From Prospects to Profits: Setting Sales Targets for Growth

Over the years, we’ve had the privilege of working with spinouts and startups at every stage of their growth—teams launching their first product, scaling operations, or breaking into new markets. 

A common question we hear, especially in the early days, is: “Setting sales targets—how do we even begin? how do we go about identifying these and putting figures on them?” 
 

It’s a crucial question—especially for early-stage ventures with limited budgets, time, and resources. Sales targets aren’t just numbers; they guide focus and measure success. 
 

But setting them—and determining how many prospects to engage—is challenging without sales experience, a full history, or ample resources. Without clear benchmarks, it’s easy to overestimate potential or set unrealistic goals that lead to wasted effort. That’s why a structured approach is key to maximising effectiveness and ensuring every action drives real progress. 
 

In this blog, we’ll provide a step-by-step guide to help you do just that and set the foundation for a sales strategy based on data, not guesswork. 
 

Setting Effective Sales Targets 
 

1. Define the Serviceable Obtainable Market (SOM)

Before you set any sales targets, it’s essential to understand the market you’re targeting. The first step is defining your Serviceable Obtainable Market (SOM), which is the realistic portion of your Serviceable Available Market (SAM) that you can capture and service in the short to medium term. 

Let’s break this down and better illustrate through an example: 

• Total Addressable Market (TAM) represents the broadest market opportunity. For example, let’s say you’re a biotech company entering the UK market with a diagnostic tool for healthcare providers. Your TAM would be the total number of healthcare facilities worldwide that could use diagnostic tools, which could be 100,000 healthcare institutions globally. 
   
• Serviceable Available Market (SAM) is the segment of the TAM that your product or service can address, often limited by factors like geography or customer demographics. In this case, the SAM would be the healthcare facilities in the UK, which could be 2,000 institutions. 
   
• Serviceable Obtainable Market (SOM) is the portion of the SAM that you can realistically capture, given your resources, competitive advantages, and distribution channels you have access to. For this example, if you estimate you can target 10% of the UK healthcare institutions, your SOM would be 200 institutions. 

The SOM is particularly important because it gives you a solid basis for estimating potential sales and setting achievable targets. 

Now, if you’re evaluating multiple markets or products to launch, begin by calculating the TAM, SAM and SOM for each option. This allows you to compare not only the size but also the revenue potential of different opportunities. For example, Product A might have 5,000 potential customers* but a lower average deal size, while Product B has only 2,000 customers but much higher-value deals. 

*To gather this information, you can use various market research tools to help determine your big opportunity: 

• SEMRush: A tool you might already be familiar with, SEMRush offers free features to explore your markets and uncover key opportunities.
• Statista: Offers both free and premium options, providing insights and stats across 170 industries worldwide.
• Plimsoll: While not free, this tool offers in-depth industry analysis and valuable intelligence for evaluating market potential. 

Once you've assessed your options, focus your launch efforts on one product, one market, and one champion buyer. Concentrating on a single target helps you avoid spreading your resources too thin and ensures a more streamlined, effective go-to-market strategy. 

By identifying the SAM, you can direct sales and marketing efforts to the most lucrative market. The SOM then validates realistic sales targets for that market, providing you with a clearer path forward for a successful launch. 
 

2. Translate Your SOM into Sales Targets 

With your SOM defined, the next step is to translate that into realistic sales targets. Here's how you can approach it: 

• Use your SOM as a baseline: 
  Your SOM reflects the number of customers you can realistically target and serve over the medium term. For example, if your SOM for UK healthcare institutions is 200 institutions, you can set your sales target based on a percentage of that market you aim to capture within Year 1. For example, targeting 10% of 200 institutions in the first year gives you a target of 20 institutions. 
  
  A key consideration here is whether your capacity and operations can effectively service this number of clients within the specified time period. Ensure that your internal resources, such as production, delivery, and customer support, are aligned with the targets you set to avoid overcommitting and underdelivering. 
   
• Align with your sales and pricing strategy: 
  Once you have your customer target, calculate the revenue potential. If your average deal size is £50,000, your revenue target would be £1,000,000 (20 customers x £50,000 deal size). 
   
• Balance with investor expectations: 
  Ensure your targets align with the expectations from your board and existing or new investors. This means ensuring your targets are realistic and achievable but also show ambition and growth potential.  
   

3. Validate with Market Data

After setting your sales targets, it’s crucial to validate them using both market research and your own internal data. Start by analysing industry benchmarks, competitor insights, and customer behaviour to ensure your targets are grounded in market realities. 

As you begin to engage with the market, continuously monitor your results and adjust your sales targets and pricing strategy based on the feedback you receive. This ongoing validation process helps you stay agile, ensuring your targets evolve with market conditions and your growing understanding of customer needs. 

 

Identifying the Number of Prospects Needed to Reach Your Sales Targets
 

Now that you’ve set your sales targets, the next step is to determine your prospecting targets.  

But first, what do we mean by prospects? These are potential customers that match your ideal customer persona criteria. By sourcing their contact information (including their work email), they’re injected into your sales funnel to warm up to sales-ready leads and ultimately paying customers. 

Therefore, the objective of prospecting is to identify and engage a high volume of likely customers, build authentic relationships, and convert them into sales qualified leads (SQL) for your sales team. 

To do this effectively, begin by determining how many prospects you need. The key is to work backwards from the sales targets you’ve defined. Here's how to approach it: 

1. Calculate Your Deals Target
   Not every sales opportunity will convert into a customer, so the first step is to calculate how many deals you need to close. Begin by taking your customer target and dividing it by your expected sales conversion rate. For example, if your target is to close 20 customers and you expect a 20% conversion rate, you would need 100 deals. 
    
   Conversion rates vary per industry, product offering and price point, and they improve as you build your brand awareness and engagement with prospects.  
    
   If you’re unsure, be conservative (e.g. 20%). As you engage with prospects, you'll have the opportunity to validate this rate by tracking actual conversion outcomes and adjusting your expectations based on the data you gather during your sales process. 
    
2. Identify Your Prospecting Needs
   Next, you need to figure out how many prospects you need to reach to generate the required number of deals. Again, not all prospects will convert into a deal, so you need to factor in your prospect-to-deal conversion rate. For a cold outreach strategy, conversion rates tend to be low, so it's wise to be conservative. A rate of 1-3% is typical. For example, if you need to secure 100 deals, and you estimate a 2% conversion rate for prospects turning into deals, you would need to engage 5,000 prospects to generate those 100 deals. 
    
   While an average 2% conversion rate for prospects to leads may seem low, it can be a reasonable benchmark for cold prospects, especially for a startup. As you move forward, you can adjust this rate based on your own data and insights gained from your outreach efforts. 
    
3. Adjust for Existing Contacts
   Now that you know how many prospects you need, assess how many contacts you already have in your database that fit your target persona. For example, if you already have 500 leads in your CRM, subtract this number from the prospects you need to reach. This gives you the remaining number of prospects you need to generate through outreach which in this case would be 4,500. 
    
   If the number of prospects needed is quite high and you believe that not this many exist who would really be interested in your solution, it’s essential to re-evaluate the overall size of your target market and assess whether there are enough potential customers within your segment to reach this number.  

 

We know that setting sales and prospecting targets can be a challenging process for startups and spinouts, but it’s essential for guiding your go-to-market efforts and optimising your resources. These steps provide a structured framework to help you get started. As you launch and gather more insights, your targets will naturally evolve, offering you greater clarity and helping you focus your resources even more effectively. 
 

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