Here, we will share the secret sauce to achieving the most important sales goals, most of which we’re sure you already have your sights on!
Targeted sales goals are as crucial to a successful sales organization as butter is to croissants. Good goals are tied to an overarching business goal and focused on a specific sales KPI. This might look like increasing your revenue by 20% year over year or improving your customer retention by 10% in the following year.
Not having clearly defined objectives will have a negative impact on business growth, annual revenue, and customer acquisition and retention in the long term.
Below, we have listed five of the most common sales goals and some best-practice tips on how to achieve them.
1. Keeping customer retention rates high – reducing churn
In order to keep your business running smoothly, you’ll need to keep your customers happy in the long run. In effect, this means they’ll (hopefully) keep purchasing your products or using your services.
The average monthly churn rate can be anywhere from 1–9%; however, in certain industries, such as cable or telecommunications, it will be significantly higher.
One of your sales goals might be to reduce your monthly customer churn to <1% or increase your customer retention rate (i.e., decrease your churn rate) by 10% in the next two quarters by improving our hand-offs to the customer success team.
You can calculate customer churn by dividing the number of customers you lost in a certain period of time (i.e., in a month, quarter, or year) from the total you had at the start of that time period. Then, you get the percentage by multiplying the answer by 100. This looks like:
(Customers Lost ÷ Total Customers) x 100 = Churn Rate
How to reduce customer churn (and improve retention rates as a result)?
The obvious answer is to figure out why your customers left in the first place. Find out why your best customers love you and do more of that, and understand your unhappy customers’ pain points and do less of that. Sounds easy, right?
Sales teams are actually on the front line when it comes to customer churn. Ensure your reps thoroughly qualify their leads before trying to sell to prospects who are a poor fit and may not even be interested. Know your ICP (ideal customer profile). By doing so, you’ll increase the likelihood of winning long-term customers.
If your company is struggling with high churn rates, carry out customer surveys and speak directly to account managers to find out why it’s not working. Another option could be to engage with third parties who conduct interviews with churned customers and compile meaningful intel further outlining specific reasoning as to why those customers have churned. Identify the key moments of churn. If your sales team manages user accounts, then ensure communication channels with the product development team are open.
Find out what type of churn is causing the biggest drop-out rates (there are several kinds). You might be targeting the “wrong” customers – perhaps they don’t really have a strong enough need for your product/service or enough budget.
Or maybe, your product’s features aren’t organized in the right way, your product is not user-friendly, adoption is low or perhaps it needs a big update. Whatever it is, find out and work to resolve it urgently.
2. Increase your win rate and close more deals over time
This one is a no-brainer – closing more deals and increasing your win rate will do wonders for your bottom line. As a sales goal, it’s also great to motivate your team to do their best.
Although you might have the most perfect sales pitch and you’ve confidently won your audience over, it doesn’t always lead to a “win” due to other internal factors that may play a part for the prospect. However, if you set your sights on a general increase by identifying how well your reps do following a wider strategy, then you can see how well that strategy works.
According to the RAIN group, the average win rate across all industries is 47%, with a 25% loss-to-no-decision rate. Your sales goal example might be to increase monthly win rates by 5%. If you find that you just can’t get there, you might want to pivot and aim to reduce your loss-to-no-decision rates by 8% instead. Another good example is to focus on reducing loss-to-competitor rates by a certain percentage.
A win-rate goal tailored to each of your reps, attuned to their individual track records, encourages them to stay on track both for their own professional objectives and those of the wider business.
When it comes to increasing win rates, there are a number of different goals you could choose. Track how many deals each sales rep closes individually versus the team as a whole. (Ideally you’d track both.)
A couple of example goals for the fictitious company Salesfire:
Team goal A: The whole team will close 20 deals per month by the end of Q3. The company will sales coach each member individually (using our sales enablement tool) and update our product training with both F2F and online training modules. For sales calls, we’ll use a consultative selling approach and track the whole process (including customer sentiment and content success) with our sales enablement tool.
