How to Set Sales Goals (That Get Results)

Setting effective sales goals is a challenging process. It requires a lot of data as well as an understanding of what makes for a good goal.

Let's walk through the entire process here, starting with why you need to spend time on setting great goals in the first place.

• Why sales goals are crucial to success
• A better approach to setting sales goals
• Types of sales goals
• Sales goal examples
• How to set effective and ambitious sales goals

Effective goals benefit people throughout your corporate structure:

• Front-line salespeople are more engaged and perform better when they have goals to hit. Rewards—even just public recognition—are highly motivating.
• Managers can more accurately gauge progress and support sales reps that need help.
• Executives have more accurate information for forecasting sales, allowing better resource allocation and planning.
• Investors receive better forecasts, keeping them happy with company leadership.

So whether you're a manager looking for ways to increase your team's productivity or an executive trying to get better forecasts, setting sales goals can help. But picking a number out of the air isn't going to cut it.

You need to adopt a scientific approach to sales goal setting.

"The New Science of Sales Force Productivity" outlines some of the factors that go into properly motivating a sales team.

A scientific approach to goal-setting, they say, "puts systems around the art of selling, relying not just on gut feel and native sales talent—the traditional qualities of the rainmaker—but also on data, analysis, processes, and tools to redraw the boundaries of markets and increase a sales force’s productivity."

These goals help not just the "rainmakers" on the team, but the mid-performers as well, significantly increasing the output of a sales team without bringing on more people.

Effective, modern sales goals have three key components:

1. They're data-driven.

Today, executives can’t just set sales goals because they sound good or because they'll impress investors.

Instead, they need to look at data to see how reps have performed in the past, how valuable specific regions are, the company's market share, industry details, and more. CRMs with lots of filters and customizable views —like Copper—make it much easier to get this data:

There's a huge amount of sales data in your CRM. Take it into account when setting your sales goals.

We'll talk more about the kinds of data you'll want to collect in a bit. For now, though, just know that data feeds into the next two components of valuable sales goals.

2. They're realistic.

If your data shows that you sold $150,000 to companies in a specific industry last year, it doesn't make sense to aim for $400,000 this year.

Unrealistic goals not only set reps up for failure, but they can also ruin their motivation. If reps have no chance of meeting a goal, why should they even try?

Realistic goals, on the other hand, can be highly motivating. Before we get too deep into what makes a realistic goal, it's important to discuss the last component of high-quality sales goals.

3. They're challenging.

Say you reward a rep for selling 15 units each month. If they sell 20 in the first two weeks, what motivation do they have to keep working hard? Challenging goals keep employees motivated and engaged.

Of course, getting the right level of challenge isn't always easy. A 100% increase is certainly a challenge, but it's not realistic. A 10% month-over-month improvement seems like a realistic challenge.

But what if your data shows that you've already saturated the market in a particular region?

Striking a balance between realistic and challenging goals is the job of good sales managers. We'll talk more about the details of how to strike this balance toward the end of this article.

First, let's get aligned on the most common types of goals.

There are different levels of sales goals. Each level influences the levels below it. We'll start with the highest level:

1. Annual sales goals

This is the ultimate sales goal. How much revenue do you want to bring in this year? How many units do you want to sell? How many new subscribers do you want to sign up?

The goal for the whole year guides your decisions on many things, from lower-level goals to hiring and professional development.

Annual sales are also important to executives, board members, and investors—they all want to see progress and growth.

So how do you set an annual sales goal? Your best bet is to start with past performance.

How much did you sell last year? Take that number and decide on a reasonable increase for your next annual sales goal. Five to 10% is a good range.

Of course, there may be other factors to consider.

For instance, if you recently introduced a new product, you may be able to bring in quite a bit more revenue. If a competitor has moved into your space, even maintaining last year's sales numbers might be a challenge. Take these factors into account when setting your annual goals.

