What a good sales target looks like
A good sales target is a number for one rep, for one month, that the rep thinks is hard and possible. It adds up to the team's number. And it comes with the weekly activity it takes, so on any Wednesday the rep can tell whether they're on track.
Most teams get one or two of those right. The team number gets split evenly, so the new rep and the five-year rep carry the same load. Or the monthly number is fine, and nobody works out what it means for this week's calls.
This post covers the manager's side: setting the numbers for a team of 3 to 20. For how to word a goal so it's specific and dated, see SMART goals for sales. For the definition and types of quota, the quota glossary page has them.
Top-down and bottom-up: use both
There are two ways to arrive at a target, and each one catches the other's mistakes.
| Top-down | Bottom-up | |
|---|---|---|
| Starts from | What the business needs to sell | What each rep can sell |
| Asks | "What do we need?" | "What can we do?" |
| Goes wrong when | The number ignores who's on the team | The number is padded to be safe |
Work out both, then compare. If the bottom-up total is a fifth short of what the business needs, you have a real gap to talk about: more reps, more leads, a bigger average deal, or a smaller number. Splitting the gap evenly across reps and hoping isn't one of the options.
Step by step: from the team number to each rep's month
1. Start with the team number for the year
Take what the business needs from sales this year and check it against last year's actual and what's in the pipeline now. A jump of nearly half with the same team and the same leads needs an explanation before it becomes anyone's target.
2. Work out each rep's capacity
For each rep, look at three things: what they sold last year, how their activity and win rate have moved, and what's already in their pipeline. A rep who sold 30 deals last year at a steady pace is a better guide than a team average.
Ask each rep what they think they can do, and why. Their answer is the start of bottom-up, and it often surfaces something the numbers miss, like a big client going quiet or a new area opening up.
3. Allow for ramp
A rep in their first few months can't carry a full target. Give new reps a stepped target that rises month by month until they reach full. The ramp time page shows how a ramped quota steps up. Whatever the new rep can't carry is part of the gap you talk about in step 1, not extra weight on everyone else.
4. Allow for slow and busy months
If December is always slow and March is always busy, don't set twelve equal months. Look at the last two years and spread the year the way sales actually fell. A rep who misses an unrealistic December target in the first week stops looking at it.
5. Set the monthly number per rep
Now each rep has a yearly figure, spread across months by season and ramp. Check that the reps add up to the team number. If they don't, go back to the gap.
6. Turn each month into weekly activity
This is the step that makes a target usable. Use the rep's own conversion rates to work back from the month to deals, from deals to proposals or meetings, and from meetings to calls.
For example: a monthly target of 8 deals, at a win rate of 1 in 4 from proposal, needs 32 proposals. That's too many if the rep sends 12 a month. So either the win rate has to rise, the deal size has to grow, or 8 is the wrong number. The activity calculator works back from a sales goal to the calls and meetings each week needs.
7. Agree it with each rep
Sit down with each rep, show them how you got to their number, and listen. Change it if they show you something you missed. A target a rep helped set is one they'll own when they're behind.
Check it by Wednesday
A monthly target checked at month end tells you what went wrong. Checked every Wednesday, it tells you what to change while there's still time.
Each Wednesday, compare each rep's activity to the weekly numbers from step 6. A rep at half their meetings by Wednesday still has two days to book a call block, and a rep on pace gets left alone. The quota calculator shows attainment, whether you're ahead or behind pace, and what each week still needs.
Once the number is set, the job is watching it. In ActivityTracker you set this year's sales number and see what each month still needs and whether you're on track, and the weekly goal fills in as you log.
A made-up team
Made-up example: Lee manages five reps selling cleaning contracts to offices. The business needs 400 new contracts this year.
Top-down: 400 split five ways is 80 each. Bottom-up: Lee asks each rep and checks last year's numbers. Anna (four years in) says 100. Ben and Chen say 85. Dev says 70, because his area lost two big clients. Eve joined last month, so her ramped year comes to 40. The bottom-up total is 380, which is 20 short.
Lee takes the gap to his boss with two options: a lead campaign in Dev's area, or a lower number. They agree on the campaign and a team target of 395.
Seasonality: in the last two years, December ran at about half a normal month and March at one and a half. Lee spreads each rep's year that way.
Weekly activity for Ben in a normal month: 7 contracts, at 1 in 3 from site visit, needs about 21 site visits a month, or 5 a week. At 1 in 4 from call to site visit, that's 20 calls a week. Ben agrees to 20 calls and 5 site visits.
First Wednesday: Ben is at 12 calls and 2 visits. Dev is at 25 calls and 6 visits. Lee books a morning call block with Ben and leaves Dev alone. The numbers are invented.
Mistakes that break targets
Javier Marcos and Monica Franco-Santos of Cranfield School of Management list ten common issues that undermine sales targets. Several match what small teams get wrong:
- Targets based only on past performance. Last year plus a tenth ignores who left, who joined and what changed.
- Targets split across the team without regard to each rep's area and experience.
- Targets that are "given" to reps rather than agreed with them.
- Targets with no agreed action plan, so the rep can't tell on Wednesday if they're on track.
- Targets that are never reviewed after they're set.
Two more from experience. Don't raise a rep's target mid-year because they're ahead, or your best people learn to slow down in October. And don't set a target you won't check: if nobody looks until month end, the rep stops looking too.
What to do first
Take last year's numbers for each rep and next month's target. For each rep, work back to the calls and meetings a week needs, from their own rates. If any rep's weekly number looks impossible, that's the conversation to have this week, before the month starts.