Sales rep goal B: Each team member will close three deals each month by the time we start Q4. We’ll make use of our sales enablement tool to ensure we’re following our best practices for sales.
Calculate deals closed
Use this simple formula to calculate the number of deals closed:
(Number of Deals Closed ÷ Number of Leads) x 100 = Deals Closed Rate
How to achieve your goal of increasing win rates/closed deals
There are multiple ways to do this and, as you might have guessed, there won’t be a one-size-fits-all solution.
- Find out what’s working – and what’s not.
You will need to investigate how your company can achieve these goals. You may need to qualify leads more thoroughly or update your sales pitch or sales strategy. It’s really about tracking what’s working and what isn’t.
And if it isn’t working, you need to identify bottlenecks, low-performing sales reps, external/internal barriers and so on. This is something your sales enablement tool can help you with, as it will have a plethora of sales data you can dissect and analyze to give valuable insights.
If, in the worst-case scenario, you have no data to go on and you need an answer now, hire a consultant who could help you investigate further.
- Coach, coach, coach
This is possibly the best advice we could ever give you. Some companies won’t invest in coaching (perhaps due to high turnover rates etc.), but the best way to improve your reps’ confidence* and motivation – and their performance during the whole sales process – is through coaching.
Start by focusing on your reps’ weaknesses and what they can do to improve. Ensure they understand how each phase of the sales funnel works and how to address a prospect at each stage. Among other things, they should know how to recognize a trigger point, the best way to send a follow-up email and how to guide a conversation during discovery.
Train your team to know when to approach prospects. They shouldn’t just know what to say, but when and how to say it. They need to know how to manage the buyer’s journey better overall; for example, when do you move on to the product demo and when is it the best time to nudge a hesitant customer?
*Sales rep confidence is really a key point here. In the words of the Wolf of Wall Street, Jordan Belfort (obviously one of the most credible coaches there has ever been…),“The only thing standing between you and your goal is the [expletive] story you keep telling yourself as to why you can’t achieve it.”
3. Increase customer lifetime value (CLV)
Customer lifetime value is basically the cash value a customer contributes to your company while they are your customer. Increasing the total each customer spends over their life cycle is a great long-term sales goal for your team.
If your CLV is lower than you’d like, then you need to identify which factor is impacting it most. It can be several things, including the quality of prospecting, lead qualification, upselling, cross-selling and churn rates.
Your SMART sales goal could be
Improve customer lifetime value to $15,000 over the next 18 months by decreasing our customer acquisition cost (with better lead qualification) and aggressively pursuing up-selling opportunities.
Or, a more long-term goal could be: increase customer lifetime value by 10% year on year.
How to calculate your customer lifetime value (CLV)
This can get a bit long-winded, but here we go:
- Calculate the customer’s average transaction value
- Multiply it by the number of orders they place annually and the number of years they’ve been your customer
Customer’s Average Transaction Amount x Number of Transactions Per Year x Number of Years With Your Business = CLV
- If you need the CLV for multiple customers, you need to do the same calculation for each one – that’s why this may take a while 🙂
How to achieve a CLV goal
Using the upsell or cross-sell tactic is a good way to increase the lifetime value of existing customers.
Tried and failed already? Firstly, communicating promotions or featured products via newsletters (yes, even for B2B) is a good way to warm up your existing customers. Then, make sure that there’s enough time in your reps’ schedules for communicating with customers by sending emails with upgrade information, scheduling calls and so on. Asking a lot of questions to find out what would make upgrading worthwhile for your customer – not just selling – is key here and should be your first step. Consultative selling can work wonders.
Analyzing the data from your CRM in combination with an intuitive sales enablement tool will be invaluable if you’re looking to increase CLV. You’re looking for customers who are already avid users of your product (or certain features or off-shoots of it), and they might not necessarily be flagged as outright upsell opportunities. You need the right tools to be able to identify certain overlaps at scale.
