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Setting sales targets

    Setting sales targets

    You need to set clear targets for your salespeople, linked to incentives such as commissions and bonuses – this motivates them and provides a clear indication of the kind of performance expected of them.

    This process is crucial to the success of your business and needs to be closely tied in with the rest of your business strategy and planning.

    Be specific when setting targets for sales staff – break your requirements down into different areas, for example:

    New sales – work from the projections in your business plan and sales forecasts – these will take into account changing market and economic conditions.
    Renewals – selling isn’t only about new business – it’s also about retaining your existing customers. A typical renewals rate is in the region of 60 to 70 per cent.
    Lapsed customers – a good salesperson should be able to recover some of your past customers who have not bought from you for some time.
    Look at your business and identify the factors driving its profitability. You should use these to drive your sales targets too. Different businesses may require very different targets. For instance, winning 200 new customers in a year might be a poor performance for a supplier of low-margin foodstuffs. On the other hand, recruiting just two new customers might be a very good performance for a manufacturer of luxury yachts.

    Make sure that the targets you set for your new sales staff are reasonable for the territory they’ve been allocated. Making things too easy may lead to complacency and lost sales, while making them too difficult can be demotivating.

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