The entire marketing plan will be designed on meeting the sales objectives, which is why this step is first and crucial to get right. Because sales are so important to a company the goals must be simultaneously demanding yet achievable. The Sales Goals must be set by giving a precise estimate of the opportunities that exist in the marketplace along with the ability of the company to meet those estimates.
By setting Sales Goals too high you will also be putting more pressure on the entire organization and increasing the cost of running the company. If Sales Goals are too low, the company will have a hard time keeping products in stock and meeting consumer demand. And Sales Goals that are not accurate will put a strain on your company that is avoidable.
While being demanding yet achievable, your sales objectives must have timeframes. This will give your sales & marketing team a start date and an end date.
Short-term sales goals are usually designed for up to twelve months and long-term goals are designed for up to three years.
Remember what is included in the short-term marketing plan will affect sales for the years after the first. Therefore, if your company is designing new products to be released they should be tested in the first year so by the third year they will be able to reach sales objectives.
The sales objectives that have been set must be able to be measured. How you plan on measuring the sales objectives should be included in the marketing plan. There are several ways that you can make the goals measurable. It can be done in terms of money, units, and transactions. Measuring with money indicates the expenses that you have incurred making the product; the profits made, and will also show any elasticity of the product if there were any price fluctuations. When you measure with units and transactions, it will show how well your product is being received by consumers. Sales goals must also include a projection of profits because sales have a direct influence on profits.
Influences on Sales Goals
Your research will come in handy when setting sales goals. A review of the marketplace over the past five years will show any upward, downward, variable, or static trends. Analyze how sales at your company are moving on a yearly basis in comparison to sales in the entire marketplace. This will give you an idea of how to project sales in the future. Sales should be projected at least equal and perhaps a little ahead of market growth in order for your company to maintain its share.
You will also need to review your data for any trends that you can see in your company’s share of the market. If you find that your company’s share of the market has been changing, whether it has been increasing or decreasing you will be able to adjust your sales projections accordingly. If you find that the market is in decline or your market share is in decline be aware that this is something that is extremely difficult to turn around.
Additionally, to be able to set proper sales objectives it is good to review your company’s history in terms of annual budgets and expected profits. This will at least give a minimum number to start with because sales of your product will need to cover operating expenses. If prices change during the year, at holiday’s for example, these need to be factored into your sales objectives.
One factor that is difficult for any business to predict when it comes to sales objectives is the economy. The best you can do is analyze the data that you have a set the sales objectives to an estimation of what you feel the economy is going to do. Along with trying to predict the economy, you must also keep a close watch on interest rates. Interest rates are important to companies because customers use credit many times to purchase goods. If interest rates go up consumers are going to tighten their purse strings and not buy goods.
Moreover, another factor that can influence sales objectives is your competition. If you are part of a growing market it might attract more competition so be sure to know who you are up against before finalizing your sales objectives. In addition, instead of more business competing against you it could be an old competitor that is looking to increase their market share and trying to push you out, so you will have to respond to their challenge.
The last factor that you want to address when setting your sales objective is the product itself. Every product on the market has a life of its own and it is up to you to determine where your product is in theirs. If your product has been on the market for several years you will want to take that into account because your market might be smaller because people already have the product. Conversely, you might be introducing a new or improved product that has a vast untapped market.