If you use this strategy, you might be able to kill two birds with one stone and accomplish a churn-reduction sales goal too, so consider pairing these two up when goal-setting. By flagging at-risk customers as soon as you can using churn-related data about these customers’ product-use habits, you can take the right action and turn this into a direct opportunity for upselling.
If possible, we’d recommend either a personal call or sending a customer survey before trying to sell to them. This will help you understand what might have gone wrong, or why they are no longer interested. Then, use that data to target the right products at the right time.
4. Lower customer acquisition costs (CAC)
It’s a well-known adage (thanks to Bain & Co) that keeping an existing customer costs less than acquiring a new one. But if you are targeting new customers, lowering the cost of acquisition is a worthwhile sales goal.
Customer acquisition costs encompass all costs incurred throughout the process of winning new business, including sales, marketing, staff salaries, office leasing costs and so on. The longer it takes your business to convert a lead into a customer, the higher your ad spend and customer outreach campaign costs will be. You will also need more employee resources.
To decrease your CAC, you need to set goals to optimize your sales process, such as:
Decrease CAC by 10% next month by adding more potential entry points into our sales funnel that would optimize staff efficacy and eliminate wasted time.
How to calculate customer acquisition cost
Calculate CAC, one of the best-known sales and marketing costs, with the following equation:
Total Cost to Acquire Customers ÷ Total Number of Customers Acquired = CAC
To see if you’re earning or losing money by acquiring customers, run a cross-check by comparing this number with the CLV. Remember to take into account the amount of time they’ve been your customer.
How to achieve your goal of lowering customer acquisition costs
First thing’s first, see where you’re spending the most money in the customer acquisition process. Check if that’s really the best place to spend that amount of money. Identify the highest point of conversion and spend the most money there.
Have your customer personas been properly developed? If not, ensure they are all set and check if you are actually targeting a lot of hard-to-reach prospects. Is it worth targeting them? Are they providing lifetime value commensurate with their costs?
A customer’s lifetime value should be about three times their CAC. If it’s not, reconsider your approach. You might want to start targeting customers who are easier to acquire or those who are likely to bring in more value.
Other key points (this goes without saying, but we’ll say it anyway) include making sure your product matches your customer’s needs and situation (and the way it’s marketed and communicated) and optimizing your sales processes.
5. Shorten your time to close
“Time is money, so I went and bought a Rolex,” Wiz Khalifa.
Ah yes. This goes hand in hand with that last goal. In essence, the longer you spend trying to close a deal, the fewer opportunities you can create and monetize. Also, when your sales cycle is short and streamlined, you’ll have fewer opportunity costs to worry about.
For example, this is a sales goal to accelerate time to close:
Our team will decrease time to close by 10% next quarter by aggressively filtering out unqualified leads while simplifying and personalizing sales pitches for our qualified leads.
The strategy and criteria we have for filtering out our leads is [X]. Here, you will insert your most-wanted customer by using that persona profile. You will also identify which customers are a waste of time – those who you don’t want to deal with.
How to calculate time to close
It is possible to use a manual calculation, but this would take you quite some time. If you have tracked data in sales software, this will definitely help here. This would automatically calculate your average time to close. Another method is counting the months/days between the first contact and customer payment manually even if this is more time-consuming.
How to achieve a time to close goal
Analyzing the sales data from your sales software is key, as learning from buying insights can open doors as to what’s working and what’s not.
To state the obvious, the one thing that will shorten your time to close is convincing your prospects to buy from you sooner. How can you do that? As mentioned before, qualify your leads early on and weed out the ones that aren’t a good fit for your business. Or, work with a reputable sales coach to optimize your pitch, work with a credible marketing agency to develop more engaging sales content, and so on.
Achieving growth goals like these is often easier said than done. But, with some good data and a motivated team (often achieved through coaching), you can get there even faster than you think.
Get in touch if you are curious to find out how you can do it faster, with Pitcher.
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