Sales Revenue Targets

Targeted revenue provides stretch goals for sales teams. But it's also vital for strategic planning. Here's how targeted revenue works and why it matters for FP&A. 1) Start with known and knowable sales This is the core of a sales forecast. Every company should maintain sales activity in a CRM. This may be broken down by customer, channel, product category, SKU, or a combination of all. Customers are known, the stage of the sales process is clear, and the amount of the deals are quantified. If a company is planning using driver-based forecasting, the sales outlook may omit this level of detail since the figures won't tie directly to customer accounts. 2) Layer in a stretch target. Many companies don't know which specific customers will generate revenue a year from now. Even if they do, there’s uncertainty in the amounts. But this shouldn’t stop setting the targets. Revenue targets can be based on forecasts within a sector or revenue channel where sales managers believe there's untapped opportunity, rather than with a specific customer. This brings about a focus on sales strategy, marketing, and other sales initiatives to make inroads in those channels. 3) Quantify the opportunities A vital, but challenging task, is for the sales team to put numbers to those opportunities: • Which channels are most promising? • What the potential deal size? This provides FP&A with a foundation for all-in revenue planning. 4) Cascade the impact Once a revenue target is set, it doesn't stop at the sales forecast. It drives the operating assumptions further down the P&L, for capex, and for financing: • Direct costs • Gross margins • Headcount planning • Compensation • Marketing • Facilities • Debt 5) Build in timing assumptions It's rare for revenue to be forecast in neat, even increments. FP&A needs to decide: • Smooth it evenly throughout the year • Front-load, if sales are aggressive • Back-load, if sales are conservative • Weight it, if seasonality is in play The choice of FP&A or a Controller is not just for revenue recognition. It impacts hiring plans, marketing, cash flow, and especially working capital needs. 6) Apply conservatism discounts Targeted revenue is aspirational and hardly guaranteed. Because of this, the financial model benefits from conservatism or scoring adjustments upon which scenarios can be run. A sale may be all-or-nothing, where it's either won or it's not. Weighted confidence levels can allow for scenario triggers so forecasts adjust dynamically. This helps FP&A and sales create what I call "tiers of planning" -- high, mid, and low confidence. Tiered planning sets optimistic and conservative sales thresholds. 7) Apply the plan With sales targets at various thresholds, FP&A can better plan for the rest of the FP&A and set performance milestones.

You’re committed to bumping up your agency’s revenue by 30% this year. How will you get there? First, what’s the number? If you did $5 million in 2023, then it’s $6.5 million in 2024. If it’s $10 million in 2023, then it’s $13 million in 2024. Second, what’s your starting point? How many clients are continuing, increasing, or churning from the previous year? Retaining 100% means you’re already starting with last year’s revenue (e.g. $5 million in 2023, $5 million to start in 2024). Agencies with multi-year contracts or a strong recurring revenue model have this. Many agencies come in below 100%, sometimes well below. If you’re mainly project-based, this could be closer to 0%, which means you may have done $5 million in 2023 and then have to start at $0 in 2024. Once you’ve got the difference between your 2024 goal (30% increase) and where you’re starting, you’ve got your target for sales. If you did $5 million in 2023 with an expected retention of 75% from existing clients ($3.75 million), then you’re targeting $2.75 million in new business ($6.5 million 30%-increase goal minus $3.75 million). How will you get to $2.75 million? Start with average deal size. If it’s $100,000, that means 27.5 deals. Maybe you get a bit more granular and decide it’s more like 5 larger engagements at $300k each and 17 engagements at $75k each. So you need to win 5 $300k deals and 17 $75k deals. Assuming a $300k deal is different than a $75k deal, how many qualified leads would you need for each? Look at your historical data, figure out your win rate for these types of deals. If it’s 33% for $300k deals, then you need 15 qualified leads. If it’s 40% for $75k deals, then it’s 43 qualified leads. So 15 qualified leads for $300k deals, 43 qualified leads for $75k deals. How many total leads does it typically take to get to these qualified leads? You might have to dig a bit deeper into your data if you don’t already track this. For simplicity’s sake, let’s say 1 in 2 leads becomes a qualified lead, a 50% hit rate. So we’re now talking 30 leads for $300k deals, 86 leads for $75k deals. A total of 116 leads. Where are your leads coming from? How many leads are you already getting per week? If your lead volume isn’t quite there, how will you get more? Who is going to help you? Do you have a sales and marketing team that’s aligned with these numbers? And don’t forget, deals take time to close. How long does it take for a $300k deal to close? A $75k one? Chances are, they can take a while. Do you have enough convos going on in your pipeline right now to be on pace? If not, what activities need to ramp up? Marketing? Cold outreach emails? Asking for referrals? I used to wing it by assigning a random revenue growth number at the start of every year. Sometimes we hit it and sometimes we didn’t. (cont... 👇)

