Having an annual sales target can provide direction to your sales team.
However, it’s important to make sure that your sales target is realistic. Otherwise, you might set your sales team up for disappointment. Missing the target can be demotivating!
You also need a plan for reaching your sales target. What do your salespeople need to do every day, week, and month to ensure that they stay on track throughout the year?
Today we are going to discuss how to set a realistic annual sales target, break it down to quarterly sales targets, and create a detailed plan that your team can follow.
We will also share the sales strategy that we used to grow our company from zero to $100M+ in annual revenue and explain how you can implement it in your business!
Okay, so before we get into our main subject, we want to encourage you to ask yourself: should you be setting sales targets to begin with?
We would argue that if you are just starting out, setting sales targets not only doesn’t make sense but can also be counterproductive and stunt the growth of your business in the long run.
This may be somewhat controversial but hear us out…
If you just launched your business, you don’t have any historical data.
This means that you have no idea:
And that’s just the obvious stuff.
There are also the “you don’t know what you don’t know” type of issues that you cannot foresee because you lack the experience of running a business like that.
This applies to all types of businesses but it’s especially relevant to startups that have an innovative product or service.
Say, if you want to open an Italian restaurant, then you at least know that people like going to Italian restaurants, the question is how to run one at a profit.
But if you have some crazy startup idea that has never been done before then you don’t even know if there’s any demand for it to begin with.
Setting sales targets doesn’t make sense in both situations because neither the aspiring restaurantier nor the innovative entrepreneur has any historical data on which they could base their assumptions.
But it’s especially ludicrous in the latter case because the entrepreneur hasn’t even validated the basic concept behind their business.
“Setting sales targets” may sound like something that you should be doing but if you have a brand new business, it would simply mean pulling a completely arbitrary number out of thin air.
But that’s not a legitimate sales target because it’s not based on historical data. It’s a random number that you came up with because it felt right to you. It has no connection to reality, you literally just made it up. What was even the point of doing that? 🧐
We would argue that you shouldn’t set sales targets until you find a product-market fit. Why?
Because setting sales targets prematurely can stunt your company’s growth in the long run.
Sure, if you have a “meh” product that people are lukewarm about but still buy, you can focus on selling it. This approach will make you more money in the short term.
But you’d be better off focusing on creating a “wow” product that people are amazed by instead instead. This approach will make you more money in the long run.
Of course, you need to generate enough revenue to keep the lights on but beyond that, it’s wise to prioritize long-term growth, even if that means leaving some money on the table for now.
If you haven’t found the product-market fit yet, your priority should be finding it.
This means iterating your product based on market feedback, talking to your customers and experimenting as much as you can.
You’ll know when you find product-market fit because the growth of your business will start rapidly accelerating.
That is when you should start setting sales targets, pursuing them aggressively, and scaling your business!
Let’s say that you have a ton of historical data. How can you set a realistic annual sales target?
You want to start by analyzing:
Let’s take a closer look at each of these:
How many cold calls do your salespeople make per day on average?
What is the:
How much time are your salespeople spending on:
You want to work out the average number of hours they are spending on each of these activities daily, weekly, and monthly.
How much time do your specialist employees need to spend on each customer?
Say, if you are selling a product that requires a specialist employee to go on-site and install it, how much time does the average installation take?
(This only applies to products that require providing some sort of service as well as a part of the package.)
How much customer support time does the average customer require?
And how much does that work out in terms of customer support agent compensation?
What seasonal patterns can you observe in your sales data?
Some of them may be obvious, especially if your business is seasonal in nature.
But see if there are any less obvious fluctuations that you should take into account when setting sales targets (e.g. maybe sales drop every year in July but you aren’t sure why).
How has your year-on-year growth been so far?
If you have only been in business for a few years, you only have a few data points here but it can still give you some idea of the trajectory you are currently on.
Let’s assume that your conversion rates are going to stay the same in the foreseeable future.
In theory, if your salespeople increase the number of cold calls they make every day, that should lead to a corresponding increase in sales.
More cold calls -> more discovery calls -> more product demos -> more sales.
In practice, though, it’s not that simple. You need to take resource and infrastructure constraints into account.
If your salespeople start making more cold calls…
You should start addressing these resource constraints by streamlining various processes so that everyone could use their time more effectively.
It’s astonishing how much time can be saved by putting systems, automation, and standard operating procedures (SOPs) in place.
Then, you might want to consider hiring more specialists and customer support agents to help your company handle the increased workload.
You also want to consider whether your business infrastructure can handle a significant increase in sales.
The exact details are going to depend on your business model but you need to make sure that your infrastructure can support the growth you are aiming for.
Ultimately, setting a realistic sales target is a math problem so you need to play with the numbers to see what’s possible.
Say, if your salespeople are currently making 100 cold calls a day, see what would happen if you increased that number by 25%, 50% or 100%.
Make sure to account for all downstream effects that you can think of.
Of course, nothing is certain, you are operating on assumptions. But if you had enough data and did a good job analyzing it, your assumptions should be pretty reasonable.
Once you explore various possibilities, choose an annual sales target that is ambitious but also realistic.
You need to be able to see a clear path from where you are now to where you want to be in a year!
Once you have your annual sales target, you should break it down into quarterly sales targets that you can then use as progress benchmarks throughout the year.
If you intend to increase cold outreach gradually, you should make sure that your quarterly sales target reflect that.
