How To Set Your Sales Goals For 2021
This year certainly has had its challenges, personal or professional. But, whether your company surpassed its sales goals, or it struggled to stay afloat, you still need to figure out some way to set your sales goals for 2021.
2020 One for the History Books
A lot has happened during 2020, like changes in remote work trends due to COVID-19. According to Statista, “Before the pandemic, 17 percent of U.S employees worked from home 5 days or more per week, a share that increased to 44 percent during the coronavirus pandemic.”
Then came all the layoffs and furloughs, according to the U.S. Department of Labor, “more than 40 million people (that’s one out of every four workers) filed for unemployment benefits since the coronavirus pandemic started mid-March.” Which, in turn, rivals the darkest years of the Great Depression.
The U.S. is also battling wildfires. Which according to, Federation of American Scientists, “As of October 1st, 2020, over 44,000 wildfires have burned nearly 7.7 million acres this year.”
What do all these things have in common, you might ask? They impacted how your company performed to your sales goals. If you are like most companies, you had to readjust your sales plan. Maybe this was because you were surpassing plan based on demand, or your sales were nowhere near what you thought they would be, and you needed to scrap the plan completely. With so much affecting sales this year, we have come up with a few things you can consider when trying to set your 2021 goal up for success.
Review Your Long-term Plan
You may want to consider throwing out your 3 – 5 year plan. Why? Because that plan was created with different information. The chances are that that information did not include a pandemic or economic downturn. That plan could be irrelevant at this point.
Many companies have steady growth plans accounting for a 10-15% increase in sales year over year. But you cannot just compare this year to last year because of everything that has happened. You also cannot base next year’s budget based on this year.
If you predict too high of an increase in revenue, you will run into cash flow problems if that revenue does not come in and you have built expenses against that budget. If you guess too low, you could run into resource or capacity problems because you didn’t build enough in to support more revenue. Try and get as accurate as you can. Be as realistic on the information you already have, and do not use this outlier year as a benchmark for your next year’s goal.
Looking at Your Sales Trends
Start by looking at macro trends. A macro trend is a long-term directional shift that affects a large population, often globally. Such as government policy, economic cycles, climate change, and technology, to name a few.
Look at the macro trends from 2019 to 2020. How did this year stack up to last year globally? Did it fall? By how much? What is the difference between this year and last year? What does ‘normal’ look like? Are things starting to bounce back? What indicators will you be looking at to determine when something will bounce back?
Industry Trends and Leading Indicators
Then start analyzing your industry trends from last year to this year, keeping your leading indicators in mind. If you are in commercial industries, a leading indicator may be trucking shipping trends. If they have increased, there’s good chance companies are buying more. If you’re in the retail industry, a leading indicator might be the housing market and seeing if houses are being bought with discretionary funds. Increases in shipping and housing indicate things are moving and going back to normal.
Your Company’s Trend
What are your company’s leading indicators? Look at those leading indicators and compare your company to your competitors. Talk to other people within your industry and ask what they are seeing. Examine if there were one-time events like a “fire” sale or a considerable project. Things that you know cannot be repeated. Look at your clients. Where do they fall within these trends? Are they sticking around? Are they leaving? If they are going, ask why? Are you able to bring them back? Look at the accounts that make up 80% of your total revenue. You do not need to analyze all the accounts but look at the majority and determine what the data is showing.
Get an overall view of how fast or slow things are coming back. Then use that information as a data point for setting your sales goals.
Dig Deep into Your Competitors
Get into the trenches and find out all you can about your competitors. Competitive research is an essential tactic for finding out what your competitors are doing and what kind of threat they present to your company’s success. According to new data from Crayon, a research firm based in Boston, “41% of business professionals “strongly agree” that competitive intelligence is critical to their company’s success.”
Start analyzing your competition. To make your analysis useful, it is essential to:
- Pick the right competitors to analyze
- Know which aspects of your competitors’ business are worth analyzing
- Know where to look for the data
- Understand how you can use the insights to improve your own business
When you have finished, you will have plenty of quantitative and qualitative data to back up your business decisions and have a better idea of your sales goal for next year.
If you want to know more about differentiating yourself from your competition, check out our blog on “Differentiation – Do You Know What Yours Is?“
What is Your Sales Capacity?
With so many companies being affected by the pandemic, you will want to look at your sales capacity.
Sales capacity is a big part of sales planning. An estimate of the total production or revenue generated per salesperson will help you calculate your team’s capacity. This production level will vary based on the type of role they have on the team, the products or services they are selling, and their territory.
With these capacity goals, you can estimate the total volume your current team can handle. You may discover that you do not have enough people on the team to achieve your topline sales goals. Or there may be another type of position, such as sales support you could add that would offload non-selling responsibilities from your current team to accelerate their capacity to sell more.
The Big Three
Stop and think about the events or milestones in your sales process that you know typically lead to sales, such as discovery calls or meetings, new “qualified” opportunities, demonstrations (demos) of your product or service, etc.
Pick one (or two) that you feel are the best leading indicators. Now you will want to clarify these leading indicators. That way, it is not open to interpretation by the salesperson.
For example – a discovery meeting only counts if:
- The salesperson has uncovered a specific need they can address
- They have learned who the decision-makers are
- A timeline has been identified
- A specific next step in the process has been determined
Examine your leading indicators. How many of these per month (week or quarter depending on your business) did your salesperson generate? Don’t know? Look at your top salespeople. That trend will help you understand where your company was sitting in 2019 and where it sits now. Are opportunities growing, decreasing, or consistent? Based on this trend, what does that tell you about your business and where you need to focus?
If you need help finding your leading indicators check out our guide on “How to Run You Organization with Only 3 Numbers.”
Setting Up Quarterly Goals
Once your 2021 total revenue goal is established, say at $12 million, set up quarterly goals as well. For example, set a quarterly goal for $3.5 million and then analyze if you are achieving that quarterly goal. Identify where the variances to plan are? If you are executing, find out what is working, and if you are not executing, then find out why not. Was it too much of reach, or did something happen outside of your control?
Make sure you have room to adjust and make changes when needed. Then follow up with your team at the individual level and see how they are executing and if they need to make adjustments.
To set your sales goal for 2021, you will need to analyze trends from all levels. Look at trends from a macro level, to your industry, to what you saw within your own company. Then examine your competitors and analyze what they are doing and what you can learn from them. Review your leading indicators and see how they impacted your results this year. Once you have your yearly sales goal, set up your quarterly goals, and be prepared to make adjustments. Your 2021 sales goal will be a best guess no matter what, but if you have these data points to pull from, it will be a very informed and wise best guess.
If you need help or want to know more about setting up your plan for 2021 join us virtually on November 6th.