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Types of sales targets
Specific and realistic sales targets will help your sales team perform confidently, consistently and with a clear understanding of your expectations. Choosing the right type of targets — and involving your team in choosing these targets — can help you achieve your sales goals and grow your profits.
Sales targets by product
Setting specific goals for each product is a simple and effective way to meet your monthly sales budget.
Product sales targets usually list the number of products you need to sell, as well as the targeted average sale price you need to get, to achieve a budgeted profit.
Sales targets set by product also include other important business information, such as stock and storage requirements.
Example sales targets table
Set out your sales goals by product or service, identifying the profit you need to make from each product sale and the volume of sales you anticipate.
|Product or service||Gross profit margin||Expected sales volume (per month)|
|This column itemises products by line or item, depending on the types of products or services you offer.||
This column identifies what percentage of every dollar the business needs to keep from each sale.|
The gross profit margin is the percentage by which sales revenue exceeds the costs of producing and selling.
|This column identifies the number of sales targeted per item.|
Sales targets by market segment
Businesses that target their markets clearly and accurately are more likely to achieve good sales figures.
The 80:20 rule is an important rule for sales planning. Also known as the 'Pareto principle', it means you will generally make 80% of your profits from 20% of your customers. Studying your market and identifying the profitable 20% will help you target and achieve successful sales.
Market segmentation — or segmenting your market — is a good place to start in setting effective sales targets. However, setting sales targets by market segment can be quite challenging.
Segmenting your market means grouping together customers with similar needs and characteristics, and customers who respond in similar ways to your products or services. For example, a hardware store might group its customers into 2 segments:
- home handymen and DIY customers
- building industry professionals.
Customer researchers often choose to group market segments by:
- geographics (region of the world, country, state or territory)
- demographics (age, gender, sexual orientation, family size, income, occupation, education, socio-economic status, religion, nationality)
- psychographics (personality, lifestyle, values, attitudes).
Using your marketing plan as a guide will help you to achieve your sales targets by pitching your products and services to these characteristics of your market segments.
Sales targets by region
Businesses with area or travelling sales representatives most commonly set sales targets by region — removing the difficulty and frustration of setting and monitoring individual targets for large numbers of products.
These businesses find it easier to set a dollar figure target per region, covering the whole product range and all the customers in that region.
Regional targets are 'big picture' targets. Because they cover large customer numbers and don't specify product sales, you need to keep them simple — one figure per area.