Any experienced salesperson can tell you that one of the biggest factors for their success is the goals they set for themselves. They understand the role that goals play in both guidance and motivation, and have set both good and bad goals for themselves over the years.

You’ve probably had experience setting goals in your own life, whether they were personal or professional in nature. And, like most people, you’ve felt both the satisfaction of success when achieving your goal and the sting of failure when coming up short.

But what is it, exactly, that makes an effective sales goal? And how can you set effective sales goals for your own team?

What Are Sales Goals?

A sales goal is any measurable objective or result that serves as a target for your sales team to hit. In any context, a goal is a desired result, and is often used to both guide and enhance individuals’ ambitions.

In the world of sales, goals give team leaders the power to coordinate their team, while simultaneously serving as a kind of barometer for success. They can be set to inspire productivity improvement, higher close rates, higher revenue, or almost any other important sales metric.

Sales goals can also be formal or informal; they may be written on a whiteboard in your main meeting room, explicitly documented in your online CRM, or just casually spoken between individuals. They can also be set for an entire team, or just one individual on that team. Learning how to set effective sales goals is one of the most essential sales skills to master.

What is it that makes a sales goal effective?

What Makes a Goal Effective?

“Effective” is a tricky term, since different people have different motivations for setting goals. One person may set a sales goal to challenge themselves, while another may set a sales goal to increase company revenue.

Generally speaking, we can consider a goal’s effectiveness in three main dimensions:

  • Motivation. Does this goal sufficiently motivate your team members to improve? Improvement can unfold in a number of different ways, but the general vision is the same; you want them to increase some measurable aspect of their performance. If a goal serves to motivate better performance in any way, it can be deemed effective.
  • Potential for success. Goals are also effective if they allow your team to get iteratively closer to your company’s vision of success. For most companies, this means generating more revenue through higher numbers of customers and higher customer retention. Good sales goals push the entire department to the next level, and they don’t allow complacency; for example, let’s say you set a goal of achieving $1 million in revenue last year, you achieved that goal, and most relevant variables are the same. Setting a goal of $900,000 in revenue would not push your team to advance, and setting a goal of $100 million in revenue would be laughably hard to achieve, making it practically irrelevant. Something like $1.2 million in revenue would represent the sweet spot.
  • Capacity for analysis. Effective sales goals also give you some way to measure your team’s performance. They serve as a goalpost for your organization, and your ability (or inability) to achieve them should give you information about how your sales strategy is developing—and where it should head in the future.

So what strategies can you use to set more effective goals?

Committing to the Goal Setting Process

Here’s an obvious statement worth making explicit: goals only work if they’re set and followed.

That’s why your first step is committing to the goal setting process. Organizations that never set goals for their sales team never end up progressing in meaningful ways, and organizations that set goals only to abandon them halfway into their outlined time period might as well not be setting goals at all.

There’s no set formula for how many goals you should set, when you should set them, or how often you should follow up with them. However, everyone in your sales team should take goals seriously, and have a formal process for how to develop and strive to achieve them.

Gathering Data to Set Sales Goals

Effective goals are also based on objective data, rather than subjective feelings or intuitions, meaning you’ll need to do research to set goals effectively.

There are several forms of research you’ll need to conduct, including:

  • Internal data. First, you’ll need to measure, analyze, and consider your own team’s past performance. Using your CRM software (or your equivalent), take a look at your sales performance over the past several months and years. How much revenue were you able to generate under different conditions? How many new leads do you generate? What are your close rates? How have these metrics changed with variables like seasonal changes, economic downturns, and specials? Using these data, you can get a decent idea of what you could stand to improve, and how much you can improve it.
  • External data. You’ll also need to look at external data. In particular, how are companies like yours performing, and how do they set goals for themselves? For example, let’s say you have an SaaS company that earns $5 million in revenue per year. A competing company manages to make $8 million in revenue per year. What accounts for this difference? How can you close the gap?
  • Surveys and team sentiments. If you’re a team leader responsible for setting sales goals for an entire group of people, consider using surveys and meetings to get a better feel for your staff members’ thoughts and feelings. Are they feeling overwhelmed and stressed by your goals, or are they feeling unchallenged and uninspired? Do they have an intuition for what would motivate them to succeed?

The more information you have to work with, the better.

How to Set Effective Sales Goals Using SMART Criteria

Now we get to the heart of an effective sales goal. With the right data, and a commitment to your goal setting strategy, your next job will be setting goals based on the well-known “SMART” criteria.

SMART is an acronym that spells out the most important qualities of ideal, effective goals. Each sales goal you set for your organization should be:

Specific.

Effective sales goals must be specific. Setting a goal like “increase revenue” might establish a vision for what you want to achieve, but it’s better if you include specific numbers, like “increase revenue by 15 percent,” or “achieve $1.2 million in revenue.” In the sales world, this usually means tying the goal to some kind of measurable metric, and defining where you want that metric to be.

