The Four Steps to Setting Demanding but Achievable Sales Targets – with Sales Team Buy-in
I approach target setting with the sales team as “joint exercise” between management and the sales team, using the following steps:
1) Upper management should have its overall revenue expectations in mind before starting the process. The revenue projections should include management’s assumption set about what will drive its projected increase in revenues (ex. new product, competitor going out of business, overall increase in the economy, etc.)
2) Then management should approach the sales team for their take on what is achievable in each territory and what resources are needed to achieve a proposed level of revenue.
3) Sales should analyze each territory by establishing base line revenue – last year’s revenues less any major one time spikes and any unusual “hits” (ex. cancellation of a very large order). Then conduct a “tailwinds” and “headwinds” assessment. Tailwinds are drivers that can boost sales (ex. key customer just acquired another company and you can expect more business from that client) and “headwinds” are just the opposite. Then determine the boosts or hits to the overall revenue line based on the tailwinds and headwinds. This should provide a reasoned analysis of the territory and what it can produce. Sales should also prepare an outline of resources that may be needed to achieve its projected number.
4) Sales and management should now sit down and review each others “revenue targets”, analysis and underlying assumptions. Then listen to other party’s business cases and then set demanding but achievable targets – with the resources in place to meet those targets. Sales may not get exactly the target proposed, but at a minimum sales will be “heard” and management will understand the perspectives of the sales team.
A caveat to the above, how far down in the sales organization this process gets driven depends upon the seniority and analytical skills of the sales team members. In other words, for a newbie to sales she/he should sit with the sales manager and jointly conduct the “tailwinds” and “headwinds” analysis and proposed revenue number for a given territory. And the manager should be the one presenting that analysis to upper management.
To learn more about setting realistic, achievable but demanding sales targets and overall sales plans, contact Brad at www.leggettsales.com or 949-388-6910.
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