Setting goals is about establishing specific, achievable objectives for teams or individuals within an organization. These goals are crucial for providing focus, direction, motivation and ultimately guiding efforts towards reaching desired outcomes. In this blog we will discover how you can set goals for your outbound sales process.
Sales goals need to be aligned with the overall financial business objectives and could for example be calculated based on how much new business that needs to be acquired and existing customers that need to be retained or upsold. For the sake of simplicity, this post will focus on setting goals for new business acquisition.
Aligning activity with goals
Typically, a sales organization will have a yearly quota on both a team- and individual level. This sales budget is of course essential, but provides little to no guidance in itself on how to achieve it. If instead broken down into a monthly budget, it becomes more tangible and arguably easier to follow up on. If we continue to break it down further we will eventually end up on a daily budget. However, plenty of businesses do not sell on a daily basis and would consider a daily progress report unnecessary. Instead, what becomes important is the activity budget - what each sales rep does each day.
Closing deals through references or incoming leads is great, but sales organizations still need to calculate a bottom line activity rate that is consistent with their new business acquisition budget. In the end, the most important metric is the value of the closed deals. However, the activity rate is the only thing the sales reps can directly affect in the short term and will help the team understand whether they are on track or not towards the actual sales budget. So how do you find the right activity rate for your business? You will have to count backwards.
Goal-setting in practice
Let us take an example where the yearly budget per rep is €480 000. Broken down on a monthly budget this amounts to €40 000. A typical deal in this example is roughly €20 000, which means that each rep needs to sell on average two deals per month. Now, for the next step it is beneficial to have some historical data and for those who do not, you will have to work with some qualified guessing.
Given the example pipeline has four steps; first meeting, demo, out for signature & closed won, we will have to calculate the conversion between these steps backwards. For this example, let us say that the conversion between the steps are as follows:
- 50%: To close two deals, we need to send at least four quotes for signature.
- 50%: In order to generate four quotes, we need to have had at least eight demos.
- 25%: Having eight demos scheduled means that we will first have to conduct 24 first meetings.
- 25%: In order to book 24 first meetings, we estimate that we need to connect with 96 people per month.
Given that we have our monthly KPIs, we can roughly divide the activity level by four to get the weekly rate, and once again with five to get the daily. This leaves us with a total of 5 connections per day.
Now, depending on what tool or medium is being used, the actual attempts that render this specific success rate will differ and if you do not have any numbers to work with in advance you might have to use some qualified guesses in the beginning and adjust as you go. In order to connect with 5 people per day, you might have to attempt as many as 30 phone calls per day.
Even though the exact numbers will vary between different organizations and there might be mixed types of outreaches, setting daily KPIs helps align efforts with overall business objectives and provides a basis for measuring performance and progress. Additionally, it encourages accountability, fosters a culture of continuous improvement, and contributes to the development of strategic plans for sustained success.