I reach out to 16 new prospects every business day. Why 16? Because I track my numbers and I have a "revenue per hour" target. Here's how it breaks down: If I reach out to 80 ideal prospects a week (16/day), I'll convert 5% of those touches into a qualified opp with a VP+ contact. That's 4 new opps per week. This work takes me about 5-6 hours a week. On average, I'll close 1.6 of those 4 opps (40% close rate) and an average deal size of $39,000. That's $62,400 in expected revenue from about 6 hours of work (not counting the time spent on the deal cycles). That's $10,400 in revenue per hour for that work stream. Not everything I do has that much leverage, but I'm aiming for a blended average of $3,000 in revenue per hour at the time of this writing. If I'm successful in holding that rate 10 hours a day, 5 days a week, that's about $8 million a year in revenue (which happens to be one of my targets). Point of this post? First, if you know your desired revenue, then you can reverse engineer by knowing your numbers. The right inputs lead to the right outputs. Second, define your 'hurdle rate.' Based on where you are and where you want to be, what is your desired revenue per hour? Aim to spend as much of your time as you can at or above that hurdle rate. Aim to "delegate and elevate" things that are worth less than you desired revenue per hour. Raise your standards on revenue per hour, and that's how you can grow your income over time. Take one step up. Learn new skills. And repeat.

Bad goal setting can cripple your business (I know from firsthand experience). Here's how to set goals that propel your business forward. Step 1: Analyze last year’s performance. You can’t set the right goals without the correct information. So, take some time to gather data from the previous year to find areas of strength and weakness. Look at your: Revenue streams — what are your most profitable areas? Your biggest cost centers? Sales & marketing — can you spot trends in customer acquisition or marketing ROI? Operations — where is your business bottlenecked? Where might you be overstaffed? Employee performance — look at productivity and churn. Which direction are things going? — Step 2: Brainstorm areas for improvement. Write down all the possible things you could work on. This is a great group activity for your leadership team or even the whole company (depending on your size). The data you’ve collected in step 1 should give you some idea of opportunity areas. One tip: don’t discount an idea just because it’s hard. Often the biggest impact things are hard to do. But you should be realistic about the effort required to get something done, and its chances of success. — Step 3: Set SMART goals Specific: Define clear and precise goals. Instead of saying "increase sales," say "increase sales by 12% in the next 6 months." Measurable: Ensure each goal has quantifiable metrics. E.g. "Reduce customer acquisition costs by 15% by the end of the year." Achievable: Set realistic goals based on your resources, budget and other constraints. E.g. if you have limited cash, avoid goals that would severely impact your monthly cash flow. Relevant: Align goals with your overall business objectives. Ensure they address the key areas for improvement identified earlier. Time-bound: Set deadlines for each goal. E.g. "launch a new service by Q3." — Step 4: Develop an Action Plan For each goal, create an action plan that outlines: Steps and Milestones: Break down each goal into smaller, manageable tasks. Set milestones to track progress. Resources: Identify the resources needed (time, money, personnel) and ensure they are available. Responsibilities: Assign tasks to specific employees. Ensure everyone understands their role and what is expected of them. Timeline: Establish a timeline with deadlines for each task and milestone. Doubling down on one point there: always assign tasks to a single person. They can still bring in other people to contribute, but it’s one person’s responsibility to get it across the finish line. — Step 5: Monitor and Adjust Goals are not static. Regularly check your progress, and adjust based on new insights or changing circumstances. Schedule monthly and/or quarterly reviews to keep everything on track. Having a simple KPI tracker is a good way to keep tabs on things. Make sure you’re regularly checking in, and ask people to flag any roadblocks or necessary adjustments as soon as they identify them.

