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By Ryan Strandin August 5, 2015

Working Backwards to Hit Revenue Goals

Setting goals is vital to success, but working hard and crossing our fingers is not a strategy.  A quality organization needs a plan that is numbers based, and starts with the goal in mind. Below is an example of how to analyze a basic system so that a sales manager can make the most informed decision.

Company ABC Information

Goal: 10M Revenue

Average Order Size: $10,000

Number of Sales Reps: 20

Rep Average Number of Deals Closed Per Month: 3

revenue_goals

As we move backwards to hit our number, we have to do some very simple calculations. First we need to determine how many deals need to close in order to hit our 10M revenue number.

 

Goal / Avg. Order Size = Number of Deals Needed
$10,000,000 / $10,000 = 1,000

 

Now that we have determined that a sales organization needs 1,000 sales annually, let’s divide the workload between the sales Reps to see how many annual deals each one is responsible for.

 

Number of Deals Needed / Sales Reps = Number of Deals Per Rep
1,000 / 20 = 50

 

Now if every Rep is responsible for 50 deals a year, it is important to make sure that they stay on track on a monthly basis. To determine this, we take a sales Reps annual deals, and divide it by the months in a year. 

 

Number of Annual Deals / Months = Number of Monthly Deals
50 / 12 = 50 = 4.17

 

Now that we know the sales Rep monthly deal quota, it is much easier to make an informed decision. Since ABC Company averages 3 deals per Rep monthly, they are left with few logical options to hit their 10M revenue number. Either hire more people so that 3 deals per month is enough to meet their targets, improve the Rep’s performance to hit the new target, or a combination of the two.

If you find yourself in a situation where you don’t expect to hit your number, or want to grow the team, Sales Result can help. We offer a variety of services which will arm your team with the right sales tools, process, and best practices to turn your Sales Reps into selling machines. Reach out to us today for a 30-minute complimentary consultation, and let’s start the conversation that helps you grow revenue.

 

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