Did you know that on average, 1 in every 5 companies fail to meet their sales objectives? One-third of all salespeople are unable to meet the sales goals they set for themselves from time to time.
But why does this happen? Is the problem with the salesperson hired? Or is the problem with environmental factors that reduce demand? Or, here’s a third possibility – is the real issue rooted in the way sales objectives are determined and managed by companies?
In this article, we will explore the challenges companies face when setting sales objectives and how companies can improve their process to ensure their sales objectives are realistic and achievable.
What are Sales Objectives?
Any company selling a product or service wants to achieve something. It could be to sell the highest quantity or reach the largest number of people or something else. These goals, when translate to the long-term, become sales objectives. They act as a benchmark for the company’s success.
Sales objectives are essentially a macro level roadmap of all that a company wants to achieve in the next 5, 10, 15, 20, 50 years or more. These sales objectives are SMART –
· Specific in their focus.
· Measurable with a roadmap that expresses stages and actions that sales teams need to fulfil.
· Attainable because of the company’s ability to build the required resources and competencies over the next few years/decades.
· Realistic and in-alignment with the external environmental development of the place they are located in.
· Timely and completed within a pre-determined time period.
Types of Sales Objectives
Depending on your company’s unique needs and desires, your sales objectives will be different from another company. But broadly speaking, we can classify sales objectives under 10 types. These include –
1. Find Qualified Leads
One of the first, most-important sales objectives essential to start the sales process is lead generation. Here the objective is to get leads whose demographic, psychographic and lifestyle traits match the customer avatar you have created. Ideally, these leads will be people for whom you have developed this product/service.
2. Shorten Sales Cycle Time
The sales cycle refers to the time right from prospecting to actual conversion. On average, it can take up to 102 days to successfully convert a prospect, especially for high-budget and high-risk purchases. The priority of any company will be to reduce this sales cycle time, to ensure quicker conversion and onboarding of customers.
3. Increase Win Rate
Another objective is the win/close rate. This indicates the conversion rate of the company. Studies have shown that the average win rate for companies is 47%, with the failure rate at 53%. All sales objectives we discuss in this list will be geared towards ultimately raising win rate and profit.
4. Drive Down Customer Acquisition Cost
Your company might have a high win rate. But at what cost? A conversion that happens only after you spend hundreds or thousands of dollars is unsustainable. It also indicates that perhaps you are aiming at the wrong prospects/leads. One of the sales objectives of a company will be to lower the acquisition cost per customer.
5. Cross-sell and Up-sell to Existing Customers
The game plan for most companies is to get a newly-acquired customer to slowly move up in their purchases with the company. This could be in the form of buying complementary products that can add additional value to the user. Or, to purchase a higher-end, more feature-rich version of the product.
While the former is called cross-selling, the latter is called up-selling. Both of these become the company’s objectives, in the long run, to ensure that customer patronage is retained always and revenue continues to be generated.
One of the ways salespeople determine whether a customer is ready to be cross-sold or up-sold, is by studying their purchase patterns and buying behaviour. This information can be stored in the company’s CRM and actively monitored to cross-sell or up-sell at a time when the customer has the highest likelihood of saying yes to you.
6. Lower Customer Retention Costs
Another important sales objective is to lower retention costs. How much money do you need to spend to ensure that the customer doesn’t jump ship to a competitor’s firm? If the customer ends up costing much more than what they bring in, it is okay to let them go.
This is where the 80-20 rule of sales comes in. 80% of your business comes from 20% of your customers, who also incidentally don’t cost much to retain. This objective is about identifying this 20% of customers.
7. Reduce Customer Churn Rate
Reduction of customer attrition rate is another objective that companies have. At the end of the day, no company wants to lose customers to a competitor. The company’s long-term focus will be to use a combination of new product introductions, cross/up-selling, discounts and positive engagement, to drive down the churn rate.
