Are you setting your sales targets correctly?

Should businesses bother setting sales targets or should they simply hope for the best each month? Is it realistic to set sales targets beyond plus or minus 5% in comparison to last year?

Businesses need clear vision to enable them to meet long or short-term goals and sales targets can provide a helpful framework to measure performance and the effectiveness of sales staff.

However, many businesses rush the process and don’t pay enough attention to working out what’s realistic so the sales target can be achieved. How many managing directors or finance directors go out with their sales force to understand what issues they constantly face and  judge whether or not the targets are realistic?

One problem with setting sales targets is that it puts pressure on sales staff which can have a negative effect on productivity, with talented staff making silly mistakes just to meet their sales targets.

A proper strategy needs to be introduced to ensure sales staff ‘own’ the targets. This means they will work tirelessly to achieve them rather than pay lip service to them.

Targets that are 5%, 10% or 15% above last year are realistic in this market but when you set targets of 100% growth year-on-year you need to be realistic. To achieve 100% plus you have to be selling something completely different or reinvent the business.

It’s important to break down annual sales targets to daily or possibly weekly figures so it’s not so overwhelming. This will help your sales staff understand them. A £5k target per month is £250 per day!

One of the biggest factors to affect sales is seasonal variation and you have to take into account that August and December are difficult months. Did you take into account, for example, that this year half of April was shut down because of the Bank Holidays and the royal wedding?

Seasonal variations are very important, and will impact heavily on cash flow.

Finally, when setting sales targets companies should have a different approach for new customers, existing customers and past customers.

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