A new year means new sales goals. The right goals optimize sales force performance. Salespeople’s goals affect how hard they work and where they direct their effort. If there are multiple goals (say for different products), goal levels affect how salespeople allocate their time. Goals affect territory sales, incentive pay, and ultimately financial contribution.
Stephen Redden, a principal at the sales and marketing consultant ZS Associates, says managers must focus on these three goal-setting challenges to make the most of 2015 sales goals:
Getting the company sales forecast right: When 10 or 20 percent of salespeople miss their goal, there may be a problem with those salespeople. When the majority of salespeople miss their goal, the overall company forecast is most likely too high. Companies that face this situation will actually sell more by lowering the company forecast to a realistic level.
Allocating the forecast fairly among salespeople: Companies frequently ask every salesperson to grow sales by the same percentage as the company’s desired sales growth. This approach neglects to acknowledge the likely reality that territories differ in their competitive environment, current penetration level and other factors affecting growth potential. Even if the company forecast is accurate, the allocation of the forecast across salespeople will be unfair unless it recognizes differences in opportunity across territories.
Gaining sales force commitment: Commitment starts with goals that the sales force views as achievable, and it is fostered when the sales force understands how the goals were set or when salespeople and managers were involved in the goal-setting process. Companies need to balance the analytic sophistication of an advanced goal-setting approach with the need for the sales force’s understanding and buy-in. At the same time, sales force involvement in goal setting needs to be managed so that proper checks and balances ensure objectivity and prevent “sandbagging.”
In addition to communicating to the sales force what the sales goals are, it’s important to communicate how the goals were set. Standard goal communication is best delivered through efficient, consistent vehicles, such as email or the Web. If goal-setting approaches have changed or are complex, higher-touch approaches such as meetings or webinars are more effective options. Communication makes goals transparent and enhances sales force motivation.
Excerpted from “The Power of Sales Analytics,” a collection of insights, advice, case studies and approaches for using analytics to support sales force decisions and drive results written by more than 20 thought leaders from ZS Associates.