Another lesson from the history of sales that blows my mind? Yesterday afternoon, while you were probably doing something awesome, I was reading about how quotas were configured 100 years ago. (Literally. 🤓 I was reading Dartnell’s “Quota Plans of Notably Successful Concerns” from 1923.) The way I did it a few years ago? I know you may think I sniff a lot of old book glue, but here’s how I remember it: “Hey, (finance team). What do we need quotas to be set to next year?” Then I’d wait. We’d have a meeting. They’d show me a spreadsheet. Very simply put, it showed historical SPP (salesperson productivity by tenure), our revenue target for the next year, anticipated number of reps (with some turnover projections), and… …”Voilà! Quotas are 25% higher!” We’d “sell” it to the teams. Then, everyone would go cry themselves to sleep, and off we’d go. I’m embarrassed to think about it. There’s zero evidence that approach existed 100 years ago. “It is far better that the quota be RIGHT than it be SIMPLE.” - 1926’s American Management Association speech. 👉 They way they did it? They realized the incredible importance of accurate quota setting and invested accordingly. 🤯 “Quotas are set on territories and not on (individual salespeople).” - 1923, Dartnell Report 🤯 Read that again! Territory. Specific. Quotas. Their paper spreadsheets (not in Excel, Google Sheets, or even using a calculator), focused on sales to date in each territory and a DEEP analysis of the true TAM (total addressable market) for each territory. DEEP - meaning, they hired sales quota specialists to figure this out. They pulled every available data source. Once calculated, they sat down with the rep, shared all the data, and mutually aligned on the year's quota. They knew it was THAT important to get it right. Morale. Performance. Investment. Turnover. Leadership’s own job security. They did it with SO MUCH LESS data and technology. What history got right, and the proof we get it wrong lies before us here in 2023. Why can't we?

It’s mid-February 2026, busy setting targets and quotas and trying to keep the excitement of “this is our year” alive with the sales team! Quotas feel tougher than ever. Sales cycles are becoming longer. Buyers and Customers are squeezing every rand and demanding clear ROI before even scheduling a demo or getting a proposal. Account Managers are juggling new AI tools, drowning in admin, and burning out fast. This sound familiar to all of you? I’ve been leading IT sales teams for more than 20 years through uncertain times, setting targets that looked aggressive on paper but realistic . The truth is, the old playbook of “just add 15-20% YoY and go” isn’t cutting it anymore. What actually moves the needle right now: 1. Data over gut feel — Review 2025 honestly before locking in 2026 numbers. What % of pipeline actually converted? Where did we lose deals ?Use that to build capacity-based quotas, not just top-down wishes from management. 2. Territory & account realism — Uneven territories kill morale and forecasts. We’re seeing better results when we balance by true potential. We also factor in ramp time for new hires, and are align tightly with marketing on plays and messages to market. 3. AI as a co-pilot, not magic — Tools are helping with forecasting signals and deal health and white space opportunities. 4. Protect your sales team . Burnout is the silent quota killer. Account Managers spending time on non-selling tasks can’t hit numbers hard. Simplifying processes, better coaching and transparent compensation plans make a massive difference. We’re not going back to easy buying cycles anytime soon. I believe the organizations that treat target-setting as a cross-functional, data driven strategy will pull ahead this year. What’s one thing you’re changing in your 2026 target setting process , if any? #SalesLeadership #ITSales #Salestargets #Quotas #iworkforaltron

THE BOARD SABOTAGED SALES. A CEO just declared: “We’re gonna hit $20M in revenue this year… because the board decided so.” No bottom-up reality check. No clear conversion math. No forecasting framework. Meanwhile, 69% of sales reps miss their quota in B2B Tech. The harsh truth? If your revenue goal isn’t tied to pipeline, win rates, and deal velocity, it’s not a goal. It’s a shot in the dark. We live in a data-fueled GTM era, and you just can’t cheat anymore. HERE’S 3 WAYS TO TEST TOP-DOWN TARGETS AGAINST BOTTOM-UP REALITY. 1. Full-Year Predictive Sales Forecast A real forecast isn’t just about projecting short-term revenue from your existing pipeline and hoping the rest falls into place. It’s about understanding how your sales engine actually works - tracking pipeline generation, win rates, and sales cycle length - to calculate a realistic full-year projection. And it’s not about averages. Start with each country, product line, and team individually, then sum them up to get a forecast that truly reflects how revenue is generated across the business. 2. Reverse-Engineered Growth Plan Start with your revenue goal, then apply your target growth percentages to last year’s conversion funnel broken down by country, product line, and team. How many new opportunities, proposals, and closed deals does that require? What level of activity needs to happen to support it? The numbers need to match both market reality and operational capacity. 3. Sales Velocity Lever Check Revenue growth comes down to four levers: deal size, win rate, sales cycle length, and pipeline volume. The key is knowing which of these actually drive growth and how they interact. Look at your 12-month trend for each by country, product line, and team. Where are improvements happening? Where are things stalling? Which shifts will have the biggest impact on hitting your goal? If your growth plan relies on improving performance this year, the trends should already be moving in the right direction. TAKEAWAY Win rates have dropped by 20 percentage points over the past years, sales cycles keep getting longer, and deal sizes are shrinking. Hoping for a sudden turnaround without real evidence won’t cut it. You can’t expect your board to be sales target experts, but you can give them the data to keep goals grounded in reality. No more BS targets just to please the board. No more CRO shoulder shrugs when it’s time to hit them. How do you balance ambition with reality in goal setting?

