It’s unlikely that any successful person or company operates without goals. They may have one giant or lofty goal. They may have a series of smaller goals leading up to the ultimate achievement but success is built upon goals. Goals accomplish many things. Three of the primary accomplishments are:
Goals energize people and energetic people achieve more.
Goals signal the direction of the company and sales team.
Goals measure the achievement of the organization.
Do you know how to establish reasonable goals?
Follow this simple five-step plan to set goals to increase sales.
1. Start with national or company objectives.
You must know all metrics acceptable to sustain growth. Historical data should be considered in addition to the makeup, ability and desire of the entire sales organization. If the economy or governmental regulations impact your business you must consider them in your plan. Why not start at the bottom to establish goals? After all, don’t salespeople have a better feel for potential and reality?
Scenario: Each sales representative assesses their territory, results from prior years, market share and potential. They “come up” with a projection and turn it in to the sales manager. They desire to hit their goals so they “sandbag”. They decide to shave a few percentage points off the goals before submitting them. Other representatives apply the same logic. The Sales Manager adds up the goals and decides to act conservatively before communicating the projections to Senior Management. Believing the projections and the dire future they foretell, layoffs begin. Sales support and training get cut first. That’s how a sales team can create a real problem.
2. Review territories and results to understand expectations and buying behavior.
Can you assess the impact of repeat or carryover business? Does your business fluctuate due to seasonality? Do you employ enough sales representatives to adequately serve the market? Can you quantify the effect of pending mergers and acquisitions? Did last year provide useful information?
3. Develop potential allocations to divide the national or company goal among the territories.
This may be done at the judgment of the sales manager. They may elect to use formulas based exclusively on prior sales. Or they may assess prior sales and market potential to determine territorial goals. Population of viable prospects and territories could be factors in establishing goals at the sales representative level.
4. Finalize the formula and process you plan to adopt.
Then you must test it by asking many questions that start with, “What if??” What if mergers and acquisitions besiege your industry? What if a tropical storm causes catastrophic damage in your Southeast region? What if the largest account in each territory reduced the need for your product by only five percent? How would that affect your performance? Compare your plan to the performance last year. How would the new compensation plan have worked last year? Imagine you’re a salesperson working under the proposed plan. Would it energize you? Would it move you to selling the right products? Is the plan aligned with company objectives?
5. Review the goals one more time and communicate them with the entire team and the department responsible for tracking and compensation. Schedule periodic reviews to assess achievement and progress.
Establishing goals is challenging. Poor goal setting leads to increased costs and can lower morale. If you sell in a volatile market you may consider goals with shorter time frames. In addition you should review them frequently and make adjustments as needed. Remember to communicate with the sales team the likelihood of this review as well as your solid business reasons for doing so. Understanding market potential allows you to reduce turbulence in the goal setting process. This is difficult in many business sectors but not impossible.
Goals based on business objectives and the markets are the most accurate. Strong sales managers are aware and recognize the difference in establishing goals for rewarding and recognizing employees and goals for use in performance evaluations.
Stack ranking sales representatives represents an alternative to setting goals although it is only fair if territories, opportunity and responsibility remain equitable.
Goals accomplish many things. They energize individuals and companies. They clearly communicate the direction of the company. Goal setting is a very integral component in the best selling organizations in the world. Do not trivialize this opportunity to increase sales.
“Not everything that can be counted counts, and not everything that counts can be counted.”