What exactly is a sales target? It is an objective set for a particular sales rep or sales department, usually reflecting units sold or revenue over a specific time period. A sales target keeps sales management and the sales team focused on goal achievement.
But did you know that there are several different types of sales targets that can be used to more precisely forecast your revenue in real time?
Today many sales organizations utilize powerful sales pipeline management technology to track their sales pipelines. A sales pipeline is a visual representation of all potential customers, neatly arranged according to their phase in your sales cycle. Each sales opportunity has its own value that is reflected in the target.
Most companies operate on one type of sales target–the final revenue figure based on the sum total of all opportunity values. But here are several more options that allow you to more accurately predict sales and revenue outcome.
5 Sales Target Types
These sales target types allow you to calculate your sales revenue based on opportunity value and these other factors:
- Sales stage probability of closure – the likelihood of winning the opportunity for that particular sales step.
- Opportunity ranking – a salesperson’s personal estimation of the likelihood of winning the opportunity.
- Opportunity pipeline position – the current position of the opportunity in the sales pipeline.
- Opportunity status – the status of the sales opportunity–that is, an open opportunity or won opportunity.
Here are the 5 target types that you can use to forecast your revenues:
#1: Unweighted Sales Target
This is the most liberal target. It is the sum of all opportunity values in the pipeline, but is an inaccurate view of the actual business coming in. The view does not take into consideration any potential deals that are lost during the process. This view would mean that you have a 100% closing rate for all of your opportunities.
#2: Weighted Sales Target
The weighted target is equal to the sum of the total opportunity values in each sales step multiplied by the probability of closure for that step. It’s the most objective target that takes into consideration the opportunities you lost during the process.
#3: Ranked Sales Target
The ranked target is the estimate of each individual sales rep as to their chances of winning a specific opportunity. It is the person view of the individual sales rep, based on their experiences with customers.
#4: Balanced Sales Target
This is the most conservative target type, and the one you should probably focus on for reliable data about target progress. It balances the Weighted Sales Target and the Ranked Sales Target.
#5: Real Target or Revenue
This is actually the revenue your sales team achieved over the time period specified for your target.
These are the 5 target types utilized in Pipeliner’s Dynamic Target feature.
Whether or not you you use Pipeliner (and for best results you certainly should) these target types and methods should greatly assist you in forecasting your sales goals.