Sales objectives are targets that your sales team is expected to achieve to meet your company’s overall goals. These objectives are usually based on the SMART goals framework. That means they must be Specific, Measurable, Attainable, Relevant, and Timely.
Different companies have different sales objectives. But some goals are common regardless of the organization that sets them. The following are the types of sales objectives that you can track to monitor the performance of your sales team:
1. Revenue
Revenue refers to the income from the sale of goods and or services that a company offers. Studies show that the average small business with employees generates anywhere from $387,000 to $40,775,000. So, the amount of money that companies bring as revenue varies widely.
When your company decides that it needs to increase its revenue, your sales team needs to know its expectations. The amount by which the company must increase its revenue should be distributed across your entire team so that everyone knows how much more sales they should generate.
Suppose your company wants to generate an additional $1 million in revenue through sales. If you have ten salespeople in your team, it means everyone will be responsible for bringing in an additional $100,000. That translates to $8333.33 monthly or $1923.1 weekly as an increase in revenue.
The best way to achieve your revenue sales objective is to increase the number of customers. You can also increase the size of the transaction for each customer to achieve the same results.
2. Cycle Time
Your cycle time refers to the total number of days it takes for your leads to convert into paying customers. On average, it takes 102 days for businesses to transform their leads into customers after closing the deal.
The longer your cycle time, the longer your sales reps will take to close deals. And that’s something you want to reduce as much as possible. The best way to reduce your cycle time is to refine your prospecting techniques.
Your sales team should ask for more referrals for starters. Referred customers are more likely to buy faster. Your sales reps should also spend more time prospecting and selling to improve the number of leads and cut down on time it takes to sell. Automating repetitive sales tasks may also reduce cycle time significantly.
3. Profit Margins
Profit margins refer to the difference between sales and the cost of doing business. It’s the measure of profitability and is usually expressed in the form of a percentage.
Suppose your company wants to improve its profit margins by 20% as one of its sales objectives. Your company leaders could come up with ways to achieve this goal.
For instance, every salesperson would be expected to reduce the number of discounts offered to customers. Your team could also come up with multiple product bundles provided at different price points. The sales department could also find ways of cutting down on the costs of selling.
4. Qualified Leads
Qualified leads refer to leads that meet the requirements to buy your company’s product or services. The criteria used to qualify leads are, however, unique to every business. Both the marketing and sales departments of every organization can qualify leads.
Unfortunately, there is a discrepancy in what marketers think a good lead is versus what salespeople believe a good lead is. Only 27% of the leads that B2B marketers pass onto the sales team are any good.
To generate sales and revenues continuously, you need to have a steady stream of qualified leads. To improve the overall performance of your team, you need to increase the number of leads. So, your sales objective, in this case, could be to increase leads qualified by 15% each month.
You can achieve this kind of sales objective by increasing the time for prospecting, coming up with an effective lead nurturing campaign, embracing CRM technology like HubSpot, bettering your lead qualification criteria, refining your sales process, etc.
5. Win Rate
In sales, the win rate refers to the number of sales opportunities that your business has won. The average win rate for most organizations is 47%. There are 53% of sales opportunities your sales team could be losing to your competition or simply because the prospect has decided otherwise.
The higher the win rate, the higher the revenues your company generates. Suppose your company has a win rate of 30% and generates revenues of $100 million.
If all other factors remain constant, but your team manages to raise your win rate by 10%, your company will generate $133.33 million in revenues. That represents a 33.33% increase in revenue just by winning more deals. So, it’s an essential sales objective to track.
To improve your win rate, your sales reps should increase their connections online, spend more time selling, expose prospects to the products more, provide relevant content at every stage of the sales process, etc.
6. Customer Retention
Customer retention refers to your company’s ability to retain its customers over a long period. It means your customers buy from you more than once.
Research shows that 80% of your company’s future profits will come from just 20% of your existing customers. And only a 5% increase in customer retention will boost your business profits by 25% to 125%. So, having a sales objective that helps you increasing customer retention rates each year would do wonders for the overall sales team performance.
It’s, therefore, important that your sales rep work hard to contact existing customers. They can give them early-bird offers for new products, sell upgrades of existing products, sell more products of the same version, etc.
Salespeople should also work hard to improve their customers’ experiences by addressing complaints, answering questions about how products work, helping them find replacement parts from business manufacturers, etc.
7. Customer Acquisition Costs
Customer acquisition costs refer to the cost of acquiring new customers. Attracting new customers costs five times as much as keeping old ones. The probability of selling to old customers is at least 60%. On the other hand, the likelihood of selling to new customers is 5% to 20%.
When your business loses customers, it means every employee will have to work much harder to get new ones. And the sales team will have to work hardest. So, to cut down sales-related costs, you need to make lower customer acquisition costs one of your sales objectives.
Your sales team can start by reaching out to all existing customers with product offers. Also, sales reps should provide feedback to existing customers who have any queries about products they are considering.
8. Churn Rate
Churn rate refers to the rate at which your customers stop doing business with your company within a set period.
Churn rates can significantly adversely affect your business revenues, especially if your sales team works on selling services to which people subscribe. That’s because the revenue depends on whether customers continue to renew payments for such services. The cable industry has one of the highest churn rates at 28%.
Your sales objective should be to lower this rate as much as possible. Good customer experience is key to reducing the churn rate. Salespeople should be aware that selling doesn’t end when the deal closes. Maintaining a good relationship with an existing customer is essential.
When customers complain, sales reps should enable them to find solutions for their issues. If they need additional presentations and demonstrations, your team members should work on providing them. Should customers need extra content to help them decide, your salespeople should liaise with the marketing department to deliver what’s needed.
9. Cross-Sells and Upsells
Cross-selling is the selling of an additional product or service to existing customers. Up-selling is the selling of more expensive items, usually upgrades, to an existing customer.
Remember, you are more likely to increase revenue if you sell to an existing customer rather than a new one. So, your sales team should endeavor to raise its cross-selling and up-selling rates.
Amazon is excellent at cross-sells. Whenever you check out a product page, the site also offers buying suggestions under the “Customers who bought this item also bought” section. And it’s something your sales rep should borrow from.
One way to determine which customers are ripe for upsells and cross-sell is by using the HubSpot CRM to mine for that information. Customers who have taken specific actions like requesting a demo of a new feature are good candidates. They present the right sales opportunities for your sales reps to sell more.
10. Sales Productivity
Sales productivity refers to activities that are critical to selling that your sales reps must undertake while using minimal resources to achieve their goals. The less time your sales reps take to close a deal, the more productive they are.
However, about 40% of salespeople miss their annual sales quotas. So, sales productivity is a sales objective worth tracking. It can enable you to know who is performing and who is dragging the team performance down. The goal is to increase sales productivity each year.
One way to improve sales productivity is by training your salespeople. The more skills they have, the better they can sell. Also, it helps to refine the sales process, automate repetitive tasks, and ensure there is enough time for salespeople to sell.