How to Set Great Sales Goals That Bring Double Digit Growth
Every self-help book, motivational seminar and sales training weekend hammers the idea of goal setting into us.
The reason for this is that setting a solid goal adds tremendous power to your efforts. However, we’re not here to convince you to set sales goals. You’ve come to understand that by yourself.
Instead, we are going to focus on how to set the right sales goals — those that will help you manage your sales pipeline in such a way that will help you achieve double digit growth in your sales results.
Here’s the thing — there are good and bad goals
And proper goal setting — or setting proper goals is difficult. Did you know that more than 80 percent of companies set the wrong kinds of goals for their sales staff? Goals that you can’t possibly meet?
In a recent study, it was shown that setting results-oriented goals made achieving these goals nearly impossible.
Think about it, if a sales manager could directly manage revenue, then every salesperson in the world would be filling their bathtubs with Ben Franklins and gold coins. The only things I saw the last time I looked in my bathtub were some stale soap and a misplaced toothbrush.
The reality is that we can’t control results — we can only manage our own actions.
The good news? You can achieve astounding sales results by setting activity goals. In fact, the results that come out of carefully planned and managed activities can far exceed any results-oriented goal you may have set in the past.
What activity goals are — a personal example
Imagine a bookseller who sets a goal to sell $1,000 in books each day. What if he sold nothing after talking to 17 people? And worse, what if prospect number 17 happened to be a very harsh rejection? It would surely get you down and make it harder to keep going.
Take it from us, before we founded Pipedrive, we got our start in sales in exactly this way — selling books door-to-door and dealing with harsh rejections.
Now what if the same bookseller had an activity goal of talking to 20 prospects each day? Taking your focus off the $1,000 result-goal and shifting it on the activity goal meant that even if 17 were to say no, it wouldn’t matter — he would only have three prospects left to talk to.
An example from the deep end
Ironically, when you take your focus off the results and put it on activities, you start feeling better, and become more effective in achieving your goals. Take Michael Phelps as an example. At the very moment when he dives into the Olympic pool, his mind is not on the gold medal at the other end.
While the medal is the motivation that keeps getting him back into the pool day in, day out, it’s not what’s on his mind when hears the starting pistol go off. Instead, his focus is on getting every move right — exactly like he’s done it a thousand times before during training. If he gets every move right, only then will the gold be in his reach — and that much he knows.
Leading to the ultimate point of…
You get results by focusing on the things you can do, not on the things you can’t do anything about.
A simple truth of sales — everyone with whom you start a sales conversation will not end up buying. It’s a matter of putting the right number of conversations into the front end of your pipeline, and managing them along the way to ensure the right number of closed deals come out of the far end.
It’s not that you never think about your desired results, it’s just that you don’t let them monopolize your focus.
How to get into the habit of setting great sales goals
Before you can start setting great sales goals, you’ll need to work out some numbers — chances are that you already know them pretty well, but if not, then here are the two things you’ll need to:
1. Calculate your sales conversion rate by dividing the number of won deals with the number of initiated deals.
For example, if you make 50 calls to different people or companies, work on those and make 2 sales, then your close ratio is 4% (2/50=0.04).
2. Calculate how many calls, emails or meetings you need to hold in order for you to make your current conversion rate work.
With a 4% close rate, it takes 25 calls to have one sale and 50 calls for two sales.
If by doing these calculations you find that there is a discrepancy with real life, it may be that you aren’t putting enough people into the front end of your pipeline. It could also be that your conversion rate is too low.
How to go about applying these numbers
So instead of worrying about a specific result, set an activity goal to initiate 25 new conversations and make 4 demos every day, for example. You don’t know which of the 50 people in your sales pipeline will end up converting into a sale, but you do know that if you do everything right, 2 prospects will end up as “won”.
Your goal is to focus on making a powerful and effective presentation to each and every prospect, instead of worrying about what may or may not happen with the conversion.
Setting solid activity goals will build your confidence and reduce the sting of rejection. When you take your focus off of what might happen and put it on the activities that you can do, you’ll find yourself exceeding any expectation of results you could ever have hoped of achieving.
To put activity goals in action, you need to do these two things:
1. Count the average number of your key activities including meetings, emails, follow-up calls, new conversations initiated per week, or per day, etc.
Remember, you made 50 calls. With a 4% close rate, it takes 25 calls to have one sale.
2. Set yourself daily and weekly activity goals based on how you’re doing compared to your current business and revenue results. You can use the Sales Pipeline Calculator for this.
So if you want to achieve 5 sales each week, you’ll need to set yourself an activity goal of 125 (=5×25) calls and then stop worrying about the result figure, because it will come in.
By increasing the number of conversations started even by a little bit, you’ll soon see that the numbers will start adding up — and that your desired results will start coming in.
How to Set Sales Goals was first published in Pipedrive blog.