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The Importance of Realistic Sales Targets

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Posted on November 24, 2017

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Sales targets are an extremely useful part of motivating your team and getting them to put their best effort into getting as many sales as they can. Surprisingly though, many businesses actually fail to set any targets at all. And a lot of them who do, end up setting targets that are poorly thought out and do not raise employee efficiency and success levels in any significant way.

The reason many businesses end up setting poor sales targets actually comes in many parts. The most common method they use is to take a look at the revenue from the previous year. Then by taking into account the growth expected over the next year, they can attempt to make a reasonable guess at what would be an appropriate sales target.

This may sound good in theory but the problems arise when you fail to take into account a bunch of other factors, such as:

  • Volatility in the market
  • New products or marketing approaches
  • Possible expansion of target audience

These are only a few examples of things that can drastically change the game as far as your sales targets are involved. Having badly laid out targets than can seem unattainable will lead to issues among your staff, including lack of focus and determination as well as a feeling of resignation at not being able to meet targets. Knowing straight from the beginning that it will be almost impossible for them to reach their targets saps the employees of all their motivation at actually getting the job done.

Conversely, if the targets set end up being on the low side and end up being too easy, the same thing happens. Employees don’t make the most of the easy market and end up settling for your low targets as the motive to go beyond that isn’t there for them.

Either way, you end up losing money and you end up losing credibility among your staff as you would be displaying a clear lack of knowledge in your market, leading to these badly thought out sales targets.

To make sure you don’t mess up and set unrealistic or plainly inaccurate sales targets, make sure you keep these points in mind –

  • Business and Economic factors. Make sure you know your business inside out, and have a strong understanding of how your market is trending at any given time. Having a strong understanding here will give you the foresight to be able to much better predict what is going to go down over the next 12 months.
  • Revenue per rep. Make sure you know exactly how much each rep is bringing in. That would allow you to better work out an average to set for your employees, and would let you know if there are any outliers that are either driving up the average amount of sales or are dragging them down.
  • Receive feedback. Talk to your reps. Understand that they have another point of view to offer you, and their thoughts and experiences can really open your eyes and allow you to see your business from a different angle.

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