How to Set Realistic Prospecting Goals
Most sales teams I work with have a common prospecting challenge: the sales people dread prospecting, but their sales managers want them to do more prospecting. Of course the root cause of this problem is salespeople’s aversion to cold calling. As much as we like to think that prospecting has changed as a result of social media, the reality is that phone based prospecting is still the primary method of prospecting for many sales teams.
So what should a manager do in order to get his or her team to do more prospecting? One technique that I recommend is to have sales managers set realistic prospecting activity goals with each salesperson, walking the salesperson through the math.
Prospecting Goals: Doing the Math
One of the most effective methods for setting prospecting goals is to start with the financial goal that the salesperson wants to achieve. Let’s use a simple example: one of your salespeople has a goal of earning $50,000 in commissions this year. Assuming your salesperson in this example earns a 10% commission on all sales, he or she will have to close $500,000 of business this year to meet his or her financial goal.
After the salesperson’s financial goal is established, you then need help your salesperson convert this goal into prospecting activity levels. Start by helping your salesperson calculate the number of deals he or she needs to close in order to achieve $500,000 of sales. Let’s assume that the average deal size for your sales team has historically been $10,000. That means that our salesperson will need to close 50 deals in a year.
Fifty deals a year, or slightly more than four deals per month, sounds easy enough but now you need to translate that into actionable activity. That means analyzing data from your CRM system to determine your sales team’s pipeline ratios. What is your proposal to close ratio? If your ratio is 2:1, then it is obvious your salesperson will need to submit 100 proposals per year to close 50 deals and achieve his or her financial goal. How many qualified meetings result in proposals? If it is 3:1, then your salesperson will need to have 300 qualified meetings over the next year in order to submit 100 proposals.
The next calculation is the number of prospects your salesperson needs to speak with in order to get 300 meetings. Let’s assume that your sales teams’ ratio of conversations with prospects to qualified meetings is 5:1. That means you need to have 1,500 conversations in order to get 300 meetings.
Now the big one: how many calls does your salesperson need to make? Typical connect rates are 8:1 – i.e., eight call attempts for every one connect. That means that your salesperson needs to make 12,000 calls in order to have 1,500 conversations. That translates into 48 call attempts per day (assuming 251 business days in a year).
OK, let’s review the math:
- Salesperson’s annual financial goal: $50,000 in commissions.
- Sales volume required to earn commissions: $500,000 in sales.
- Number of closed deals required to achieve sales volume: 50 deals.
- Number of proposals required to close 50 deals: 100 proposals.
- Number of qualified meetings required for 100 proposals: 300 meetings.
- Number of conversations with prospects required to book 300 meetings: 1,500 conversations.
- Number of call attempts to get 1,500 conversations: 12,000 call attempts.
- Number of call attempts per day: 48 calls per day.
There it is: a prospecting activity goal of 48 calls a day. What salespeople often find by doing the prospecting math is that achieving their financial goals typically requires a higher than anticipated number of prospecting calls. Helping salespeople do the math helps them internalize the amount of prospecting effort required.
Improving Prospecting Efficiency
Of course as a sales manager you should focus on opportunities to make your team’s prospecting efforts more efficient as this will significantly increase your team’s prospecting motivation. One fundamental analysis you can conduct is whether your team is calling on the right targets. What types of customers are your sweet spots? If you perform an analysis on your best accounts, what are the specifics that they have in common? Are they all from the same industry? Are they all of a similar company size? Do they have a similar business model? By identifying the very specific criteria that has won you deals in the past, you can focus on similar accounts for your prospecting effort going forward.
From here, you should consider how to use social media tools such as LinkedIn, or referral based prospecting to increase prospecting efficiency. Another thing you can do as a manager is to encourage your sales team to set aside blocks of time to make their prospecting calls and limit team meetings, training and other interruptions during these times.
While sales people will probably never like to prospect, having them understand the math behind prospecting activity level goals helps them “buy in” to these goals.
About Marlaina Capes
Marlaina Capes is a Senior Director of Client Services at the Sales Readiness Group (SRG). She has over 20 years of experience helping organizations improve performance in the areas of sales skills and leadership development. At SRG, Marlaina has worked with industry leading clients including Abbott, AdRoll, Alcon, Catalina Marketing, FactSet, Johnson Financial Group, Maritz, RingCentral, Univision, and Valmont Industries.