How to use data to set goals for sales reps

Managing a sales rep or a team of sales reps can be very different than managing almost any other employee. After all, a sales rep’s position by nature is fluid and ever-changing. But that’s no excuse—it’s still important to provide a certain level of structured goals for sales reps that will enable them to achieve personal goals and in turn contribute to larger company targets.

How do you determine those goals? How much should your sales reps be accomplishing in terms of leads, project quotes, and other indicators? The good news is that both the building products industry and your team members already generate data points that you can use to answer these questions.

Goals for sales reps formulas

First and foremost, consider the timing of the goals. Avoid daily activity goals; a sales rep’s routine can vary greatly day to day. Set an annual goal, but then break it down into manageable monthly and weekly goals that can help you and the rep stay on track while monitoring performance.

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Here’s an example of how to weigh and set those goals.

Let’s assume your sales rep, Jason, sells vinyl windows and doors. Last year, Jason sold $1.5 million in windows and doors. And you have determined that you want to see a 15% increase in sales from Jason this year.

$1,500,000 x 15% = $1,725,000

Therefore, you expect Jason to generate $225,000 in new window and door sales this year.

But simply saying, “You need to sell $225,000 more this year” is overwhelming and unproductive. That figure needs to be broken down into something more tangible—i.e., quotes and orders.

So again, let’s reverse-engineer: How many quotes and orders did Jason produce to achieve the $1.5 million in sales last year? For this example, let’s say he generated 400 quotes and closed 100 of them (25%).

$1,500,000/100 = $15,000 per window and door package on average

We know Jason closes 25% of his job quotes, and each sale is an average of $15,000. With this information, we can now determine how many quotes he needs to produce in the coming year:

$1,725,000/$15,000 = 115 sales needed to close

Now, assuming that Jason is going to continue closing at a 25% rate, we can use this number to determine how many quotes he needs to produce (with an average of $15,000) in order to achieve this goal.

115/0.25 = 460 quotes needed this year

So, Jason needs to generate 60 more quotes than he did last year. If we divide the total quotes by 49 weeks (allowing for three weeks of vacation) in a year, we reach 9.38 (let’s round to 10).

So, we now know that to achieve your goal of a 15% increase in sales of windows and doors this year, Jason needs to quote on average 10 window and door packages per week.

This is just one example of how you can use established data to provide activity targets for your sales reps that con- tribute to larger annual goals and performance indicators. And these types of calculations could be used to drill down even further to determine any of a wide variety of activities needed, such as the number of phone calls or meetings necessary to produce the target number of quotes and sub- sequent sales.

An important caveat: To produce  the  data  needed  to do these types of calculations, you need to have an accurate tracking system. Remember also that it  is  important to always be transparent with your sales teams about the goals you have set for  them and what you  feel  they need to do to achieve those goals. Goal-setting in this form isn’t just a benefit to the company, but can make your reps’ jobs easier, more manageable, and, ultimately, more personally profitable.

Rikka Brandon is the founder and Chief Executive Recruiter of Building Gurus, a boutique executive search and consulting firm that works exclusively with building product manufacturers and distributors to find, hire, and retain top building products talent.

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