Setting Sales Targets

Targets

Happened to see a thought provoking update by Anup Soans in Linkedin MedicinMan group.

Targets

Targets are never an arbitrary figure. There are many ways to arrive at them and each situation is unique when you arrive at a target. I share here some easier and established ones that we have practiced in the past.

In general, there are two types of target setting possible: Top-down approach and Bottom-up approach. It is better not to mix up both. Companies can follow one of the approaches throughout to make it transparent and get the conviction of the team to achieve it.

Top-down approach:

For each product, a company can decide on the growth percentage it wants to achieve and can set the targets accordingly. The company shall do so basis their reports on market research on overall market growth, competition, trends etc for each product. The company shall also analyze their resources and advantages and set the target for the product for the company. Once such a target is set, it is split basis contribution levels down the line and passed on as targets to achieve. Since the contribution levels will already reflect market conditions of each market (like growth, competition and others), accordingly each is given a target basis their current/past contribution (of respective markets). Each target shall be the same percentage growth on their respective current/past volumes. The numbers are arrived by applying this growth percentage on current volumes or past volumes. Of course, managers shall re-distribute the same according to other parameters within their zones, markets or teams. A similar approach is followed for allocating resources to achieve the targets.

Bottom-up approach:

Every team is asked to set their own targets basis their current volume, market potential and other parameters as they see fit and such targets are collated to arrive at the company’s targets.  Here everyone justifies their numbers basis the respective market conditions and such a basis is followed till the top and the company arrives at its target and plans its growth. Accordingly resources are planned and given.

Two important things in target setting

If you are a market leader you will be thinking of increasing your market share % and need to think on how to get this percentage growth from either market growth or from existing competition of other brands or from similar range of products. Here one needs to be innovative and has to lead with creativity and originality to be ahead of the market increasing the lead and picking up more market share in %.

If you are not a market leader, then you already have a bowl established by others. You just have to think how much you can take from the existing bowl basis your own capabilities.  One can be innovative and do what the market leader would do, but that is not a must as there exists ways to grow by just taking the share of others.  For such brands, past is not an indication of future trends. They can go after as much as they can, to convert, depending on the resources they have available with them.

Targets are never arbitrary. Targets are not just some numbers. They tell you everything about your business and how you run it.

If we put up targets and don’t achieve them, one of our managers used to say, “Sugar will not be sweet, if written on paper and licked”. Targets are sweet when we achieve them and celebrate the achievements.

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Comments

  1. Setting our 1q 2014 targets and this is on feed 🙂 “: Setting Sales Targets – http://t.co/Q8QPZAopIr

  2. but it was good da

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