Whether you are a Managing Director, a Showroom Manager, or a Kitchen Designer, you want to know what your target is.
For many people, commissions are linked to so we all want to know what they are.
But how do you set your targets ?
Over the years, I have seen many different ways of choosing the magic number.
In my mind, there are two main ways of deciding what your goals are for the year.
Vs The Plan
The Plan is the number you decide at the beginning of the year that you want to achieve.
It could be an aspirational number like £1m, or it could be double your break even number.
Usually, the annual number is part of a bigger three or five year plan and could form part of a larger project.
Sometimes, you have committed these numbers to your business plan, which has been given to stakeholders and the banks in order to finance the showroom so they need to be as accurate as possible.
Vs Last Year
Do you want growth from last year, and if so, by how much ?
If you want ten percent growth on last year, it’s very easy to work out.
And finishing your year with double digit growth on your previous period is very good news ! (A normal, non Covid year that is !)
What Should Your Targets Be ?
Obviously, the sales number is the primary focus, but what other KPI’s should you be looking at?
I always used to look at my targets as a reverse V.
Firstly, what is my sales target for the month, so for example, £100k.
I then look at what my average order value is, let’s say £12,500.
That means I need to sell 8 kitchens in the month to hit my target.
But what is my conversion rate ? Let’s say it’s 80%.
That means that in order to sell 8 kitchens in the month, I need 10 quotes.
Now, how many leads do I get that convert into quotes ?
Let’s say that for this example, my lead to quote conversion rate is 50%. That means that I need 20 leads in order to give me 10 quotes and 8 sales.
So what is my enquiry to lead conversion ?
Again, let’s base it on 50%. This allows for the online enquiries that are people looking for a cutlery tray, and the showroom walk-ins who have come in to get out of the rain.
That means I now need 40 enquiries in order for me to hit £100k of sales in a month,
But then what is your average time from enquiry to sales. Maybe six to eight weeks ?
So in order for me to sell £100k in March, I need 40 enquiries in January.
These numbers can be totally interchanged to be specific to your business, but the principles are the same.
How to Set The Targets
The most important thing about targets is that the whole business should know what they are and what you are trying to achieve.
When I was visiting a branch, during a walk around the warehouse, I would always ask the warehouse staff what the branch's sales target was for the month.
In the successful branches, they knew exactly, in less successful branches, they sometimes didn’t even know there was a target.
They should be discussed regularly and constantly updated on a visible operations board where people can see what progress is being made.
Once you have your annual number, you then need to break into down into monthly chunks.
Where are your big months going to be ? January, April ? Traditionally, these tend to be better performing periods due to New Year and Easter sales.
When are your slower months going to be ? August while people are away on holiday ? December while people are paying for Christmas and not wanting to start a project before the break ?
And what types of information should you be targeting ?
Sales, quotes, leads and enquiries have all been discussed above.
But what else should you be lookin at ?
The value of your lead bank is a very important indicator to how you are shaping up for your number.
If you want to sell ten percent more than you did for the same month last year, but your lead bank is twenty percent less than it was at the same stage, then you know you are going to be facing an uphill battle. So make sure you are monitoring your outstanding business.
Also, the number of surveys is very important to measure.
If, at the end of February, you had carried out 20 surveys in the year so far, but had done 30 in the previous year, again, you’d know you had some work to do.
To reiterate a very old saying, the targets need to be SMART.
An unrealistic target can have a damaging effect on salespeople and morale in general.