How To Set Revenue Goals

DEFINITION
Revenue goals are the financial target your business sets to plan a revenue growth strategy. As they can be measured and tracked, revenue goals allow you to have a clear picture of business growth.

💡Understanding Revenue Goals

A financial target helps you lay down the action steps needed to achieve them. Say, for example, your organization’s financial turnover last year was $5 million. If your goal is to achieve a 20% growth rate, you can now design targeted strategies to reach the revenue target of $6 million. 

What’s more, a well-planned revenue goal defines the priorities and responsibilities of every team member, creating accountability. But setting revenue goals needs a rigorous planning process. This ensures revenue operations can be run smoothly and efficiently. 

Having clear revenue goals and growth strategies in place eliminates the stress of hasty emergency decisions, too. 

🖋 Takeaway

Moving forward without revenue goals is like sprinting through a field like a headless chicken, or a horse without blinders on a racecourse. 

Managing and motivating your team and knowing where your organization is collectively headed all rely on your revenue goals. They go a long way in helping you achieve maximum efficiency in your business operations and prevent you from making hasty decisions and the problems that come with low-quality leads and low conversion rates. 

It also promotes a healthy work environment where every member knows their role in achieving the financial targets. 

Why Setting Revenue Goals Is Important

Revenue goals define what success looks like for your organization. As the goal changes every year, it gives you the direction to structure your organization and modify internal processes in line with the goal. 

They keep you on track with where your business is heading, be it towards hitting your annual financial target or other long-term plans. It also puts customer retention in sight and allows you to allocate sufficient time to every aspect of the business.

How To Set Revenue Goals

Setting revenue goals requires foresight along with analysis of past trends. Here are some insights to get you started:

1.  Analyze Past Data

How many active customers did you have in the last year? What was the churn rate like? What was your lead scoring structure like?

Having such data with you before you fix a number will make sure you’re setting a realistic goal. You can also choose to go by a specific year-on-year growth rate. 

2. Set Monthly And Quarterly Targets Over Annual Targets

Not every customer is going to stay with you annually. Setting monthly and quarterly targets factor in your churn rate. Your marketing and sales team can ramp up their efforts accordingly.

Having monthly recurring revenue (MRR) targets also lets you take holidays into account without overwhelming your team by a huge number.

Plus, setting quarterly goals gives you a reset button. When reviewing goals every quarter, you can analyze your strategies and tweak them based on the results.

3. Consider Your Team’s Capacity

Your team might not be able to sustain the sudden pressure if you want a jump from $10,000 MRR to $100,000 MRR. You’ll also need to hire talent at the same pace, which is a time-consuming process in itself.

When setting revenue goals, make a plan for recruitment too. Use a job board to expedite the hiring process. Based on how fast you’re able to attract new talent, you can scale your marketing and sales efforts.

4. Set Targets For Revenue-Driving Activities

Once you have your annual target broken down into monthly and quarterly targets, divide it further by activities and teams. 

Suppose your primary revenue-driving activities include inbound marketing strategies, identifying sales-ready MQLs, and outbound marketing based on lead scoring. Break down your ultimate goal and assign revenue goals to each of the activities and the corresponding teams. 

For example, if your goal is to generate $50,000 in MRR, assign figures like $10,000 to inbound marketing strategies, $20,000 to closing sales-ready leads, and $20,000 to outbound marketing.

5. Create Your Lead Scoring Metrics

Not all leads are equal. Even if you have a large number of sales reps, they’ll soon burn out if they’re reaching out to every person on your lead list. 

The way around this problem is to rank your leads based on how close they are to your ideal client profile (ICP). You can rank the leads based on multiple factors like budget, intent, position in an organization, page visits, downloads, and more. 

Setting your lead scoring criteria early on is important to stay on track with your revenue goals. The better your leads are, the easier conversions will be.

Once you’ve decided on the metrics, use an app like Breadcrumbs that integrates with apps like HubSpot, ActiveCampaign, and Marketo to receive the lead score directly in your data source. Book a demo to find out how.