What Are Sales Goals? 5 Tips for Building Effective Targets

Vũ Khôi

Author at Wotech Electronics Blog

Businesses need to set sales goals to get the best results from online selling. Depending on the market, customer segment, and the company's purpose, different managers will define and build different online sales goals. Let SimERP walk you through the secrets of building effective sales goals!

What are sales goals?

A sales goal is the business result a company expects to achieve over a certain period. Each sales goal must be stated specifically and measured with figures, so employees can be held to delivering them and managers can easily control business results in each period.

Sales goals must be realistic, broken down so they are easy to execute and manage. In particular, they must point toward certain long-term results, such as growing the market or expanding into new products. Managers should set sales goals focused on:

• Increasing revenue

• Increasing the number of new customers

• Boosting sales volume

• Increasing profit

• Improving the sales process

• Reducing costs.

Types of sales goals for businesses

Revenue/volume goals

A revenue goal is the total value of final products and services that must be sold within specific periods. It needs to be defined concretely for a set time frame, expressed in numbers, achievable, and broken down. In addition to revenue goals, businesses can also set goals for the volume of goods sold within a specific period.

When building goals, managers must base them on foundations such as: the previous period's sales results, the company's capacity, the industry's competitive situation, and market shifts. Internal figures usually come from within the company, while market reports are typically gathered from other research organizations.

Market development goals

Market development goals are expressed through metrics on the coverage of sales points in the market and the number of sales channels. Businesses usually set market coverage targets, including metrics on the number of sales points and the products sold at each store.

Customer development goals

Customer development plays an important role in profit growth and long-term business development. Metrics tied to this goal include: the number of new customers, the repeat-purchase rate, the customer satisfaction rate, and so on. Beyond attracting new customers, businesses need to focus on retaining customers and turning them into loyal ones.

Market share goals

Market share is the proportion of customers who buy the company's products relative to the total potential customers in the target market over a given period. The basis for setting this goal is the company's and other brands' market share in the previous period, the size of the market, and how it is changing.

Profit goals

A profit goal is the amount of money the company wants to earn after all costs are deducted. This profit can be calculated for the total products and services or for each individual product line. However, for easier calculation, managers often use metrics like profit margin on revenue or profit versus cost rather than a specific amount. Businesses can base the next period's goal on the previous period's results.

Steps to set online sales goals for your business

Before each business period, a company needs to set concrete sales goals. Only then can the sales team act to produce results, and the company can easily manage and measure how effective its business activities are. SimERP suggests building effective sales goals with the 6 steps below.

Step 1: Define the sales goal

The more detailed and specific the goal, the easier it is to control the sales plan and the higher the chance of success. Businesses can use the SMART rule to set their goals. The criteria are:

S – Specific: The goal must be specific. Instead of a vague target, a business can break it down for better management.

M – Measurable: The goal must be expressed in numbers. Only then can the company check its plan and devise remedies if the business runs into problems.

A – Achievable: The goal must be attainable within the company's capabilities. Managers need to understand their own resources and weigh them against the market as a whole.

R – Realistic: When setting goals, managers must be realistic to avoid unattainable ambitions.

T – Time bound: Goals must have a defined deadline. They can be set by week, month, or quarter. The shorter the time frame, the easier it is to control emerging problems.

Step 2: Build the customer portrait

For individual customers, a business can research and build customer portraits through factors such as: demographics (age, gender, occupation), geography, financial capacity, interests and habits, and shopping behavior.

Once the customer portrait exists, the business should segment customers into groups based on shared characteristics. The company can divide them into: potential customers, loyal customers, and high-value customers. This helps the business devise strategies suited to each buyer group and decide on sensible market segments and products/services.

For organizational or business customers, building the customer portrait is different. In that case, the company must identify prospects through factors such as: size, revenue, number of employees, field of business, and so on.

Step 3: Research and survey the market

Market research and surveys give the business an overall view of the industry it operates in. Surveys also play an important role in understanding the company's competitors, grasping their strengths, and devising suitable strategies.

A business can conduct market research itself or hire research organizations. However, doing it in-house may yield inaccurate results, while hiring outsiders is expensive and unsuitable for small businesses. In practice, managers therefore usually rely on readily available survey data online, figures published in magazines, and their own sales experience.

Step 4: Plan the strategy

Managers need to think through and sketch their business strategy. Then they must list in detail the goals, the set requirements, and the activities each department must carry out. The business should have a workflow and personnel control process to ensure progress and work efficiency.

Managers should set priorities and deadlines for each task to ensure employees meet the set goals. If any problems or risks arise, you need to investigate and offer timely solutions to make sure the plan's requirements are fulfilled.

Step 5: Build a contingency plan

In business, you will inevitably run into difficulties. So a business should anticipate possible scenarios and set up contingency plans to minimize future risks.

Step 6: Budget the expenses

Budgeting must be calculated carefully for each stage and each plan, and fit the departments within the business. The planner should set aside a reserve for contingencies, usually around 5%–10% of the project's operating budget. Listing spending items in full detail ensures the strategy is executed effectively.

Secrets for building your business's online sales goals

Build short-term sales goals

When setting sales goals for individuals or small groups, managers need specific, detailed calculations for each department or each employee. These goals need to be checked and evaluated periodically over short intervals — monthly, or even weekly. That way the business manages sales activities closely, spots emerging problems, and comes up with solutions.

Build cascade-style goals

This is how a business sets individual sales goals for each employee so that the next period's target is higher than the last. This motivates and pushes salespeople to perform better.

Build a chain of sales goals

The business determines each goal's priority and arranges them in order. This helps you see which high-value areas must be done first and what should come later. It helps the company achieve good results within the set deadline.

Be flexible in setting and executing goals

When building sales goals, a business needs to value flexibility. With an overall goal handed down from above, lower-level managers can flexibly break it into different targets so they are easier to control and employees can execute and achieve the best results in line with the overall goal.

Create stretch goals

You need to set stretch goals for employees to spur them on — for example, extra commission percentages for beating KPIs. This motivates employees to strive to meet, and even exceed, the set targets.

Conclusion

Those are SimERP's insights on how and why to build your business's sales goals. We hope the points above make it easy for you to set concrete goals for your online business.

If you want to manage sales well to achieve your sales goals, consider SimCRM software. SimCRM lets you try it free for 30 days!

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