3.5 How to hit a Sales target
When it comes to hitting a revenue target there are four levers at Sales’ disposal:
Increase the volume of deals you win
Increase the value of deals you win
Increase the win-rate of your deals
Decrease the time it takes to win deals
These four levers can be worked individually or collectively by both Sales and Marketing and systematic joint planning of interactions, initiatives and incentives can support moving the needle. Levers 1 and 3 have subtly important differences that need real partnership to optimise. Lever number 1 says that you should win a greater number of deals, while lever 3 says you should increase the win rate. Say, for example, you target 40 wins per month. If you win one in three then you would need to create 120 opportunities to close those 40 wins. If your objective is to increase the win volume by 50% to 60 per quarter then you need 50% more opportunities to work – 180 in total. If instead you focus on increasing your win rate, then you don’t need any more opportunities but you need to improve from a one in three success rate to, say, one in two. Your 120 opportunities would produce the same 60 deals. If you’re able to grow both your opportunity volume by 50% and improve your win rate by a third then from those 180 opportunities you would close 90 instead of 40.
What’s important is to be clear on your goal. Can sales manage an additional 50% volume of opportunities or will they go unworked as no one can pursue them? Can marketing deliver an additional 50% of opportunities without quality declining and the win rate going down as a result? If win rate is improved does it concurrently slow down deal velocity meaning fewer deals can be completed within the same time period?
Few leaders would agree that more rubbish is better than less quality so simply creating more opportunities is not necessarily the answer, but unfortunately it's an answer that can be measured and that marketing has a reasonable level of control over. When attainment is looking tight there can be a temptation to acquiesce to running activities because it shows partnership, where real partnership between Sales and Marketing comes from taking mutual accountability of how together deals will be closed.