Example annual sales goal: Generate $1,200,000 in revenue from new sales by the end of the year.

2. Team sales goals

Your sales team doesn't need to focus on your annual sales goal. It's too hard to see progress, especially at the beginning of the year. Monthly and weekly goals will serve your team better.

Team goals are often monthly or quarterly quotas for the entire team—the annual goal divided by 12 or four. But you may be wondering why you'd set goals for the entire team when you're going to set goals for individual reps.

The short answer is that they provide additional motivation. Not every rep is going to make their goal each month. And if it's clear that they're not on track, they may lose their steam.

But what if their team is close to meeting a larger goal? They can still contribute to that goal—and that's inspiring.

These goals can also provide some healthy competition between different sales teams, which adds some fun to the goal-setting process. Everyone loves a contest, and the bragging rights that come with hitting a sales goal are motivating in themselves.

Copper's sales leaderboard is a great place to keep tabs on this competition, showing you how everyone’s wins and losses stack up:

Example team sales goal: Sell $100,000 in new product by the end of the month.

3. Individual sales goals

Don't make the mistake of dividing your team sales goals equally between your sales reps (unless they all have the exact same group of prospects).

Reps selling to different industries and territories will have different rates of success. Take that into account when setting individual goals.

For example, a rep selling to small businesses probably isn't likely to bring in as many dollars as a rep selling to multinational enterprises.

So how do you set realistic, challenging goals for your individual reps? By looking at the data.

See what they've done in the past. Take a look at your customer profiles. Gauge your market share. All of these things will help you set motivating goals for individual reps. Again, a 5–10% increase is a good place to start.

Example individual sales goal: Close 30 deals by the end of the month.

4. Individual activity goals

Unfortunately, sales aren't completely under the control of your salespeople. Sometimes reps will have an off day. Or an off week. Or an off quarter. It happens.

Customers change their buying habits, go out of business, and switch to competitors. That can wreak havoc with your individual sales goals (hopefully your team goals are robust enough to withstand a few setbacks here and there).

Reps need to feel a sense of control over some of their goals. And that's where activity goals come in. These measures are under reps' control. Activity goals are usually measured in the number of emails sent or phone calls made (also known as "sales activities").

But these goals don't just give reps a sense of control. Combined with data from previous time periods, you can use them to approximate what the rep needs to do to hit their sales goals. Now the activity goal can serve as a daily guidepost on the rep's way to success.

Let's say a rep has a win rate of 10% (they make one sale for every 10 people they talk to). And the average value of their sale is $500. If their quarterly goal is to bring in $25,000, they have to close 50 deals. So they have to talk to at least 500 prospects over the course of the quarter.

This ensures that your goals are realistic—if your salesperson talked to 250 prospects last quarter, you can't expect them to bring in $25,000.

So activity goals serve a dual purpose: they provide a lead measure that salespeople can actively pursue and they serve as a good measure of progress toward the goal.

Example individual activity goal: send 30 prospecting emails every week.

5. Stretch goals

Sometimes your salespeople will surpass their sales goals. And that's great. In fact, it would be nice if they could blow their goals out of the water every month.

But balancing that desire with realistic and challenging goals is difficult. A huge increase in quota isn't realistic. And once they've hit their target, it's no longer challenging.

That's where stretch goals come in. These are extra rewards given to sales reps that exceed their targets by a specific amount.

For example, you might provide a cash bonus for reps that beat their quarterly quota by 15%. (You can provide very motivating non-cash bonuses, too.)

Example stretch goal: beat this month's goal by 20%.

It's important to remember that these goals don’t need to be in dollar amounts. They might not be in number of sales, either.

Let's take a look at some examples of sales goals that address various facets of your sales program:

Now that we've covered the five types of sales goals, let's look in detail at how you might put them into action.

When laying out sales goals, it quickly becomes clear that your sales team isn't the only group involved—so we'll also look at the people your team needs to work with to hit these goals.

