Sales target

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Sales target - it is a value that is set for sales representatives or sales departments and measured in terms of sales revenue or the number of units sold within a specified period of time. The created sales channel is primarily a representation of the implemented sales process in the company and potential customers who can join as new customers. It is also important for companies to monitor their sales targets on an ongoing basis. They provide relevant information on the marketing and advertising activities undertaken. This allows you to measure potential trends and model future cash inflows. The implementation of sales targets also allows for the visualization of revenue forecasts. This enables the company to determine the potential future profits and the current target group. Additionally, such an activity strengthens the sales activity.

Determining sales target

Setting sales targets is initially a difficult process. Well, first of all, it is important to identify:

  • The added value of the product you own and offer;
  • Positive features of the sales team;
  • Training of the sales team in the area of transaction execution and product knowledge;
  • Taking care of the quality of the product and current management of customer relations.

With this in mind, it is important that the entrepreneur at every stage of setting sales targets should be aware that the numbers alone are not able to perform the task. It is also important to identify the strengths of the offer. Preparation of a market analysis will allow for more effective management of the company's resources, and therefore the established sales targets will be characterized by a small standard deviation from the actual revenues.

Moreover, a correctly set sales target is evaluated by several departments. These include, but are not limited to, production, sales and management departments. Each of the persons employed in a given unit will be able to present a different perspective on the use of market advantage. Synthetic presentation of these comments will enable the preparation of a proper sales strategy, which will then enable the implementation of the target [1].

Achieving sales target

Achieving the sales target is possible mainly through the employment of qualified sales representatives. They are responsible for acquiring new customers and maintaining relations with people who have established permanent cooperation with the company. In addition, they prepare personalized sales offers and sometimes marketing materials.

Their basic salary is usually low, but nevertheless has to be compensated by relatively high margins on turnover, revenue or net sales. It is not difficult to observe that such persons are part-time part-time entrepreneurs, because on the one hand they need a security in the form of an employment contract (although this minimum) and on the other hand they want to depend their remuneration purely on the results achieved by them. Therefore, educating their minds that they are co-responsible for shaping the success of the company (and at the same time their own) is crucial to achieving sales targets [2].

The last of the important methods of managing sales targets is rational management of product deliveries. This means that storage surpluses do not exceed a certain percentage of goods coming down. This is due to the fact that, although one product may be essentially a hot, profitable product, the other may be a significant loss, offsetting the profits made by the former. Therefore, even if it is important to generate profit, in a situation of so-called warehouse bottlenecks, it is better to focus sales capacity on selling out these bottlenecks (in connection with and therefore compensating for potential losses) than trying to make up for these costs by intensifying sales of hot products. In the long term, this is disadvantageous for the company, since, having made up for the losses, it will saturate the market sufficiently, so that popular goods will no longer be caught in such a way [3].

Examples of Sales target

  • Number of Sales: A company may set a sales target for its sales team to reach a certain number of sales in a given period of time. For example, a company may set a goal of selling 100 units of a certain product in one month.
  • Revenue: A company may set a sales target for its sales team to generate a certain amount of revenue in a given period of time. For example, a company may set a goal of generating $50,000 in sales in one month.
  • Market Share: A company may set a sales target for its sales team to reach a certain market share in a given period of time. For example, a company may set a goal of reaching a 10% market share in a certain region within one year.
  • Customer Acquisition: A company may set a sales target for its sales team to acquire a certain number of customers in a given period of time. For example, a company may set a goal of acquiring 100 new customers in one month.

Advantages of Sales target

Sales targets provide numerous advantages to businesses. Some of these include:

  • Increased motivation for sales teams: Sales targets help motivate sales teams, as they give a clear indication of what needs to be achieved, and rewards are often given to those who reach their targets.
  • Improved sales performance: Setting sales targets helps to focus the team on the desired outcomes and can help to improve overall sales performance.
  • Improved customer service: Sales targets can also help to improve customer service, as teams are more likely to focus on providing excellent customer service if they know that it will help them to reach their targets.
  • Improved team morale: Setting sales targets can help to improve team morale, as teams are more likely to work together if they know that they are working towards a common goal.
  • Improved company reputation: Meeting sales targets can also help to improve a company’s reputation, as customers are more likely to trust a company that is successful in meeting its targets.

Limitations of Sales target

Sales targets can be an effective tool to help increase sales, but they also come with certain limitations. These include:

  • Difficulty in setting the right target: A sales target must be realistic and achievable, or it can be demoralizing to the sales team. It is important to set the right target, taking into account the current market conditions, competitors’ activities, and the company’s own resources.
  • Difficulty in measuring results: Sales targets should be clear and measurable, but it can be difficult to measure the success of a sales campaign. It is important to track the performance of the sales team, the level of customer satisfaction, and the return on investment.
  • Unpredictability: Sales targets can be affected by external factors, such as changes in the economy, competition, and customer behaviour. It can be difficult to predict how these factors will affect sales and whether the target will be achieved.
  • Lack of motivation: If sales targets are not achievable or realistic, they can be demotivating for the sales team. It is important to ensure that targets are achievable, with incentives for achieving or exceeding them.

Other approaches related to Sales target

To supplement the use of sales targets, there are other approaches that can help companies boost their sales performance:

  • Customer segmentation - This approach allows companies to identify different customer segments and evaluate their potential value. By understanding their needs and preferences, firms can target specific customers in order to improve their sales performance.
  • Sales funnel - This approach focuses on the customer journey from the initial contact to the end of the sales process. It provides insight into the customer's decision-making process and allows companies to identify any potential weak spots.
  • Gamification - this approach involves using game elements such as points, rewards and competitions to engage customers and drive sales.
  • Cross-selling and upselling - this strategy involves encouraging customers to buy additional products and services.

In summary, sales targets are a great way to measure progress and ensure success in sales, but other approaches such as customer segmentation, sales funnels, gamification and cross-selling and upselling can help to further boost sales performance.


Sales target — recommended articles
Success criteria examples — Consumer orientation — Goals of marketing — Criteria of market strategy evaluation — Sales objective — Market metrics — Selling process — Market mapping — Strategic driver

References

Footnotes

  1. ↑ Krawczyk J. B., Sissons Ch., Vincent D., (2012), p.4-7
  2. ↑ Steinhoff L., Palmatier R. W., (2016), p. 88-107
  3. ↑ Cruceru A. F., Moise D., (2016), p. 3-6

Author: Martyna Barłóg

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