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How to set effective sales team targets for 2024

  • Nov 28, 2023
  • 4 minutes

From my time in sales, I’ve learned the key to sales success lies in setting effective and realistic targets for your team. 

Every individual needs to know their personal responsibility, as well as being part of something bigger, with a team target.

Setting clear, achievable, and motivating goals is crucial for any sales team's success. Here we'll go through the 5 crucial steps:

Defining pipeline targets

Aligning sales and opportunity targets with budgets

Strategic planning for success

Assessing team strengths and market focus

Set and communicate the targets

Consistent follow-through

 

Why effective sales targets are so important

Well-designed targets have so many benefits to a revenue team:

  • helping reps stay focused
  • ensuring all departments in the revenue team work efficiently
  • ultimately, driving growth

On the other hand, unrealistic or confusing objectives only lead to:

  • missed quotas
  • low morale
  • revenue shortfalls

When creating sales targets, as a manager, you need to find the right balance between goals that inspire peak performance and quotas that are so imposing they set teams up to fail. 

This requires carefully evaluating lots of factors, including:

  • historical performance
  • market conditions
  • individual rep capacities

Here I’ll explain the steps we took here at Jiminny to set targets for our sales teams, based on decades of experience and many lessons learned.


Step 1: Defining pipeline targets

The journey to hitting sales targets begins with understanding the importance of pipeline targets. 

The biggest mistake I see made when managers create pipeline targets is simply taking the sales target for the month and working out what the pipeline target should be based on the conversion rate. 

For example:

Let's say I've got a December target of $100k.

And my conversation rate from Opportunity to Close is 25%.

Well then I should create $400k of sales pipeline.

The issue is that this strategy only works if you’ve got a sales cycle where you close Opportunities in the same month you open them.

Before you create accurate pipeline targets, consider the following:

  • Sales target by month/quarter - clearly outline periods within your calendar and what needs to happen within them, ensuring they align with overall business goals.
  • Conversion rate from Opportunity to Close - understand your conversion rates to determine the volume of opportunities needed in the pipeline, and any segment splits that make the conversion rate vary.
  • Your sales cycle - the pipeline you create today is for a future month. Let's say you've got a sales cycle of 3 months. In 3 months' time you’ve got to hit $500k and you convert at 25%. Then you know you need to hit $2m in Opportunity creation now, to create enough pipeline to hit that future target number.


Step 2: Aligning sales and opportunity targets with budgets


Before you can work out the team's opportunity target, you need to know what the sales target is. 

I’ve always worked on the basis that the sales target should be 15-20% above the sales budget, a strategic approach that allows room for growth and unpredicted challenges. 

This also gives you flexibility, creating a more realistic and achievable target.


Step 3: Strategic planning for success


Once you know what you need to hit you can work out when you need to hit it. 

I'm a big fan of baking in the fluctuations that happen throughout the year so we don’t set a $300k target in a month when we’ve never managed to deliver more than $50k. 

Accounting for those fluctuations paints a far more realistic picture of where you need to be and when. This builds more credibility into the targets, making them more meaningful when they’re achieved - or indeed, when they’re missed.

If you've got a sales cycle of 3 months or more, the reality is you need to be planning how you’re going to reach that target the year before to make sure you’ve got the right number of heads trained and ready to hit their targets. So ramp time should be another consideration. 

Understand the ramp time for your team members - both existing and those you anticipate hiring - and create a plan to onboard effectively and without compromising quality. In my experience, creating a playlist of best-practice sales call recordings is the best way to ramp new reps quickly. Setting achievable, bite-sized targets for new team members will also build confidence and motivation.

A one-to-one sales coaching session between a manager and a rep


Step 4: Assessing team strengths and market focus


Before setting the targets for your reps it is really important to assess where it's easiest for you to win in the market. 

It can be so tempting to simply hand out the targets amongst the team but with some proper thought you might find narrowing the focus of individual members or finding a skills gap that can be filled with a new hire, makes all the difference to hitting the target.

In preparing for 2024, we thoroughly assessed the strengths in the current team. 

We could see the conversion rates differed depending on the size of the business the rep was selling to. That caused us to refocus the team into tighter market segments. Those segments dictated their average deal value.

The second exercise was to assess the volume of deals that each AE was currently able to handle based on segment, and if there was any chance of increasing the volume. We discovered time-saving opportunities in our trial process and hired a team to support trials, allowing the AEs to spend more time getting opportunities into the pipe and increasing the deal volume.

Finally, we assessed where the Opportunities would be sourced from, demand-generated vs self-sourced. That developed our thinking about deal velocity.

Once we ran through that exercise we were able to design a sales funnel for each team segment based on average deal value, sales cycle, deal velocity and conversion rates.

For example,

Mid-market AE will work 12 deals per quarter. 
£20,000 ACV.
At a 25% conversion rate.

That equals a £240,000 sales target.
So they need £960,000 opportunity target.


Step 5: Set and communicate the targets


Once you’ve done your maths, sit down and document the targets you are setting. Then create your communication and implementation plan.

Offering an open conversation when you communicate the new targets will make reps more engaged. For newer reps, establish weekly or even daily steps that reps can take to reach their quotas.

For example, calculate how many cold calls, emails, demos etc. reps must perform weekly to achieve their pipeline numbers. Defining these regularly recurring activities maintains focus.

This approach will also identify ability gaps sooner. If reps struggle to execute assigned actions, you can provide extra training or coaching early rather than after they miss quotas. You have more runway to course correct.

Finally here, you could consider implementing two tiers of sales targets: "quota" numbers reps must achieve to earn base commissions and "stretch" goals tied to extra payouts for standout performance. Stretch goals inspire A-players to push themselves.

 

Step 6: Consistent follow-through - the game-changer

Far more important than one-time planning is consistent follow-through. 

Check assumptions, inspect indicators, tweak activities, invest in development and keep everybody moving forward. Even with thorough planning, targets sometimes need to be adjusted based on changing market dynamics. Agility is essential.

With the right process, goals become catalysts, not constraints. Your team should feel positive about their targets and have confidence that they are achievable, so be sure to check in with reps as the weeks go by.

Shelley Lavery is the CRO and Co-Founder of Jiminny, the leading conversation intelligence and sales coaching platform that helps companies maximize their revenue. With over a decade of experience in coaching B2B sales teams, Shelley was previously Group SVP of Sales at Reward Gateway now leading the conversation intelligence discussion with expertise and insight.

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