For example, the goal below related to increasing win rate includes the marketing team because higher-quality leads can result in a higher win rate.

1. Bring in $1,000,000 in new sales revenue this year

Type: annual team goal

Teams involved: Sales, Sales Development, Marketing, Ops

Possible approaches: improve lead generation, increase call volume, increase average sale value, almost any other improvement in your sales process

2. Increase win rate by 5% by next quarter

Type: team/individual quarterly goal

Teams involved: Sales, Sales Development, Marketing, Ops

Possible approaches: conduct sales trainings, improve lead generation, change sales techniques

3. Decrease sales cycle length by 2% every month this year

Type: team/individual monthly recurring goal

Teams involved: Sales, Sales Development, Ops

Possible approaches: change sales follow-up schedule, improve lead generation

4. Increase average sale value to $2,500 by end of quarter

Type: team/individual quarterly goal

Teams involved: Sales, Sales Development, Marketing, Ops

Possible approaches: improve lead generation, emphasize sale value during sales calls, run promotions

5. Decrease customer acquisition cost by end of year

Type: team annual goal

Teams involved: Sales, Sales Development, Marketing, Ops

Possible approaches: optimize marketing spend, focus on high-likelihood leads, automate sales and marketing tasks

6. Generate 200 new leads every month

Type: team/individual monthly recurring goal

Teams involved: Sales, Sales Development, Marketing, Ops

Possible approaches: encourage salespeople to seek referrals, incentivize lead generation, start a web-based campaign, increase ad spend

7. Get emails per day average up to 50 by September

Type: individual goal

Teams involved: Sales, Ops

Possible approaches: automate sales tasks, offload non-sales work to other teams, sales CRM training

As you can see, there's a variety of metrics and timelines you can use to set sales goals. And in most cases, those goals involve other teams.

Sales development and marketing are crucial parts of sales. So those teams will be involved in most of these goals, too.

It's also important to note that all of this information can easily be tracked in a sales CRM. (More on how to do that below.)

Okay, so we've established that sales goals are important and that there are several different types. Now we need to know how to set goals that work for your sales team.

This seven-step process will get you from the "what should we aim for?" stage to tracking progress on your new goals.

Step 1: Decide on the type of sales goal you want to set

Are you trying to set your annual revenue goal? A monthly lead-generation target for a specific team? An individual quarterly goal? What are you trying to improve?

Also consider the overarching business goal that your sales goal will support. For example, if you just want to measure your sales success, you can set a revenue goal. But if you want to improve efficiency, win rate might make more sense. Or you could look at your customer acquisition cost to make better use of your sales and marketing dollars.

Every goal should be connected to a business priority. If it's not, rethink your goal. Measuring a metric for the sake of measurement doesn't do you any good.

Step 2: Look at previous data

Your CRM is your best friend here. Use it to look at relevant data from the past few years (or whatever timeline you have available) and see what your company, team, or rep has achieved in the past.

Zoltners, Sinha, and Lorimer, writing for Harvard Business Review, suggest setting goals that 60–75% of your sales team can hit. If 100% (or only 25%) of your reps hit their last goals, it's time to make a change. Use a dashboard like this one to keep track of how much your reps have sold and use that to influence your goals:

Let's address the obvious problem here: what if you don't have any data? Maybe you're a new startup and haven't started your sales program yet. Or you weren't tracking a particular metric in the past. Whatever the case, you don't have data to look at. So what do you do?

In short, you have to come up with an educated guess. You might look up averages online (searching for something like "average startup SaaS close rate"). Or work with your salespeople to see what kind of metrics they've achieved in the past.

Remember that you can update your goals after you've set them, too. Be flexible with goals that aren’t based on hard data.

Step 3: Determine a realistic improvement

It's time to set the actual goal. In most cases, you'll aim for improving on the last year, quarter, or month. That keeps things challenging and helps your company grow.

