Here's How to Set Sales Goals That Hit the Target (Year-End Planning Series, Part 2)
We kicked off our 3-part mini-series for year-end planning by talking about sales forecasting. In this article, we’ll talk about the three things you need to do to create accurate, inspiring, and actionable goals!
Erase your assumptions: What are your sales goals, really?
Are they real targets or are they sophisticated wishes with a number attached?
Sales goals are not hopes; they are calculable, measurable, and attainable targets (with a little bit of stretching).
As we head into the New Year, we feel the energy of new beginnings and are driven, fueled by dreams and ambition.
But this business is radically fast-paced. It’s a deadline-driven business with rapid-fire projects, and the year will take you into it and drown you so quickly with activity that if you don’t plan, your year-end sales results might be merely marginal, solely the result of a response-driven market.
You have the power to change that.
Goals are about changing your mindset from order-taking to order-making.
From accepting whatever comes, to making shit happen.
Here’s how to turn all that enthusiasm and energy for the New Year into proactive tasks!
Before we walk you through how to set those ambitious goals, there are three dangers to be aware of:
Playing it too safe. Branded merch has never been more respectable in the eyes of buyers. And while traditional advertising is failing, our medium is thriving and ideal for driving results. Every CMO today is striving for a better customer experience for their organization and beautiful, strategic merch delivers. Also, technology has leveled the playing field and it’s a rich environment for growth, this is not the year to play it safe with your sales goals. While average industry growth hovers around 3%-5%, some distributors are achieving growth upwards of 20% and 30%. Time to amp your dreams because the atmosphere is ripe for change.
Setting unrealistic goals. Setting unrealistic goals is not about being unambitious; it’s the result of not mapping the right action to your goals. Unrealistic sales goals are set because you’re not clear about how to get there; they are goals that cannot be mapped backwards to daily and weekly activities. It's okay to dream, but if you want to be at $10 million next year and you’re at $5 mil now, that’s a herculean leap. Make sure your goals are a realistic stretch compared to where you are currently at because unrealistic goals are demotivating; they stir frustration rather than excitement. Carnegie said our goals should liberate our energy. We’re aiming for achievable, measurable outcomes, we’re not shooting for the moon and hoping we get far enough.
Setting obscure sales goals. If you’re going to set a goal to grow a customer’s sales by 20%, what actions are you going to do to attain that? Sometimes we make sales goals so obscure they are not practical. Think of a sales goal like an archer’s target, if it’s cloudy outside and you can’t see, you’ll not even know where to aim! You’re bracing yourself for failure. The clearer you can see your goal, the more accurate your shot.
The biggest mistake distributors make in goal setting is aiming for big numbers without creating an actionable plan to make it happen, which is why you must establish both top-down and bottom-up goals and then meet them in the middle with “the gap.”
Set the Vision with Top-Down Goals
What’s the overall dollar amount that you want to hit by year-end 2020?
As the leader, it is incumbent upon you to assess the market, know your strengths, and inspire your team. We all want to be better than average; if you don’t set higher expectations, you’ll repeat the same year as last year (or worse). Many distributors are in the hamster wheel of experiencing the same, year-over-year results with average growth. Without a vision, in a good market, you’ll achieve average industry growth at best, for example, if you are at $7 million in sales, average growth will gain you only $350,000 in additional revenue.
So, what should be your target?
Since we are privy to only our numbers here, we can share with you that the average growth rate for commonsku distributors is much higher than industry average, at a whopping 20%. So, to use our $7 million number again, if 20% growth is being attained by the fastest-growing distributors, that’s an $8.4 million target. This is why leaders need to set the target, because they can see the whole picture: the strength of your teams, the assets you have, the systems that can enable your growth, your market, the competition, and your unique strengths.
Map to Reality with Bottom-Up Goals
But to make your vision a reality, you must map those goals to actual targets. If you’re managing a team, you should visit with each of your reps to establish their goals and create an action-plan.
When I was a distributor, we had two primary business units with multiple sales teams in each unit. There were years I would declare (blindly) that we were going to grow by 30%. I was fueled by optimism, but there was also a kernel of truth: I knew well our strengths and the market, but I would often set goals without consulting my team. Management had a vision that no one else could see or practically meet, resulting in a dysfunctional dream and a disengaged, uninspired, and even resentful sales force.
You should consult with each of your reps so that you don’t aim blindly but also, to ensure they don’t merely repeat the same sales-year over and over. Visit with your reps and work through a series of questions:
Start with your baseline: What were your total sales for the year?
What were your annual sales from each of your existing (major) customers?
Next, what’s the potential growth opportunity of your portfolio?
What event-sales or categories are you not selling to your customers now?
What other buyers or departments exist within those accounts?
Are you clients investing in ineffective advertising and how do we get in front of them with our medium, that works?
Are your clients growing? Merging? Acquiring? What’s the status of your biggest client's’ business health? Is there more budget being allocated that we’re not aware of?
It’s also helpful to examine big projects because they tend to skew your numbers dramatically - will those repeat? What can we do to ensure we capture that business again?
What specific sales tactics can you change with each of your clients in 2020 to achieve your goals?
What tiny task are you going to implement in your daily routine that will help you get there?
Are there unprofitable clients you need to purge to create more bandwidth to sell proactively?
Account-based marketing is a stealthy tactic utilized by only a handful of some of the savviest distributors. What is account-based marketing? Establish a marketing plan per client. What kind of plan can we create, per customer, that will guarantee growth?
Next, establish some inspiring stretch goals: Now that we know what we can expect to reach, what can we stretch to? Are we thinking too small?
Once you’ve set these goals with each rep or each business unit, roll these numbers into your top-line goal. How far off is your assessment from your vision?
Now, Close the Gap
Now that you established a top-line vision and you’ve established bottom-up goals with your team, it’s time to determine “the gap.” The gap is the space between your potential growth with existing business plus the new business that you need to acquire to hit the target.
In our distributorship, our sweet spot was with six-figure clients who did $100,000 or $250,000 or $500,000 a year in sales. With our marketing momentum and our strong team, it wasn’t unrealistic to expect that we could land $250,000 - $500,000 in the upcoming year. Our leads were coming in and we needed to get better at closing, so this was a goal that we aimed at and one that was actionable: to close the gap we needed to improve our close with prospects. We had an actionable part of our plan.
Another example: In your case, as you examine the strengths of your team and assess your marketing and your market, you might realize that if each of your reps simply reached out to one new prospect a day or one per week, you could close x number of clients. There is more to new business development than we can unpack in this article, so to help with this, we encourage you to share with your team this skucast episode that we recorded with Chief Door Opener, Caryn Kopp, called How to Find Revenue Faster. Caryn also delivered a talk at skucamp titled, Path to the Cash, a great video resource to watch with your team over a planning lunch!
Crunching the numbers is math and science, but dreaming big is an art, you must combine the two to achieve your ultimate vision. Picasso said, “Our goals can only be reached through a vehicle of a plan, in which we must fervently believe, and upon which we must vigorously act. There is no other route to success.”