Setting And Achieving Annual Sales Goals for Your Team
Achieving sales goals is an essential part of sales management. While an annual sales goal may be “imposed” on a sales manager based on a company’s overall budget, this should be viewed as a starting point for planning purposes.
Unfortunately, many managers take the approach that they will simply work with their sales team and suggest they go on as many calls as possible to achieve their goal. Instead, they are better served developing a plan based on an analysis of existing business and determining the amount of new business required to achieve the goal.
Analyze the Existing Customer Base
As a starting point, sales managers should look at the annual sales goal objectively and compare it to prior performance. As an example, if this year’s sales goal is $12 million and last year the team achieved $10 million the manager should start by estimating sales potential from existing customers (i.e., the customers that generated last year’s revenue).
Start by having each sales rep review and segment their existing accounts into the following three categories.
- Limited or no revenue: These may be smaller accounts or customers who had a one-time requirement.
- Stable: These represent stable customers whose needs are consistent with the prior year. It could also include recurring revenue based on existing contracts.
- High potential: These accounts have significant growth potential. This includes customers who may have placed initial orders, run pilot programs, or offer growth potential through other departments or business units.
Let’s assume the following based on the above analysis at the Team level.
|Category||Prior Year Sales||This Year Sales|
|Limited or no growth||$1.5 million||Zero|
|Stable||$6.5 million||$6.5 million|
|High Potential||$2.0 million||$3.0 million|
|Total||$10 million||$9.5 million|
As noted in the chart above, the expected revenue from existing customers is $9.5 million even though the high potential accounts are forecast to grow by $1 million. This means that the additional $2.5 million of revenue required to achieve the Team goal of $12 million will need to come from new accounts.
Allocate Sales Quotas
The above analysis informs how the manager sets quotas for the individual team members. Keep in mind that quota allocation depends on a number of factors, including the amount of time required to manage existing account relationships and territory potential. Here is a simple example for a sales team of six where higher “new account” targets are being assigned to sales reps who have a smaller existing customer base to manage.
|Sales Team||Existing Accounts Last Year||Existing Accounts This Year||New Accounts This Year||Quota|
|Rep 1||$1.0 million||$.9 million||$.6 million||$1.5 million|
|Rep 2||$1.2 million||$1.1 million||$.6 million||$1.7 million|
|Rep 3||$1.6 million||$1.5 million||$.4 million||$1.9 million|
|Rep 4||$1.7 million||$1.6 million||$.4 million||$2.0 million|
|Rep 5||$2.1 million||$2.0 million||$.3 million||$2.3 million|
|Rep 6||$2.4 million||$2.4 million||$.2 million||$2.6 million|
|Total||$10 million||$9.5 million||$2.5 million||$12 million|
Based on the above analysis, managers can now clearly explain the sales goals to the respective members of their sales teams and work with them on plans to (i) grow existing accounts with an emphasis on those noted as high potential and (ii) sell into new accounts.
Ultimately, sales managers need to take the lead in getting their team to analyze the account base and develop a plan to achieve the annual sales goal. By taking the time to develop a plan, the manager not only improves the likelihood of success but also builds confidence with the sales team and senior leadership.
About Norman Behar
Norman Behar is Chairman and Managing Director of the Sales Readiness Group (SRG). He has over 25 years of senior sales management experience, and is recognized as a thought leader in the sales training industry. His blog posts and whitepapers are frequently featured in leading sales enablement publications including ATD, TrainingIndustry.com, and Selling Power.