Strategy

Back to Basics: The Vital Importance of Sales Activity Targets

Posted byIan Brodie on April 15th, 2008.

Everyone recognises the importance of having a clear vision for their business, and of setting specific, measurable objectives. And almost all businesses have clear sales targets for the year – and usually quarterly and monthly targets too.

But what I see much less often are clear Sales Activity targets. Targets for what you are actually going to do not what you hope to achieve.

Managing only using sales targets is, of course, like driving using the rear-view mirror. You get an accurate picture of where you've been – but not of where you are going.

In many industries, the typical sales cycle lasts months – and so your actual sales figures show how well you did months ago – not now. Maintaining an accurate Sales Pipeline gives you much better visibility of how you will be doing in the upcoming months – but again, it's focus is on measuring effect (the probable sales) – not cause (the activities that lead to the sales).

In order to effectively run your business you need to set clear targets for what sales activities you will be performing in the upcoming period – and measuring and managing to achieve those targets. If your business is driven by referrals then you must make sure you and your team are actively carrying out the activities necessary to get referrals.

If you're in start-up mode and you're cold-calling, you must ensure that you are doing enough calls, to the right people, in the right way to achieve your targets.

Why do you need to set these targets? Won't people (including yourself) just “do their job” to hit the overall sales target?

Well, yes and no.

Unfortunately, many critical sales activities are difficult or even painful to do. Very few people like to cold call. And even with referrals, asking a client for a referral can be embarrassing for some people. Firing everyone (perhaps including yourself) and hiring people who find these tasks easy is an option – but not a viable one for most businesses.

Instead, having in place a targeting and measurement system which gives people a visible reminder of what they should be doing is the answer.

Sometimes that yearly or even monthly sales target can just be too far away and too theoretical to drive action. You walk into the office in the morning, and you have emails to answer, some customer service queries to deal with, and perhaps the need to talk to the guys on the production line. All of those can seem much more interesting and preferable to getting on the phone to some potential customers, trying to get some meetings, and facing the potential of rejection.

Even contacting existing customer for referrals can seem daunting in comparison. The end of the month seems a long way away, and sales seem to be doing OK – so you take the easy option and deal with the emails and chat to the production guys about the new product coming on stream next year.

But it's a different story if you've worked out that to hit your sales targets you need to be having at least 3 new customer meetings a week – and to get those you need to be making 5 calls per day. And if you don't do that, sales in 3 months time will crash. W

ith those cold, hard figures staring you in the face (preferably literally – stuck on to your wall or PC) it's a lot easier to motivate yourself to make those calls.

Of course, these targets need to be based on facts. You need to break down your sales targets to how much you realistically expect to achieve for your major sales channels (e.g. cold calls, referrals, networking, inbound from website etc.).

The mix will be different for every business – and change over time as your business grows. For many businesses, customer referrals are the best source of new customers – but for a brand new business with no history and no existing customer you will have to supplement this with other channels initially.

Each channel will then have a different sales pattern or sequence of events that lead up to a sale. For cold calling it may be an initial call to a lead to set a meeting, followed by a face-to-face meeting, then a proposal, then a sale.

Historical data will allow you to see your average sales size for each channel, and your success rates at each of the sales stages and so allow you to figure out how many sales you need to hit your target, how many proposals you need to get the right number of sales, how many meetings you need to have, and how many calls you need to make to get those meetings, etc. The same applies to your other main channels.

Now these calculations will be far from perfect and actual results may vary significantly. But they do allow you to set ball-park targets for your key sales activities – and to break those down into weekly or daily targets to provide a highly visible marker of progress.

They also need to be combined with quality criteria and/or targets which ensure that you're not just playing a numbers game, but instead are carrying out your activities properly. For example, asking a client for a referral doesn't count unless you've briefed them in advance, told them exactly what and who you're looking for, and earned the trust in advance to make sure you get a high quality referral. Making a cold call doesn't count unless it's to a qualified target that you've researched beforehand, etc.

Once you have established those quality criteria, and set yourself activity targets based on what will really drive your business forward; you can then us your activity targets as a daily and weekly “conscience” to make sure you are focusing your efforts in the right areas.

The importance of these targets can't be overestimated. Put simply, if you are not hitting your activity targets day by day and week by week – then you are relying on luck to hit your sales targets.

Onward!

Ian