How do you set revenue targets for your industry that you're focused on when the sales team's quota isn't tied to your industry?

There is an in-depth science to this that many sales or product strategy teams leverage, so with that caveat, I'm sharing a high-level approach. My recommendation is to break down the problem piece by piece and find each variable needed to set a revenue target (and a sales pipeline target and coverage ratio based on close rates to support attainment of that revenue target).  

First get a sense of the addressable market. Talk with your sales leaders (or strategy team) to determine if you have a way of reporting on all of your target accounts within a focus industry (both existing customers and prospects) and seeing which sales reps cover which accounts and where the gaps are so you know where to expand coverage over time. This is a bottoms-up approach and will take some time so you may want to break it down by territory and by industry or sub-industry to start.

Second, understand the current quotas and the strategy that your sales leadership has put in place so that you don’t drift too far from the reality of what is attainable. If your company’s selling teams are geo-focused with multiple industries to cover and multiple products “in their bag” to sell, their mindshare for selling into a specific industry will be limited. 

The information you have to work with will never be perfect, so when you find a gap, make a reasonable assumption. If you know how much revenue each rep produced, broken down by account and by product, and you have a mapping of which account is in which industry, this should give you a baseline from which to set your quarterly ARR.

Not sure I understand the question. If this is to set revenue targets for a new industry expansion where GTM resources have not yet been assigned, I'd do a top-down and bottom-up analysis of the total addressable market (TAM), then take a percentage of that TAM to set the revenue target. You'll need to have marketing-only activities ready to back up your assumptions if no other resources are available.

• Top-down: Research the overall industry, audience size, propensity to spend, competitive pricing, geographical entry points, distribution, etc. and take a chunk of that market.
• Bottom-up: Find a market comp or adjacent industry your company is already engaged with, and assume that you have no one in the field to go to market with (ie. sales reps) except for marketing and a modest programs budget

This is really tricky to do well, and requires strong executive leadership and business operations support to pull off. Right now, at Procore, I work in an environment where our sales teams -- and thus revenue targets -- are set by our three primary segments, so I don't have this issue, but our Product teams do -- and I've talked to them a lot about it, and I have also had this experience back when I was at Salesforce. 

A few recommendations:

• Use modeling based on prior year attainment by industry, and model growth on top of that.
• Look at your TAM/SAM/SOM by industry, and what amount of growth is possible based on your current market share.
• Know, and get agreement from leadership, on where your product feature/function gaps are, and which industries are going to be a really uphill climb. 
• Get explicit buy-in from sales and revenue leadership on your program and how you and other industry-focused experts will be held accountable to any numbers if sales "doesn't have to care". 

This is a tough one because it’s difficult to set any sort of revenue targets for your industry if sales is not fully aligned and compensated to sell to that industry. You could be setting yourself up for failure. Not sure who’s requiring you to set a target in this way, but I would first ensure that you have strong buy-in from your leadership / your executive team on what the expectations will be around accountability.

Having said that, you could approach it in two ways:

• Set target based on internal metrics: Look at your revenue, growth rate, average contract value and win rates over the past 2 years. You can estimate a feasible target based on past success.
• Set target based on external metrics: Look at the Industry TAM, CAGR and spend, and estimate what you could realistically attain based on how much of the market you (and your top competitors) have already captured.

Formally, sales and sales ops should be setting revenue targets and the associated pipeline coverage targets needed to drive marketing strategy. At least for enterprise software companies with direct, quota-carrying sales organizations, compensation structure drives the ship so you wouldn't want to construct revenue targets apart from the sales team - that's bound to cause all sorts of alignment issues. If, in a marketing role, you decide that an industry focus is the right driver for messaging and campaign investment, any allocation should be lined up to how marketing, sales and product/strategy collectively see the market. Even if the sales team isn't specifically aligned around industries (vs. geo and company size), you can prioritize industries with the highest concentration of prospects in a given geo/segment and that allows the marketing team to execute around industry messaging while supporting the sales teams in their existing patches.

Industry KPIs should encompass sales and marketing performance. Sales and marketing teams need alignment on pipeline, revenue goals, and rep productivity.  

In many instances, when a proper solution marketing team is created, KPIs should encompass market penetration and sales performance. Even if quota isn't tied to the industry, benchmark figures must be baselined to grow off of:

• New Logo ARR
• Cross Sell ARR
• Rep Productivity 
• Upsell ARR
• Close Rates 
• Cycle Times
• Pipeline

All of this then translates to: 

• Drive pipeline and top-line revenue growth, inclusive of new logo and cross-sell / up-sell (land & expand growth)
• Partner with Enablement
• Prioritize, open, and adapt to  new markets (both countries and buyer types)

The strategic marketing team could provide direction on where the business has the greatest growth potential: where there is a strong product-market fit and room to capture a greater share of demand. They may already have target growth numbers in place. Next, you’ll need to determine whether you can identify the industry for each customer segment in the customer relationship management (CRM) system (e.g. Salesforce) and track their progress through the pipeline. With this information, your marketing operations or analytics team can build dashboards to track progress over time.

As a PMM, revenue is a trailing metric and the one you have the least control over. If there aren't existing quotas set by industry (and this is rare), this is likely to be unsuccessful.

Instead, go back to the core KPIs for PMM: Opportunity creation (count), Qualified pipeline ($), and win rate (or pipe coverage). These are more direct to measure, and if you create opportunity for sales, they'll follow those dollars. 

Establishing these can flow directly from past results and the next few quarters' plan. If you know, for example, that you tend to deliver 18% of business from a given vertical, start there. How much pipeline do you carry to maintain that 18% as the business grows? What incremental pipeline would create a meaningful lift in bookings? What's the investment required to achieve that (how many new accounts, avg. size of account in that industry, etc), and how much database coverage do you have? 

This can form the bottoms-up view of what you could shoot for. And if you're truly getting started, set these as vectors or targets, not hard goals. Quotas and sales commits are written in blood; building something new needs a little more flexibliity.  

When I read the first part of your question, my first thought was to tie it to sales team quotas ;)

In more mature industry GTM motions, having sales teams segmented by industry is best practice. For example, we had sales teams at SurveyMonkey fully dedicated to B2C, B2B, Financial Services and the public sector - they have different lingo, regulatory/compliance needs, use cases, product needs, etc.

Ok, but what if you can't tie it to sales quotas? In my opinion, revenue may not be the right goal. You may want to focus on the metrics you can control and influence. Early on, focus on MQLs, qualified opportunities, and pipeline. As you continue to enable the reps and they gain confidence, you'll start to see AOVs and Win Rates improve. Early on, focus on those improvements.

When a new motion is introduced, it will take time for reps to gain that confidence. They default to their comfort zones. Gamifying it can help: running competitions or spiffs. Showing momentum by celebrating big deals won in your target industry & sharing how the rep closed it. Once you see enough traction, your revenue forecasts will also start to become more accurate. Then you can make the case to structure territories by industry.