Teaching Goal Setting To Salespeople
Sales leaders must always face a simple reality. You should not allow yourself to think your salespeople know the fundamentals of sales unless you have personally witnessed their success in live selling situations. That same premise applies to their goal setting as well. The following is a simple method to walk them through the process of setting their goals.
Start your goal setting by imagining how you want the final results to appear over a certain period of time. In our example, I will use twelve months. However, the same process will work for longer-term goals as well. This process is based on the averages you should expect in your industry. If you do not yet know those averages, seek the information from your sales leader or a trusted mentor.
Set Personal and Family Goals First: Make a list of at least ten things you want to accomplish for your family over the next twelve months. If you are married, make this list with your spouse.
Set Your Twelve-Month Income Goal: Determine the sales commissions you must earn in order to accomplish your family top ten. Involve your family in this process with you. Include your normal living expenses, savings, and investment targets. If you need help in this area, I will point you to the author Dave Ramsey. You can easily find his free resources online at www.daveramsey.com. As you review your top ten list, search online, where appropriate, to see how much income you will need over the next twelve months in order to fund your priorities.
Set Your Twelve-Month Sales Closed Goal: Determine the number of sales you must close in order to earn your commissions. To do this, simply divide the total income needed by the average commission you expect to earn per sale. For example, if you want to earn $100,000 over the next twelve months, and you average $500 commission per sale, your Sales Closed Goal over the next twelve months would be 200 ($100,000 ÷ $500 = 200).
Set Your Twelve-Month Sales Presentations Goal: Based on the averages you can expect in your industry, how many presentations must you make in order to close one sale? Multiply that number by your total Sales Closed Goal. That will give you the total number of sales presentations you must make to achieve your goals. For example, if you want to close 200 sales, and you average 3 sales presentations to close 1 sale, your Sales Presentation Goal would be 600 (200 × 3 = 600).
Set Your Twelve-Month Appointments Scheduled Goal: In some industries, this part is not needed, and you may skip to the next step. If your sales model actually calls for the sales presentation to be made simultaneously with the initial contact, skip this step. Or if 100 percent of the appointments you schedule will result in a presentation being made, your Appointments Scheduled Goal will be the same number as your Sales Presentation Goal. However, if your sales model involves scheduling an appointment for your sales presentation, and you experience a consistent number of appointments that must be rescheduled, you should account for that in your goal setting and activity planning.
What percentage of presentation appointments are normally rescheduled in your industry? Add that percentage to your Sales Presentation Goal to determine the number of appointments you must schedule. For example, if you want to make 600 sales presentations over the next twelve months, and your company normally has a 10 percent appointments rescheduled rate, your Appointments Scheduled Goal would be 660 (600 × 110% = 660).
Set Your Twelve-Month Prospects Contacted Goal: How many prospects must you contact in order to schedule 1 appointment for a sales presentation? Multiply that number by your Appointments Scheduled Goal to determine how many prospects you must contact in order to hit your target. For example, if you want to set 660 appointments for sales presentations, and you average 7 contacts to schedule 1 appointment, your Prospects Contacted Goal would be 4,620 (660 × 7 = 4,620).
Set Your Twelve-Month Leads Identified and Qualified Goal: You should always contact each qualified sales lead you have. For this section, we will operate under the premise that you do so. However, in many industries, you will find that not every lead you identify is qualified to become your client. If that applies in your field, then you should take this into account in your goal setting. What percentage of leads you identify must be “tossed out” as unqualified leads? Add that percentage to your Prospects Contacted Goal to determine your Leads Identified Goal. For example, if you want to contact 4,620 qualified leads over the next twelve months, and about 25 percent of the leads you find are not qualified to become your clients, your Leads Identified Goal would be 5,775 (4,620 × 125% = 5,775).
Now, based on the activity goals we determined above, the following would be your targets over the next twelve months:
Leads Identified = 5,775
Qualified Leads = 4,620
Qualified Leads/Prospects Contacted = 4,620
Sales Presentation Appointments Scheduled = 660
Sales Presentations Completed = 600
Sales Closed = 200
Commissions Earned = $100,000
For most new salespeople, their annual activity level may seem overwhelming. In my next post, we will discuss how to sweeten that up a bit for them.