The sales teams that consistently hit $500k+/mo. aren’t reactive to their KPIs. They engineer them. Here’s how: By the time you find out a rep is behind on quota, it's week 3. Pretty tough to turn the month around at that point. Most founders check their sales numbers at the end of the month, then spend the first week of the next one trying to figure out what went wrong. The most successful teams proactively control their month by doing this 1 thing: →→→ They check four numbers every morning. 𝟭. # 𝗼𝗳 𝗗𝗶𝗮𝗹𝘀 ( ✅ On pace or ❌ Off pace) Is each rep on pace for their weekly/monthly dial target? Formula: Divide the monthly target by the number of working days, multiply by days elapsed. If a rep is 20% behind on dials by Monday of week 2, it’s not likely they’ll hit their number this month. 𝟮. 𝗖𝗼𝗻𝗻𝗲𝗰𝘁 𝗮𝗻𝗱 𝗰𝗼𝗻𝘃𝗲𝗿𝘀𝗮𝘁𝗶𝗼𝗻 𝗿𝗮𝘁𝗲 Track connects and meaningful conversations (2+ minutes) separately. A rep making 300 dials with a 5% conversation rate indicates a different problem than a rep making 200 dials with a 15% rate. 𝟯. 𝗣𝗶𝗽𝗲𝗹𝗶𝗻𝗲 𝗟𝗲𝗮𝗱 𝗚𝗿𝗼𝘄𝘁𝗵 How many new opportunities entered the pipeline this week? This is the leading indicator for what closes 3–4 weeks from now. A week with zero new leads means you’ll take a painful revenue hit in 30 days. 𝟰. 𝗦𝘁𝗮𝗴𝗲 𝗺𝗼𝘃𝗲𝗺𝗲𝗻𝘁 Are deals advancing through the pipeline or sitting untouched? Any deal that hasn't moved stages in 10+ days needs a next step logged or needs to be closed out. Stale deals distort your forecast and waste rep time. 𝟯 𝗦𝘁𝗲𝗽𝘀 𝘁𝗼 𝗥𝘂𝗻 𝗮 𝟭𝟱 𝗺𝗶𝗻. 𝗠𝗼𝗻𝗱𝗮𝘆 𝗔𝘁𝘁𝗮𝗶𝗻𝗺𝗲𝗻𝘁 𝗥𝗲𝘃𝗶𝗲𝘄 : 1️⃣ Pull these four numbers for each rep. 2️⃣ Compare actuals to pace targets. 3️⃣ Ask one question on any rep who's behind: is this a volume problem (not enough activity) or a conversion problem (sales skill/approach problem)? Volume problem → fix the activity standard (either marketing w/lead flow OR with sales rep pipeline management standards/compliance). Conversion problem → pull the calls and coach to the breakdown. That's it. 15 minutes. Every Monday. ⚠️ 𝗧𝗵𝗲 𝗲𝗮𝗿𝗹𝘆 𝘄𝗮𝗿𝗻𝗶𝗻𝗴 𝘀𝗶𝗴𝗻𝗮𝗹𝘀 𝘁𝗼 𝘄𝗮𝘁𝗰𝗵 𝗳𝗼𝗿:  • Dial attainment below 80% by end of week 1  • Conversation rate dropping more than 5 points week over week  • Zero pipeline adds in any 5-day window  • More than 3 deals with no stage movement in 10+ days Any one of these in week 1 is a fixable problem. All four of these in week 3 means a painful month. ❓ Are you reviewing rep attainment weekly...or finding out at month-end? ♻️ Repost this if you know a founder who only checks the scoreboard when it's too late. ➕ Follow Josh Alltop for daily posts on sales team management and rev ops. 📌 Looking to outsource your sales ops and rep management? DM me or comment "OPS" and I'll reach out personally.

