Setting the right retail sales goals
Want to meet (or beat) your sales goals? Start by setting the right targets. There aren’t any hard and fast rules for doing this, as every company is different. Generally, though, you’ll want to consider the following factors when setting goals:
- Historical sales data
- Sales initiatives and events throughout the year
- The capacity of your sales team
- Employee input
1. Come up with sales targets that are challenging but achievable
Goal-setting can be tricky. On one hand, you need to set sales targets that are achievable but challenging at the same time. In other words, you don’t want to come up with goals that are too easy or too difficult to hit.
So, how do you find the right balance? Kevin Graff over at Graff Retail offers excellent advice. According to him, you need to apply the 70% rule to your sales goals.
“Goals should be achieved at least 70% of the time. If not, they’re too high and risk de-motivating your staff,” he wrote. “By the same token, if goals are achieved 90% or more of the time they’re too low and aren’t pushing your staff.”
2. Properly manage sales quota frequency and timeframes
When coming up with your sales targets, you’ll likely start with your annual revenue goal then break that down quarterly and then monthly. But when dealing with your sales team, you may want to set goals for shorter timeframes — think weekly or even daily.
Frequent sales quotas can give your associates continuous motivation. As the Harvard Business Review put it, “Under a monthly plan, salespeople who started off the month poorly might become less motivated after realizing they weren’t going to make their quota for that month — in essence giving up in the current month. Daily quotas would theoretically help prevent such behavior.”
To put that theory to the test, they conducted a study at a large Swedish retailer and compared sales results between stores that were given monthly versus daily quotas.
HBR found that having daily quotas increased sales productivity by nearly 5% and that the improvement was more pronounced for low-performing salespeople, with the bottom quartile experience an 18% boost in sales productivity.
What’s the reason behind this?
According to the publication, daily quotas seemed to help prevent those individuals from giving up for the rest of the month after having a slow start, which is typically the case for low performers.
That said, the study did find that while daily quotas increased sales volume, frequent quotas seemed to motivate salespeople to “to sell more quantities of low-ticket items, probably a result of shifting their mindset toward the smaller daily goals.”
This led to lower profitability because sales associates kept pushing the low-margin items.
If you experience this in your store, then try to find ways to incentivize employees to sell higher-ticket items. In other words, stick to frequent sales quotas, but look for creative ways to put your high-margin products front and center.
3. Clarifying your team’s targets makes it easier to achieve retail sales goals
A big goal-setting mistake people make is having vague targets. For example, simply saying that you want “increase sales” won’t cut it. In order to maximize your results, strive to set goals that are SMART — i.e., specific measurable, attainable, relevant, and time-based.
Sales goals examples include:
- Get 10 new customers to join your loyalty program every day.
- See a 20% increase in sales by the end of the month.
- Improve basket size by 15% by end of the quarter.
How to communicate your sales targets or goals
You’ve set your targets. Perhaps you’ve even mentioned them to your staff. That’s a good start, but if you want to drive those goals forward, you need to communicate them clearly and constantly.
Here are some ways of doing just that:
4. Talk up your goals throughout the day
Talk up those sales targets. This isn’t just about mentioning it at the start of the day and then asking about sales when you’re about to close. You need to talk about sales goals and performance throughout the day to keep those targets top of mind.
Spend a few minutes at the start of each shift talking about the team’s goals and how they’re doing. This will keep them accountable and motivated to achieve their targets.
5. Make those sales targets visible
Display your sales goals and achievements in the back room. Put up a board dedicated to sales and make sure it’s updated.
Another idea? Make your sales goals visible on your POS system. Look into your point of sale solution and see if it lets you set sales targets. If it does, find out how to make those numbers visible to relevant employees.
In Vend, for example, the Home screen shows the targets for the user currently signed in. This can be a very useful tool for identifying top performing cashiers or sales reps, and for tracking goals for each team member.