Updated on April 7, 2023
Setting sales targets is an important part of any business’s success. These goals provide a measurable marker against which the performance of your sales team can be measured, and ensure that you’re on track to meeting the company’s overall financial goal in a period of time.
Having defined targets also helps to provide direction for your sales team, as they’ll know exactly how close—or how far—they are to reaching their target, rather than blindly prospecting without any specific guidance. As part of the motivation, sales targets give your sales team something tangible to strive for, providing motivation and structure for your sales reps to achieve the desired goal.
Beyond that, having a set sales target enables you to draw up an action plan designed to help you reach it. You can develop objectives related to different key-result areas like pricing, outreach campaigns, promotions, and overall inbound and outbound efforts to increase customer numbers and revenue as well as look at ways in which you can optimize efficiencies and improve your operations overall.
Each key-result area requires a different approach and attention, however, if your outreach targets and revenue goals are not meeting your capacity, you might end up missing most of your quarterly sales targets for this quarter.
In this article, we’ll focus on how to predict and set achievable prospecting targets as part of your sales targets strategy.
Total addressable market
Before we start giving prospecting numbers out of your sleeve, we need to know our total addressable market.
The total addressable market refers to the total number of people or companies that could potentially benefit from your product or service. By knowing your total addressable market, you can tailor your sales outreach efforts more effectively and efficiently, ensuring that your messages reach the right people in the right amount.
Without this information, your prospecting efforts may be misguided and ineffective, resulting in wasted time and resources. So, it is crucial to conduct research and gather data to determine your total addressable market before embarking on any prospecting initiatives.
Number of leads and prospects
The number of leads and prospects you can expect from your sales efforts can vary greatly depending on a multitude of factors. Some of these factors include the industry you operate in, the size of your target market, the quality of your products or services, and the effectiveness of your sales team.
It’s important to track your sales efforts and analyze your results to identify areas of improvement and opportunities for growth. By doing so, you can develop strategies to increase your lead generation and prospect conversion rates, ultimately driving more revenue for your business.
It’s crucial to do the right calculations according to very achievable conversion rates. This will give you information on how many prospects you will need to convert into paying customers.
You could consult with your marketing team for any estimates on the potential conversion rates based on a historical view. You could tweak the numbers a bit but don’t give just rough estimates or rely on industry standards, as these sorely depend on the quality of data you have, your team’s capabilities for creating prospecting content, outreach capabilities, pricing of your product, product demand on the market and so on.
If you don’t have numbers to go with, start slow and small before you give a 10% conversion rate on leads to paid customers. Might look like an easily rounded number for a target, but many industries go a long way before hitting a target of a 10% conversion rate, especially in the B2B sphere.
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Now let’s see how you could play this out for your sales process.
Case 1: Newbie to prospecting and no information on previous sales performance
If you are just getting started with prospecting, you’ll most certainly need some help with setting up your sales targets. This is because you’ll not have any prior information on your conversion and closing rates to rely on. In this case, after you identify your total addressable market, start with good research on industry standards and lower the numbers by at least 30-40%.
Let’s say your research shows that a good, average conversion rate for a trial in SaaS is between 3-7%. Keep in mind that this is an industry standard of an average for more established businesses. This is why it’s important to always go with a lower expectation, however, it still needs to be profitable.
So, if we lower the number by 30-40% we are in the range of 1-4% which is a good starting conversion rate for an early-stage SaaS company.
Case 2: Have historical conversion data and want to accelerate prospecting efforts
If you are already doing some prospecting efforts, start by calculating your previous metrics and make a small increment. We always suggest taking smaller steps with prospecting due to various factors that can contribute to a prospecting “disaster”.
Even though you already have some numbers in your cards, additional calculations should be made to optimize the rates.
For example, if a high-performing outreach campaign showed a 53.5% open rate with a reply rate of 3% and a conversion rate to booked calls of 14% your average conversion rate sales target should be set at least 20% lower since you can’t expect the highest performance of your campaigns each time, however, we still need to strive for progress, so anything lower than 11% will not bring ROI, depending on your deal size.
A good conversion rate, in this case, is everything from 7-12%, so make your calculations before setting up the targets for this quarter.
Predictions according to ICPs
Predicting sales targets based on your ideal customer profile is crucial for the success of any business. By analyzing this data, you can estimate the number of potential customers in a given market and create sales targets accordingly.
This allows you to calculate your efforts for the entire prospecting process, increasing your chances of meeting and surpassing your sales targets. This approach also helps you tailor your messaging and offers to better resonate with your ideal customers, leading to more successful sales interactions, increased revenue, and reaching effective sales goals.
Before you start your prospecting, you need to make sure you have the leads and prospect data at your disposal. Working with a trusted B2B data provider will help you stay on track with the data that is available, and you can base your predictions on that.
For example, if you have a solution for dentists and you want to target regional dentist offices to present your solution, you’ll need to know the exact number of available data there is.
You can’t just expect that you’ll end up with 10K potential dentists on your list, that also have left their direct email addresses for you to target them with cold outreach.
If you also try other business networks like LinkedIn, you’ll also notice that the dentist and medical industry, in general, is not most fond of business networks and don’t usually share their contact details for business purposes.
So from our assumed case above, reaching your sales goal of booking 22 new meetings with dentists out of your outreach campaign might just be too ambitious, but if you do micro-targeting and focus on getting the right contact lists, even with a lower number of prospects, you might end up increasing your rates in general and reach a close goal.
For example, if you find a highly-targeted list of 5000 people that are the actual decision-makers for the dentist’s offices, and run 5 highly-targeted campaigns for each batch of 1000, you’ll possibly increase the open, reply, and conversion rates to get to the 20+ booked meetings from your set target.
Bottomline
Creating achievable sales targets is crucial for any business that wants to succeed. The formula for calculating these targets involves analyzing your previous sales performance, knowing your total addressable marketing, and taking into account external factors that could affect your sales, like the data availability.
By using this approach, you can ensure that you are not setting targets that are too high, which can lead to disappointment and demotivation of your sales reps, or too low, which could result in underperformance for the team goals. Ultimately, having achievable sales targets can help you stay focused and motivated, and can lead to greater success for your business, not only for a period of time.
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