What happens if you don’t have targets?
In business, it’s easy to be pulled in different directions and go ‘off track’. With so many distractions we are often enticed away from what is really important and requiring most focus to achieve growth (especially away from sales activity) and waste time on fruitless activity.
Does this sound familiar to you? Or are you seeing this in your team? As business owners, we only have a finite amount of (precious) resources – time, energy, attention and money – available to us. Wasting any of these can make or break your business. How many times have you noticed that you have more tasks left on your to do list than you anticipated? And how many times have you been frustrated by the fact that you seem to have got no further on something even though a whole day has gone by.
Why are targets important?
Targets help us to define the activities in our business and make the most of our resources. They create clarity. They ensure focus in sales enabling us to build the business. They provide direction and give the best chance of best performance whether that be individual, team or business performance. Ultimately they increase the chance of achieving the business growth ambition aim.
The targets you set create the results you get
You may have heard the phrase “where you look is where you go”. The key to setting great targets is to understand the nature of your target setting or measurement in the business and the reasons for doing it. An effective target or measurement is one that adheres to these 4 key criteria – it is context driven, it is helpful to those who use it, drives the business forward and it is simple to understand and use by those relevant.
4 key criteria that can help you set targets that grow your sales
- It is context driven
Sometimes it is more effective to set targets for the activity that leads to sales, rather than only setting a specific financial target. If you know in your business that 17 sales calls produces an average of £20,000, then it would be worth setting the target for the calls, not the sales.
- It is helpful to those who use it
- Targets can motivate everyone who is involved with them but only if they understand the nature of the target and why they are set. Communicating this, and indeed getting feedback on what drives the people who the targets are set for and buy-in can be effective
- A target of increasing your ‘list’ or database by 40 people weekly may be understood by the management team, but only if those who are responsible for growing the number of new contacts understand that this increase is then linked on average to 4 new pieces of business.
- It drives the business forward
It seems obvious to say this but sometimes we do measurement for measurements sake, or the measurements we use are no longer a useful driver. There are longer term and shorter term targets that can support for example a ‘summer sale’ that will fix a short term cashflow issue, if we are overstocked etc. and development targets towards a longer term project
- It’s simple to use and understand
Setting, using and sharing metrics that are easy to understand makes for a ‘shorthand’ in the business or creates an ‘activity dashboard’; if we know that over a month we have 70 sales calls each to make, 30 proposals to send out, 4 talks to give, or 80 people to add to a list, that makes it very easy and quick to see and follow. Make sure your targets drive sales The key to setting these targets is of course that they do indeed ultimately drive sales. This may mean moving away from purely sales revenue targets, and into a wider context of activity target setting, you may need to do a little work on the impact on your business that those targets set. Below are some suggestions for different ways to measure your results in your business – as a starter, we suggest you look at:
- Increased contacts added to your database
- Stock turnover on different product lines (and then promoting those lines)
- Number of calls made over a period of time
- Speaking engagements / networking attended
- Partnerships developed (who may be a different revenue stream, or provide you with new referrals
- Average order value or frequency
- Sales per client type
- Sales online or offline
- # of preferred supplier lists you are on
- Amount of repeat business vs new business
What is driving your sales results? What targets can you set to ensure the right activity is being done and give your business the best chance of increasing your sales?