The Secret to Setting (and Nailing) Sales Goals
When I was raising my kids, I used to follow one parenting rule: I never wanted to put them in a position to fail. If you don’t set your sales goals correctly, you’ll be doing the same thing to your sales team – and likely your company as well.
Sales goals and an effective sales force have a yin–yang relationship. If the sales goals are set correctly, they can be a motivating force for your sales team and allow you to realistically assess the quality and effectiveness of your staff.
If they are not set correctly, they can be demoralizing and may even cause you to terminate good people.
To avoid this undesirable result, you need to do two things to ensure the yin-yang relationship is working correctly. First, you have to set your sales goals correctly. Second, you have to have a system in place to hit those goals. In this post, I’ll address both issues.
Step 1: The Mystical Method of Setting Sales Goals
I always like to start the process of setting sales goals at the beginning.
Unfortunately, too many companies start at the end.
What do I mean by that?
I can’t tell you how many times a CEO has pulled a number he/she would like to hit out of thin air, and designated it as their sales goal for the year. “Last year we did $6 million. This year I want to do $12 million.”
Ask the CEO how he came up with that number, and he might laugh or shrug, but he likely won’t tell you he just wants to make two times as much money.
The truth is, for most leaders, the sales goal is an arbitrary number, and it’s extremely unrealistic.
For example, has the CEO who wants to hit $12 million considered what he’ll need to spend to get to that level? Has he analyzed his assets and his personnel, and included that in his projections?
Generally, the answer is no. He’s starting at the end. So what should you do?
First of all, let me say that there is a fair amount of guesswork involved. That is, there is guesswork involved if you don’t have much data, both internal and in regards to the marketplace.
To set your sales goals for the year, I would begin by using the Net Sales to Total Assets ratio. This requires looking back at last year’s total assets, and dividing it by your net sales.
For example, if Company A did $7 million in net sales, and had $2 million in assets, it would have a ratio of 3.5.
Conversely, if Company B only did $4 million in sales and had $2 million in assets, its ratio would shrink to 2.0.
For Company A to increase sales to $14 million, it would require $4 million in assets. For a printing company, that might include more printing presses, for example. For company B to reach that $14 million, it would take $7 million in assets.
According to this ratio, if you fail to reach that asset level, your sales team won’t be able to meet those goals, no matter how good they are. You just won’t have the capacity.
When you start to think in these terms, you begin to consider the other factors that could impede your sales. Your think about how you can set the stage for success, and then make sure your management team takes the steps to get there.
In other words, you’re putting your sales people in a position to succeed.
Now comes the tough part: The task of actually increasing sales.
Step 2: The Five Keys to Increasing Sales
You’ve set your sales goals. They’re reasonable and realistic. Now what do you need to do to make it happen?
I believe there are five keys to increasing sales.
Collaborate with your customers. Your sales team cannot be order takers. They can’t mill around the office, waiting for the phone to ring.
Instead, they need to be out in the field, establishing a collaborative culture with your customers. Note I said “customers.” I’m referring to your current clients, because these are the people who are most likely to generate business. They trust you, and they have done business with you before.
Your sales team should build on the rapport they’ve already established with the customer, and take it to the next level. Establish a sense of collaboration. Find out where the client wants to go, and then see if you have the products and services to take them there.
This will be a learning process for your sales team, your company, and your clients. But it will also unlock new opportunities and avenues for growth you’d never imagined. That’s the power of collaboration.
Equip them with the tools to tell the tale. I remember once talking to a marketing manager who claimed a good salesperson didn’t need a slick brochure to make the sale. “A good salesperson should be able to make the sale with a piece of notebook paper,” she said.
That’s partially true. A good sales person relies on sales technique and the power of their personality to some degree.
But in the information age, more and more buyers are become pre-qualified before your sales team even gets to the door. So your first order of business is to ensure your website and your content tells your story.
Then, before you send your sales people out, make sure they have the tools necessary to tell the story. Do they have a PowerPoint presentation loaded with data? A brochure that tells the entire story? A sales script that hits on all the key elements?
In theory, they should have all that and more. Your marketing team should have unique, creative ways to deliver the message with corporate collateral, and your sales people should be practiced and on message when they make a call.
Gather and monitor data. You built your sales goals with good data. Now you need to use data to motivate and monitor your sales force.
You’ll want to track your overall product sales, sure, but keep an eye on the individual production of your team. Give each sales person goals, and then watch to see if he or she is on track to achieve them.
Tracking the results can motivate your team to do even better, or it will indicate that more training or improvements to the product is needed. The closer you track the results, the faster you can swoop in and make ongoing adjustments.
You can also collect data on your competitors and your markets. Good market research yields insights, which can open your sales teams’ eyes to new markets and approaches.
Provide them with a sales leader. Sales is a craft. Just like carpenters, doctors and lawyers, sales people require a unique set of acquired skills and natural talent.
To lead a sales team, you need someone who is a sales person as well. Someone who has been in the trenches and sold for a living. Not a plant manager, a COO, or (worst of all) a marketing professional.
A sales manager will know how to motivate his staff when they’re down, or reel them in when they’re flying too high. They know how to guard against over-confidence, and be on the lookout for incompetence.
Even the best athletes require a great coach. Your sales team is no different.
Look and listen. This is my X factor, and it’s basically on your shoulders. Very simply, you need to look and listen.
Look at what is happening to your company. Watch your team and your competition. Keep an eye on your numbers, but also watch your staff’s body language. Your eyes should on the big picture, as well as current events.
Then listen. Ask your people what they think, and listen to what they have to say. Listen to what your customers are saying, as well as your competition and industry peers. Keep your ears as open as your mind.
Let me circle back to parenting. Half of any parent’s success is being there. It’s looking and listening to what your kids are saying and doing. The same applies to leading a sales effort.
You are now ready to set the sales goals for the year, and create the sales environment that will enable you to meet them. Why will this work? Because you’ve put your sales people in a position to succeed. And if your sales team wins, guess who else wins in the process?
Rock LaManna is the President and CEO of the LaManna Alliance. The LaManna Alliance helps printing owners and CEOs use their company financials to prioritize and choose the proper strategic transition – including mergers, acquisitions, organic growth, and exit / succession plans.