8. Increase Revenue
Revenue is the income a company makes out of the sale of its products/services. One of the core sales objectives will be to lower company expenses and generate higher value from each prospect. Here, there is a focus on making all marketing activities cost-effective as well. Plus, to find ways to increase the transaction value per sale.
9. Drive up Profit Margin
Various studies show that depending on the company, what they sell, their customer characteristics and the country they’re in, profit margins can range between 5% and 20% annually.
On average, a 10% profit margin is considered very healthy. The long-term objective of any company will be to steadily drive up the profit margin of their company. This will also help improve their shareholder relations and bring in additional financing for expansion.
10. Increase Salesforce Productivity
The final sales objective companies have, is to make sure that their sales team is efficient and productive. The fact is, sales force productivity has a direct correlation to successful conversions and high profits.
When your sales teams have an open and accessible communication channel, plus knowledge of using important sales CRM tools, nothing can stop them from succeeding. Plus, they will be able to identify which processes in the sales cycle are a waste of resources and will be able to refine their sales process.
What Are the Challenges to Setting Sales Objectives?
Companies and their sales teams are often aware of what sales objectives they need to work towards. Yet, when it comes down to it, they find it difficult to set the right, SMART sales objectives. Here are a few reasons that make this process so challenging –
1. Insufficient Research About the Target Market
Sometimes, companies don’t conduct enough research about their target customers and therefore don’t understand their buying behaviour. In other instances, there may be a cultural misunderstanding between the company and their target market, which leads to their not knowing what customers want. This ends in forming wrong sales objectives.
2. Targeting the Wrong Leads
Even if the company has sufficient information, they may try to target leads who are a mismatch with what they’re selling. The sales team may be targeting too many leads, rather than narrowing down on a select few. When this happens, they end up getting the wrong picture of their target market and therefore set sales objectives that won’t be easy to achieve.
3. Desire to Scale Too Fast
Sometimes, the challenge lies in the company’s unrealistic expectations and desires. They may aim to generate way more market share or profit in a short period of time than is actually possible. When the goal-setting starts out faulty, it becomes difficult to meet these sales objectives because you don’t have the capacity to meet these goals.
4. Planning and Managing Sales Objectives Wrongly
Sales objectives are ever-evolving goals. As your company grows, so do your sales objectives change. Planning and managing your sales cycle, processes and data manually – or even using obsolete technology – can be detrimental to you. This is because such manual operations are vulnerable to high human errors and they make it difficult to track the efficiency of different sales processes.
All of this can snowball into an inefficient sales operation which wastes time, money and resources. Using sales CRM software can help fix all of these problems.
Looking for a CRM to supercharge your sales engine and streamline sales efforts? Try Kylas, an easy-to-use CRM, uniquely designed for growing businesses. Schedule a demo today!
5. Lack of Company Vision
One of the biggest challenges to setting sales objectives is the absence of a company vision. Sometimes the entrepreneurs themselves will be unsure about what they want for their business or where they see themselves in the next 10-20 years. This ambiguity about their future can make it difficult to set the right sales objectives, which are, after all, the rudder an organization needs to steer in the right direction.
Common Sales Objectives With Examples
Now that we know some theory behind sales objectives, let’s take a look at a few sales objectives and their examples.
1. Reduce Sales Cycle Time by Automating Emails to Prospects/Customers
This could entail using a CRM system to collect lead names, contact details and information. Then, using an email automation software to automatically send emails for brand introduction, the announcement of offers, sale confirmation, shipment/delivery notification, periodic support reminders etc.
2. Finding Qualified Leads by Setting Daily and Weekly Prospecting Goals
For example, every day, business development professionals need to find at least 3 prospects online or provide a list of 25 prospects by the end of the week, each week. Over a period of time, this will lead up to the company’s objective of having a fool-proof lead generation process.
3. Increase Win Rate, Revenue or Profit by Incentivizing Sales Objectives
For example, if they meet 70% of their quarter’s conversions/revenues/profit goals, they get two days extra holiday or a 10% raise in that month’s salary. Giving your team something to fight for, can encourage them to work harder towards your sales objectives.
