percent or a simple number (i.e. 15% vs. 10 leads)
- What the target number should be (i.e. $20K or $35K)
- How much time it will take to reach the goal (1 month or 1 quarter)
Depending on how wide the gap is between your current performance and desired target, you may need to set small goals and slowly raise the bar. Too large a jump will demotivate your team and can slow progress to a stop.
After you have all these details worked out, you can start thinking about the action plan you will take to achieve your new sales target.
Make It SMART
From here, you can write out your SMART sales goal in a clear, concise statement. Just remember to include all the relevant details you fleshed out above so that you can measure your progress and assess your goal regularly. Here’s a sales goal template you can steal to create your own SMART goals:
Improve [KPI] by [number or percent] within [time period] by [strategy or action plan you’ll implement to get it done].
Don’t forget to set up your analytics platform to track your desired KPIs as well so that you can measure your performance as you progress toward your sales objective.
As any sales leader worth their salt will tell you, setting effective sales goals for your team is hard. It takes a lot of careful planning and you have to find a delicate balance between the company’s needs and your sales reps’ capacity. But when you’re “SMART” about it, you can pin down the right goals for your organisation. This, when coupled with solid coaching and training, can make all the difference for your performance and long-term success.