Also, if your business is subject to seasonal patterns, you should take that into consideration as well when setting your quarterly sales targets.
Once you have your quarterly sales targets, schedule time at the end of each quarter to review them with your sales team.
Now that you have your quarterly sales targets, you can create an action plan designed to help your sales team meet them.
We recommend setting daily, weekly, and monthly cold outreach goals for your salespeople.
You should also schedule time every day, week, and month to review those cold outreach goals.
These reviews will help your salespeople keep themselves accountable, immediately notice if their performance is slipping, and course-correct ASAP.
When the time for a quarterly review comes, ask yourself these two questions:
If the answer to both questions is yes, that’s an indication that your strategy is working. Your sales team is on track to reaching its annual sales target.
If the answer to the first question is yes and the answer to the second question is no, you need to reassess your strategy. Why isn’t it working as you hoped it would?
Discuss this with your salespeople, analyze the data, and reassess your initial assumptions. You need to figure out what went wrong. Once you do, adjust your strategy accordingly.
It’s also worth noting that you should evaluate your salespeople’s performance by whether or not they achieve their cold outreach goals, not by whether or not the team meets its quarterly sales targets. Why?
Because the former is entirely within their control while the latter isn’t. The number of sales someone makes in a given time period can be influenced by all kinds of factors that are completely out of their hands so it would be unfair to judge them based on that.
Make it clear to your salespeople that what matters is achieving their daily, weekly, and monthly cold outreach goals and remind them that they are in complete control of how many cold calls they make each day. Success is within their reach!
Scaling sales by scaling your sales team is possible but it’s not the best way to go about it. Why?
Because of these three reasons:
All that makes scaling a sales team a slow, arduous endeavor that requires a lot of trial and error.
Fortunately, there’s a better and faster way to scale sales: building a Value Ladder sales funnel and then driving traffic to it!
A sales funnel is a system designed to convert visitors into leads, leads into customers and customers into repeat customers.
The core sales funnel structure looks like this:
Sales pipelines and sales funnels are similar concepts. So what’s the difference between them?
The former can be completely manual: you can simply pick up a phone and start calling people.
The latter is always either completely or partially automated. We will discuss this in more detail later.
Our co-founder Russell Brunson created the Value Ladder sales funnel that is based on a simple idea: gradually building trust with the people in your target audience.
Here’s how it works:
This gradual progression from your least valuable and least expensive offer to your most valuable and most expensive one is the best way to structure your sales funnel because it allows you to gradually build trust over time.
And trust is what it’s all about the more someone trusts you, the easier it is to sell them your products!
For example:
Russell wrote a best-selling book about sales funnels called “DotCom Secrets” (you can get it for free by the way).
He then created a “DotCom Secrets” Value Ladder:
There’s also a subscription offer – our funnel building software – that runs through this entire Value Ladder from the Free + Shipping stage onwards.
So it all starts with a free quiz and eventually progresses to an exclusive mastermind where memberships cost between $50,000/year and $250,000/year.
Russell is widely recognized as one of the top sales funnel experts in the world so having access to him can be incredibly valuable for entrepreneurs who want to grow their businesses using sales funnels.
But people would think that he was insane if he approached them out of the blue and said “Hey, want to join my mastermind? It’s $250k/year!”.
However, inviting potential customers to do a free quiz and then gradually building trust with them over time allows him to eventually persuade some of them to join his Inner Circle.
In fact, there’s so much interest in these masterminds that he had to restrict the $50,000/year tier to 100 people, the $150,000/year tier to 14 people, and the $250,000/year tier to just 6 people!
Do you see how powerful the Value Ladder sales funnel can be?
As we have already mentioned, sales funnels can be either completely or partially automated. What does that mean?
Here’s how a completely automated sales funnel works:
Here’s how partially automated sales funnels work:
There’s no right or wrong answer here:
Also, in some industries, complete automation may not make sense so that’s something to take into consideration as well.
When Russell and his co-founder Todd launched ClickFunnels back in 2014, they knew that they had to figure out how to grow their business fast. Why?
Because they bootstrapped it with their own money without taking any outside investments.
This meant that they didn’t have a pile of venture capital that they could burn while meandering their way into profitably. They needed to start generating profit ASAP!
Fortunately, this wasn’t their first rodeo: they both had over a decade of experience selling products online with sales funnels.
Rusell built a Value Ladder sales funnel for their new business and started driving traffic to it by promoting their software at industry conferences and through webinars.
At the time, he aimed to do 2-3 webinars per week. Sometimes, he would end up doing that many in a single day.
This strategy worked. In that first year, ClickFunnels grew from zero to $10M+ in annual revenue. Now, a decade later, it’s at $100M+!
Since then, Russell has taught thousands of other entrepreneurs how to use sales funnels to grow their businesses. Want to learn from him?
You can start by joining our Five Day Lead Challenge…
Russell created our 5 Day Lead Challenge to help you build your first sales funnel.
In this super practical, hands-on online workshop you will:
…in just five days!
Russell and his special guests will walk you through everything step-by-step.
All he asks is that you commit to showing up every day, watching the main lesson and then completing the homework assignment.
If you can do that then you can have a fully functional sales funnel five days from now. So what are you waiting for?
Join Our Five Day Lead Challenge Today!
P.S. This challenge is completely FREE!
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