4. Reducing Customer Churn by Running a Mentor-Mentee Sales Program
Here, an inexperienced salesperson who is losing customers works with an experienced and successful colleague to review their sales process and techniques. Performance improvement plans can be implemented under the supervision of the experienced employee.
5. Increasing Cross-Sell Opportunities and Revenue Through Stretch Goals
Stretch goals are additional goals that your sales team can work towards if they successfully achieve their main objectives. You can try to include cross-selling as part of your team’s stretch goals. For example, if they are able to sell all 100 units of Product A before the quarter ends, they should try to sell as many units of Product B as they can. The salesperson who sells the highest units of Product B, will get 10% of their sale revenue as extra commission.
How Can You Set Sales Objectives Based on Your Goals?
Setting sales objectives need not be hard. You can set the ideal sales objectives that help you thrive by –
· Being cognizant of your company’s capabilities.
· Understanding how the external environment affects your business.
· Knowing what you want out of your company in the next 10, 20, 30 etc. years.
Here are a few ways in which you can set your sales objectives based on your company vision and goals –
1. Understand Your Buyer’s Persona
First off, really get into the mind of your target customer. Answer the following questions –
What do they want in a product like the one you’re selling?
How frequently will they purchase it?
How much dissonance might they feel when making the decision?
How much convincing/encouragement will they need before they say yes?
This will give you a fair idea of what your demand might be like. This will help you set the right sales objectives that are set up for success.
2. Determine the Type of Goals That Are a Priority for You at the Moment
Sales objectives are evolving and what objectives you have today may be vastly different than the ones you’ll have a decade or two later. But it’s important to focus on what is of priority to you right now.
It doesn’t make sense to work towards all types of goals at the same time, as they might be conflicting with each other. For example, it can be difficult at times to maintain a high win rate and have a low customer acquisition cost. Or to constantly keep up-selling while also aiming at churn reduction and lowering of retention costs.
That’s why you need to decide what exactly you want out of your sales objectives planning. What goal takes the highest priority right now? Select those 1-2 objectives and work towards them. Later as your sales processes become better and you get closer to fulfilling these objectives, you can bring new goals on board.
3. Make the Process of Sales Objectives Setting Transparent and Collaborative
A sales person’s sales objectives aren’t exclusive to them alone. Every sales objective has an impact on various teams within the company. The only way you’ll be able to set the right sales objectives that are set up for victory, is to make it a collaborative process.
Various teams like finance, marketing, R&D, delivery etc. must come together to put forth their respective goals. At the end of the day, a company can make a successful sale only when the entire business runs together like a well-oiled machine. When sales teams are aware of the strengths & weaknesses and opportunities & challenges of different departments, they will be able to set up SMART goals.
4. Share Your Sales Objectives With Your Team and Build a Roadmap
Once these sales objectives have been set, it’s time to impart knowledge and training to your sales team. It is only when your team are aware of your end goal that they will start finding ways to achieve them. You can then sit with your team and build a roadmap with sales cycle stages. You can plan milestones to be achieved, processes to be used and things to be eliminated to ensure these sales objectives are achieved.
Preparing and sharing training material and sales enablement kits with your team can further solidify knowledge about the product/service and powerful sales techniques. Even sharing resources stored in your sales CRM and making it role-accessible can help your team successfully achieve your sales objectives.
5. Monitor, Check-In and Course-Correct
Over time, companies can lose sight of their primary sales objectives, as new opportunities come up and they feel enthralled by them. But it’s important to keep checking in to see if you are still on track towards your main objective or not.
You can also hold regular meetings with various teams and employees, using a sales CRM tool to study sales performance reports. These reports help you monitor whether milestones are being achieved on time or not. It will also tell you the status of your sales cycle. You can use the information you get to course-correct and re-orient your sales cycle and processes towards your primary sales objectives.