One way to get an idea of what a realistic improvement would be is to look at how many of your sales reps made their last goal. If half of your team didn't make their monthly email quota, don't increase it by 25%. You might even consider lowering it if very few reps hit it.

On the other hand, if almost everyone hit their previous goal, it's time to step it up. If most people smashed the goal, raise it 20% or so. If most people barely made it, raise it just a little and consider leaving it where it is so you can address underlying issues.

If you're not sure where to start, go with a 10% increase. That's usually fairly realistic—but it still provides a challenge.

Step 4: Set a stretch goal

Okay, so you have your goal. Now it's time to give your sales team a little extra challenge. Set a stretch goal that's not impossible, but also isn't easy to hit.

How much higher should this be than your standard goal? Again, look at previous data from your CRM to see how likely your team is to actually make it to the stretch goal.

You want a small portion of your team to hit the stretch goal. Try to aim for around 10% to make sure that it's attainable but not too easy.

It's also important to note that this step is optional. You don't need to set a stretch goal. And if you can't afford to fund a monetary incentive for it, you might not want to set it.

Recognition is an admirable reward, and some teams respond well to it. But if you think your team won't appreciate an extra goal with no hard reward, feel free to skip it.

Step 5: Identify incentives

Sales incentives are a standard part of the sales world. Reps who hit their goals are rewarded. Those who don't are motivated to hit them next time.

But how do you create your incentive system? You can start by working with averages: the average salesperson in the US has a 60/40 mix of salary and performance-based incentives.

If you think that will work for your reps, make it happen. If not, feel free to shift it. Getting input from your own sales team can be very helpful for this step.

Figuring out your incentive structure takes a lot of work and is beyond the scope of this article, but this is a good place to start. Once you've created a solid incentive structure, you can use it to inform your decisions on all future goals.

Step 6: Communicate your goals to your team

Goals aren't motivating if people don't know about them. You have to communicate the goals for them to work. So make sure your sales team knows what they're expected to do.

That's easy. But communication doesn't stop there.

Telling someone they're expected to hit a goal is only part of the equation. And it's not the motivating part. You also have to tell them why you set that goal. Here's Jill Konrath on the topic:

If your sales team is going to hit their targets, they need to have a good reason. And the more personal that reason is, the better. So help them find their "why."

Step 7: Set up analytics and tracking

Effective tracking of your sales goals requires the right software. Whatever the goal is, your CRM needs to show you the progress your team and individual salespeople are making toward it as simply as possible.

For example, Copper makes it easy to set your goals right in the app, and sales reports break down your total progress by salesperson—we’d know because this is one of our favorite features that we use!

It also lets you check sales forecasts to see if you're likely to hit your goal:

If your reports show you that you're not on track to hit your goal, it's time to change something. Maybe you need to switch up your sales tactics. Or assign a rep to a new territory or customer group.

Of course, just because Copper shows you basic sales data and forecasts doesn't mean you can't use it to get to more complex reports:

The point is that your sales software needs to make it easy to see progress toward your goals. And you should be ready to start getting reports as soon as you start working on your sales goals.

If you're not using a CRM that makes it easy to set and monitor goals, it's time to switch to something that does. Because it's a central piece of hitting your sales targets.

Setting, monitoring, and hitting sales targets is a complicated process. But with practice, you'll learn to analyze the data from your CRM to create goals that both challenge and motivate your sales team. Over time, the process gets easier.

Having a reliable, accurate source of sales metrics helps. But there's another resource that you may not have considered: your sales team.

Make your sales reps part of the goal-setting process. Being involved encourages them to be invested in the goals. When they know why you set the goals you did, how you determined the incentive structure, and their team's progress toward larger goals, your sales team becomes part of the wider sales process at your organization.

And that's very motivating.

So don't keep the doors to your sales goal setting meetings closed. Invite salespeople and representatives from Operations and Marketing to join you. Sales is a big process that involves a lot of people, and involving them from day one makes it better for everyone.