Measurable.

Speaking of metrics, your sales goals should be measurable. It doesn’t do you any good to set a goal that can’t be determined as a failure or success. Thankfully, there’s an abundance of modern tools available to help you measure your company’s sales statistics, so this criterion shouldn’t be an issue for your team.

Achievable.

The whole point of setting sales goals is giving your sales team something they can achieve—so the project falls apart if the goal isn’t truly achievable. Most of the time, achievability is tied to realism, and achievability falls as sales managers get more ambitious. Setting lofty goals may seem like a great way to keep your team motivated to succeed, but if you stretch too far, your team members may deem the goal impossible—and feel defeated in the meantime.

Relevant.

Goals should also be relevant to the people who are responsible for achieving them. This should be fairly intuitive; you wouldn’t set a goal to increase revenue and expect your human resources team to be responsible for achieving it. This criterion applies more to individual goals than team-based goals in the sales world; each goal you set for an individual should be tailored to that individual’s strengths and weaknesses. And all your sales goals should, of course, be relevant to sales.

Time-bound.

Effective sales goals also need to be time-bound. A goal to increase revenue by 15 percent may be specific, measurable, achievable, and relevant, but how fast are you trying to achieve it? Do you want to increase annual revenue by the end of the year? Or do you want to focus on monthly revenue? Additionally, you’ll want to pursue a mix of short-term, long-term, and midrange goals so your team members always have something to work on.

Core Goals and Stretch Goals

Another way to create effective sales goals is to develop what we’ll call “core” goals and “stretch” goals.

A core goal is the main thing you want to achieve, while a stretch goal is essentially an optional variant for overachievers. For example, your core goal could be to produce 50 new leads this month, while your stretch goal could be to produce 70 new leads.

Core goals tend to be more achievable, while stretch goals tend to be more ambitious. They allow you to get the best of both worlds, and are especially important if you’re not sure what an appropriate goal would be.

Team and Individual Sales Goals

It’s also important for team leaders to set both team-based goals and individual sales goals, in the context of a sales team. Your team goals will serve to unite your salespeople, encouraging teamwork and collaboration. They’re effective for boosting the performance of an entire team, but may neglect the strengths and weaknesses of individuals within that team.

Individual goals, by contrast, aren’t great at fostering teamwork or cultivating better overall results. However, they’re much better for fine-tuning goal systems for the unique individuals who make up your team.

Spend time with each member of your team to learn how they work, and you’ll set much better goals for them. You should also work with individuals to help them set their own goals for themselves.

Incentives and Motivation

Even with perfect goals in place, it can be tough to inspire your team enough to want to achieve them. If you want to make them even more effective, you’ll need some kind of plan to motivate your team. In many cases, the best way to do this is through incentives.

You could provide monetary incentives, like bonuses or commissions, to salespeople who achieve goals, or special privileges to individuals or the team when a goal is met. It’s completely up to you how to set incentives, but this form of extrinsic motivation is the best way to make your goals seem more attractive.

Sales Goals Examples

If you need some help coming up with effective sales goals for your organization, here are some examples of categories in which you can set sales goals. Obviously, the specific numbers will vary based on your organization, your team, and the data you’ve gathered on your industry.

1. Increase sales revenue.

You could set a goal to increase total sales revenue by a certain dollar amount, or by a certain percentage, for a given period (like annually).

2. Increase the win rate.

You can also set a goal to increase your total win rate or close rate. Usually, this is based on a percentage.

3. Reach out to more prospects.

Another effective sales goal is to reach a greater number of prospects, or to increase your total prospect reach by a fixed percentage.

4. Decrease the sales cycle.

If speed is a problem in your sales strategy, you may set a goal to decrease the sales cycle.

5. Increase customer lifetime value (LTV).

Increasing customer lifetime value (LTV) is a way to make each customer more valuable to your organization. You can do it by improving customer retention and upselling current customers, along with many other tactics.

6. Reduce the cost of customer acquisition.

You can improve your sales results by setting a goal to reduce the total cost of customer acquisition as well.

7. Increase total new leads.

Leads are vital to your sales strategy, so consider setting a goal to increase your number of leads for a given period.

Now that you know how to create sales goals, are you interested in getting more out of your sales strategy? Are you having trouble reaching out to prospects, closing sales, or getting responses from new leads? The right analytics tool can help you measure your results, better understand your interactions, and improve your sales communication.

For many salespeople, that tool is EmailAnalytics. With EmailAnalytics, you can monitor the Gmail accounts of everyone on your team, including their average response times, their number of incoming and outgoing emails, and even their top senders and recipients. Sign up for a free trial today, and see how your email sales statistics improve in real time!