Published by Niall Devitt, Btb BusinessTraining

Salespeople often complain about their sales targets so first let’s start with stating some realities about targets

1. Sales targets should never be easy to achieve but should always be achievable.
2. Sales targets don’t take account of unforeseen events such as sick days etc
3. Sales targets are hit as a result of good planning and doing the correct activities at the right time.
4. Not planning for how you intend to hit your target is planning not to hit target.

So how do you plan to hit your target?

Lets take an example

Meet Joe Bloggs

Joe is a B2B sales rep for a company selling IT software solutions.

Joe’s quarterly target is 75K

Joe’s average sale value is Euro 10K

Joe has a potential 94K in his sales pipeline

Joe’s average sale length is 6 weeks.This is average length of time that it takes from initial contact to closing out an opportunity. Most sales people tend to underestimate this figure

Joe’s successful close ratio is approx 30%. In other words, Joe usually closes 3 in every 10 sales or 3K for every 10K on his pipeline.

The first thing Joe needs to realise is that his pipeline is way too small, based on his closing ratio of 30% this will only lead to 27-29K in sales which will leave him well short of his target. In other words he needs to prospect for a lot more opportunities and he needs to do this in the first half of the quarter as his average sale length is 6 weeks.

The second thing Joe needs to do is move his target up, that’s right up. The reason that he does this is to protect the 75K target, In Joe’s case he decides to add 10% so his new target is 82.5K

Lets look as Joe’s existing pipeline, applying the close ratio we can say that approx 28K should close. Take this from his new target and he stills need to bring in a further 54-55K in sales.

Because his close ratio is 30% this 54K in sales actually means around 180K in new sales opportunities. His average sale value is 10k so this means around 18 new opportunities.

And because his average sale length is 6 weeks, he needs to get these new sales opportunities in his pipeline in the first half of the quarter.

So here’s Joe’s plan

For the first half of the quarter his first objective is going to be getting at least 18+ new opportunities and his secondary objective is to close out his existing pipeline of 94K.If all goes according to plan at that stage he should have approx 28K in sales and a healthy pipeline containing 180-200K.

He then switches his primary objective to closing this new pipeline and prospecting becomes a smaller par of his activities.

By the end of the quarter he should have closed a further approx 54K+ in sales leaving him with a total of approx 82K in sales for the quarter. Should he under perform, he has still left enough room so that he should still hit his real target of 75K in sales.

The key lessons are:

1. You need to plan for how you intend to make the target happen
2. To hit target always aim to do more than target to protect your original target against under-performance
3. Consider factors such as your close ratio and average sale length (prospect to close)
4. Consider the state of your pipeline to focus where you concentrate your sales activates and factor this into your plan.

Tags: sales coaching, sales performance, sales planning, sales target, Sales Targets, sales training

This entry was posted on Friday, February 15th, 2008 at 9:54 am and is filed under Sales. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.