Happy New Year!.... Now get out there and start selling!
The holidays are behind us, and the calendar has flipped over to a brand new year, which for most salespeople means starting over. Last year’s results are in the book, and a new year comes with a renewed focus, full of optimism and hope for what they expect to accomplish.
If you’re like most Sales Leaders, you’ve probably met with each member of your team, reviewed their 2022 performance, and set goals for the new year. These goals may have been handed to you by your boss stating where the company expects to be next year. And you know, the number for next year will be bigger than the previous year. It always is.
Unfortunately, this approach to sales planning is what most companies experience. They set a target for growth and then hand that off to the Sales Leader to implement. The Sales Leader divis up the goal and among the sales team members and assigns them their new goal for the new year. The Sales Leader rarely gets any insight as to how the new goal was decided on and as a result, has nothing to share with the team except the expectation to do more in the new year than they did the previous year. This may be the reason that on average, less than 50% of sales reps hit their goals each year.
Sales Leaders need to do more than divvy up goals and assign them to their team. If they want to succeed, they need to build a roadmap that defines the path to success for each of the sales reps. A sales roadmap takes the goals and identifies different milestones of accomplishment required to reach their goal. It’s just like taking a road trip, knowing where you are going isn’t nearly as important as knowing how to get there.
A Sales Road map breaks down the goal into measurable activity and effectiveness metrics that serve as a guide to ensure that each salesperson is on course to meet their goals. These success metrics serve as performance indicators and allow the Sales Leader to make improvements or corrections along the way to ensure success. Let’s look at some of the success metrics that could be used to ensure that sales reps meet their goals.
1. Revenue from New Customers vs Existing Customers – If you have a product or service that can be sold to existing customers, you need to set specific goals for how much revenue you expect from existing customers vs new customers. We all know that new customers are harder to find, but necessary for long-term growth. If you don’t set specific goals for each, your sales reps will sell what’s easiest to sell – not necessarily what’s best for the company.
2. How many deals do they need to close? – One of the simplest metrics to set is the number of deals that they are expected to close to reach their goal. To do this, you need to know what their Average Deal Size is. Take the goal and divide it by the Average Deal Size and you get the number of deals required to meet this goal.
This is also a key metric to determine if your sales rep is selling to the right customers. If the Average Deal Size is lower than expected or lower than the other team members, you need to determine why this is happening. Chances are, your Sales Reps may be selling in the easiest market – not the best market for your business.
3. How many proposals do they need to submit to reach their goal? – Nobody closes 100% of their opportunities. Set a target close ratio for each of your sales reps to measure their overall effectiveness at closing opportunities. If they exceed that target, they are likely to exceed their goal. If they are not meeting that target, it’s an opportunity to evaluate their sales process to see if there is something that they could be doing better to meet their objective. Are they qualifying opportunities early in the process? Are they identifying the client’s problem and clearly presenting the solution? Find the reason they are not performing to standard and correct the behavior to help them meet their goal.
4. What does the ideal Sales Pipeline look like? – This assumes that you have a well-defined sales process model with each of the key sales stages defined. The Sales Pipeline considers the conversion rates from one stage to the next. It also takes into account the average time to move through the pipeline to reach their goal. If you know it takes an average of 4 months to close an opportunity, then you know that any deals started after August will most likely not close in this calendar year. You need to build a Sales Pipelines that accounts for the conversion rates and time required to know if you’re on track to meet your goals by the end of the year.
5. How many Leads does it take to convert to Sales Opportunities? – If your sales team is responsible for generating leads or following up on leads provided by the company, they need to know what the expected lead conversion ratio is. How many leads do they need to create or follow up on to meet the minimum number of sales opportunities required to meet their goals?
Once you identify each of these key sales success metrics, you now have the roadmap for sales success. Each of these milestones can be divided into weekly or monthly goals that you can measure. When you present the new goal to the sales rep, present them with their road map to success. Set the expectations for weekly lead generation and conversion, pipeline management, closing ratio, and average deal size. Separate the goal into the amount of revenue you expect from new customers compared to the amount you expect from existing customers.
Sales reps are energized when presented with a detailed roadmap to achieve their goals. They don’t have the anxiety associated with trying to figure out how to hit the goal. Instead, they have a detailed plan of attack that is broken down into manageable activities that they can execute. Their energy shifts from an anxious, scrambling mentality to a confident, execution-focused energy.
If you need help developing a sales roadmap to success for your sales team, let me know. We are here to help you reach your 2023 sales goals!