Every year, it happens the same way. You check your calendar one day and realize that Q3 is nearly over. The year has flown by, and it’s already time to start setting sales goals for next year.
The task of regularly reviewing and revising your sales plan is critical. Looking ahead to next year, the routine task of creating sales goals is further complicated by a changing sales environment characterized by digital selling and rapidly changing buyer behaviors. With this in mind, should you set your sales goals to assume you’ll go back to normal? Or should you anticipate having to adjust to the new normal?
Laying Out the Framework
Under usual circumstances, this is the time of year you’d be mapping out your sales goals. You would start with questions like: “How much revenue do I want to have next year?” “How do I want that revenue broken down by customer type (new customers, existing customers, etc.)?” “How do I want that revenue broken down by customer vertical, product, geography, etc.?”
Once you decided where you wanted to go, it would be time to create a plan. You would make any changes necessary to hit those sales goals, tracking and pivoting as necessary.
The process is similar this year, but it’s vital that you consider your KPIs in light of the new sales landscape and tailor your strategies accordingly. For instance, think through how to adapt the composition of your sales framework and your team to support next year’s approach to revenue acquisition, compensation plans, sales strategy, and KPIs/metrics.
A Work in Progress
Sales managers must constantly think of their planning and forecasts as “working documents.” Why? A sales forecast is your data-based opinion on future revenue at that moment. Reality is rarely 100% consistent with your prediction from months or years ago, though.
Imagine that you’re forecasting future revenue before a large competitor comes into your space. You would probably assume, optimistically, that you’d retain a large percentage of your existing customers while achieving a high closing rate on new customers. Your future revenue was based on those things actually happening.
Now imagine that a large competitor has come out with a lower-cost alternative to your product. This competitor is quickly poaching your customers and making it hard for you to attract new customers. Without a fluid sales framework, you’d spend too much because you planned for your costs to align with a higher revenue level. You assumed the revenue would still come through, but you would end up judging your performance by a standard that is no longer attainable.
Setting Goals in the ‘New Normal’
It’s never easy to set sales goals, and it only becomes more complicated during such uncertain times. That said, here are six steps to follow as you set goals that account for the “new normal” in sales:
1. Build Your Forecast From the Top and the Bottom
Most organizations “push down” the numbers they want to see from the top without understanding what the sales team thinks is possible from the bottom. When management and sales teams work together to create sales forecast numbers, though, the outcome is much better for everyone involved. Both parties can get a sense of what’s reasonable to expect and take more ownership of their part of the plan because both parties have had a seat at the table.
2. Be Specific About What You Want To Happen
How much revenue do you want? And from where do you want it? Decide how you want to hit your revenue goal, breaking down the overall mission into different “buckets” (e.g., customer type, customer vertical, product, and geography). This will make it possible to track progress more granularly and accurately, allowing you to identify holes and areas for improvement more easily.
3. Incentivize the Outcomes You Want
If you don’t encourage the exact performance you desire, it won’t happen. If you want to sell more of one product than another, pay a higher commission for that product. If you want to grow new customer sales, offer a higher commission for that type of customer. When your salespeople read their compensation plan, make sure they’re incentivized to sell what you want to be sold — in exactly the right proportion.
4. Map Your KPIs/Metrics To Your Desired Performance
How many proposals should go out in a specific time frame? How many meetings need to take place? What type of RFPs merit a response? It is one thing to set a revenue goal, but you need to focus your team on the individual tasks that it takes to get there. Focus on leading indicators (predictive metrics) that give you a sense of where you are headed before you reach that final destination. With lagging indicators (metrics of past performance), it is too late to do anything useful with the data.
5. Stay Aware and Ready To Adapt
As you track metrics, don’t be afraid to pivot when necessary. It’s a bit like following a map: You know you’re headed in the right direction when you see landmarks and milestones, but that doesn’t mean you shouldn’t take a shortcut when you find one. To reach your final destination, you have to stay the course, and being nimble along the way will only help you as you do exactly that.
6. Inspect What You Expect
Hold your team accountable. If you don’t show your team that sales goals are important to you, how can you expect anyone to understand the importance of those goals? By helping your team members understand their roles in the collective success of the company, you’ll empower them to work harder and smarter for the greater good.
Many businesses look for ways to get back to normal when a recession hits. But when it comes to the sales planning and forecasting, there is never really a circumstance that could (or should) be considered normal. When an external force changes, sales leaders must be ready to change along with it — that applies more than ever in this uncertain sales environment.
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