Sales Targets/Quotas should NOT be based on company need. Just because we "need" to "triple, triple, double, double" doesn't mean we can actually do it or expect sales reps to do it. This ignores reality. We need targets built on real historical numbers. Things like: - Close Rate - Sales Cycle - Average Sales Price - Inbound Pipeline Generation - Outbound Pipeline Generation - Average new Sales Rep Ramp Time - Our overall average Rep Attrition Rate Think about the path for reps to hit quota. 𝟭. 𝗜𝗻𝗯𝗼𝘂𝗻𝗱 𝗣𝗶𝗽𝗲𝗹𝗶𝗻𝗲 𝗚𝗲𝗻𝗲𝗿𝗮𝘁𝗶𝗼𝗻 Tripling the sales team doesn't automatically triple inbound pipeline generation. Unless we're doing something else, each rep will now have 1/3rd the lead volume from inbound to hit their target. 𝟮. 𝗢𝘂𝘁𝗯𝗼𝘂𝗻𝗱 𝗣𝗶𝗽𝗲𝗹𝗶𝗻𝗲 𝗚𝗲𝗻𝗲𝗿𝗮𝘁𝗶𝗼𝗻 I'm a BIG believer that reps should generate their own pipeline, but how much pipeline have reps been able to generate in the past? With 1/3rd the inbound, we can't just assume they will magically make up the difference by prospecting. Also, do we have enough good accounts in our TAM/SAM/SOM for them to prospect? 𝟯. 𝗥𝗮𝗺𝗽 𝗧𝗶𝗺𝗲 Obviously new reps are very unlikely to generate the same amount of outbound pipeline as our average ramped rep, so we need to take that into account in setting targets and quotas. 𝟰. 𝗥𝗲𝗽 𝗔𝘁𝘁𝗿𝗶𝘁𝗶𝗼𝗻 𝗥𝗮𝘁𝗲 Additionally, a certain percentage of reps will leave and pipeline generation will be impacted as a result. 𝟱. 𝗦𝗮𝗹𝗲𝘀 𝗩𝗲𝗹𝗼𝗰𝗶𝘁𝘆 We should now be able to more accurately predict the amount of pipeline we can generate each month/quarter based on our historic performance, the team we have today and those we expect to join us and also leave us. From here, what Close Rate can we expect for existing reps, new reps, inbound, outbound etc? What average sales price can we expect? What sales cycle can we expect? We need to factor all of this in to arrive at realistic targets and quotas. 𝗪𝗵𝘆 𝗱𝗼𝗲𝘀 𝘁𝗵𝗶𝘀 𝗺𝗮𝘁𝘁𝗲𝗿? We'll not only miss our these unrealistic targets but we'll perform even worse than we would otherwise. Our best reps will leave for better territories, quotas and commission elsewhere and the team remaining will feel defeated and unmotivated to tackle an impossible mission. 𝗛𝗼𝘄 𝗰𝗮𝗻 𝘄𝗲 𝗮𝗱𝗷𝘂𝘀𝘁? That all said, if we look at realistic numbers we can adjust our targets and quotas and/or adjust hiring, try to improve ramp time, close rates, etc. to get there. What am I missing here? What would you add to this? 🤔

"It's mid-February. Why haven't we hit our pipeline goals yet?" Sound familiar? I've seen it happen over and over again – a company sets aggressive revenue goals that expect growth overnight. No ramp. No seasonality considerations. No clear pipeline input strategy. Just a walk-to-the-numbers approach that assumes everything will improve at once. And now? We're six weeks into the year. ➜ The team is scrambling ➜ Performance marketing is being thrown at the problem ➜ The pressure is killing strategic thinking ➜ That "big, ambitious goal" is already feeling out of reach The mistake? These goals were set without deep forecasting – without factoring in ramp time, seasonality, pipeline source inputs, or efficiency bets. If your team is already feeling the weight of an unrealistic revenue target, here's what to do right now to reset: ➜ Run a forecast model. Look at historical data and current pipeline trends. What's actually achievable based on existing momentum? ➜ Find the gaps. Compare the forecast to the goals. Where's the shortfall? How much additional pipeline is needed? ➜ Factor in ramp & seasonality. If you're already behind, is Q1 even realistic? What's the natural pacing based on past trends? ➜ Back into the goal strategically. Instead of assuming marketing and sales can just "do more," set efficiency bets. Where can conversion rates, sales cycle lengths, volume, and/or ACV be realistically improved? ➜ Build a plan to bridge the gap. Align the team on where to focus – instead of just scrambling to hit a number. I've worked with 20+ companies, and the pattern is clear: Growth isn't a flip of a switch. It's a process.