Lots of time is given over to create sales goals that work.
Sales goals to match the focus of the overall business, and all and any other interested party.
And you’d think it would be easy, a simple excel spread sheet, some reverse engineering, a bit of margin management, some key business critical metrics, a good dose of sales management and off you’d go…it’s a day at the races and the end result is nailed on.
Surely it’s that simple?
And it’s not just made a tad more complex because you’re dealing with people (buyers and sellers) but because you’re having to balance the needs of sales people who think they deserve the lions share, business owners, shareholders, stake holders, maybe the city analysts, the customers, all those hard working people in customer service, ops, logistics, purchasing and credit control and maintenance…
The list goes on.
And it’s a critical list.
Because harmony, balance and equity in all systems is what makes any system work, including a sales goals system.
Sales goals might be as simple as detailed above, but sales goals, rarely are.
Sales goals are company wide.
They’re not just numbers that sit with the sales team.
Sales Goals vs Sales Target vs Sales Quota
Let’s get total clarity before we carry on.
Your sales goals belong to your business as a whole. They are not the domain of the sales reps alone.
The sales team simply start the journey, and, whilst it’s fair to say that the sales team failing to start the journey is a pretty epic fail on their part, it’s no different from the sales reps bringing in business that the rest of the firm proceed to drop the ball with.
Picture a very big, leaky, putrid bucket.
You get the picture.
Everyone in the business has their role to play in delivering the sales goals.
So sales goals that look at sales revenue and customer numbers should also look at incoming inquiries, quotes going out, sales cycle days, complaints by department, debt, pay days, churn, repeat buyers, increase in order value and spend, as well as NPS (net promoter score), referrals, lost business cause…
You see, building sales goals goes deep into the function of each business.
Of course, sales quote and sales targets are part of this but not the same as.
Sales target – the financial burden carried by each sales rep or sales function
Sales quota – related to products often or lines in a budget and is often used by a business to help forecast their costs and resource utilisation.
So, the question is, can you create sales goals that work for the sales team, reflect the contribution of other / internal roles and also satisfy external stakeholders including shareholders?
Let’s start by looking at what a sales goal actually is…
In my world a sales goal is really simple…
It’s the sales number the business has to achieve so that the business is healthy enough to survive another 5 years.
Sure it’s a woolly definition – you can substitute ‘survive’ for ‘thrive’, you can define ‘healthy enough’ in any way you chose, you can pad the sales number, you can have a minimum sales requirement number and a stretch sales number
You can pick that number, because before all else, whatever you decide to do when it comes to splitting the ‘cake’ at the end of the year, the business should be safe and stable.
Number one consideration.
The asset preserved and fit to trade on.
And with that definition in mind, here are some of the things I encourage my clients to think about…
Goal Number 1.
Have a sales goal number so comfortable support the growth of the business, and finance any risk in the business.
In short, generate a sales goal that is enough to give you and the rest of the employees stability and safety in the company and in their roles.
Everything else is secondary, and secondary by a long way.
And sales teams need to understand this.
They start the journey.
They plant the seeds.
Harvest the crop and feed the hungry business.
The rest of the business needs not to trample on the plants, and they need to remember to water appropriately.
I know – shockingly simply comparison but also surprisingly accurate.
Goal Number 2
Keep your customers happy.
Really happy, so happy that your competitors don’t stand a chance.
So absolutely cock-a-hoop, over the moon happy that you’ve got a loud crowd of raving fans.
Raving fans who delight in talking about you.
Do that because these guys are your unofficial sales team, and they’ll cost less, close more, more often and with greater certainty than your existing team.
Treat them well and enjoy their good will, their patronage, their loyalty and most of all, their praise!
And their free voices!
Goal Number 3
Let your customer facing, account management staff free reign to do what they need to do to keep your customers in the happy state so that goal number 2 becomes a tick box exercise.
Your customer facing team don’t need to ask permission to do the right thing.
You recruited them, you’re happy to work along side them, so trust them to deliver.
Sure set the KPI’s, monitor the actions, encourage the right behaviours and actions with customers, let them deliver.
Goal Number 4
Build the customer journey so that the customer gets multiple touch points, do the delivery drivers chat with the drop off people, is the credit line handled by a different person, is the customer on-boarded by another person…wrapping the customer up in a warm and fuzzy with different touch points is healthy and sustainable.
This way customers don’t become sales rep dependant.
Or any department dependent.
You’re creating an asset not a friendship club.
In the same vein, be aware when any of your customers get beyond a certain size…they may need a different journey and a different internal structure to support their needs.
Keep a keen eye on growth in singular customers
Goal Number 5
Keep your employees happy and productive
You don’t want customer churn and you don’t want staff churn either, although I do like a forced scored card system, although almost no-one uses them anymore.
Happy staff = happy customers.
It’s not tough to figure out.
No, it’s not all about cash but neither is it about ping pong, beer, or pizza all of the time…it is about having great communication, open door management, clear team goals, good team spirit and fun.
People under-rate fairness.
Don’t be that person.
Again not complicated.
Not beyond any company operating today.
Goal Number 6
Get really specific on the Key Performance Indicators (KPI’s) for each team and each function.
Trust the divisional heads to communicate those KPI’s, the reason for those KPI’s and a good understanding of why those KPI’s are in place.
And the impact of those KPI’s on the sales goals.
If everyone can understand what a 1% deviation of delivery means – positive and negative impact – then you have a business that understands their ability to make a difference.
Also, make sure everyone knows what GREAT looks like, and celebrate the wins.
Goal Number 7
Whilst I’m never a fab of reweighing the pig every 5 minutes, I do like accountability.
(note: reweighing the big is continually measuring something that is unlikely to have changed since the last time you weighted it)
And even better – I like self monitored accountability.
So, make sure everyone in the business knows their number, knows where they are in relation to that number, and if they’re behind, have 10 good ideas to how to make that number switch from red to green again.
Goal Number 8
Involve the boss.
Every lost client.
Every substantial complaint, even every complaint, involve the boss.
Could be the head of the dept, could be the Director of the division, could be the CEO.
I don’t care much.
But get someone with some clout out there, front and centre, talking with the customer.
The customer will be delighted and rescue becomes a viable outcome.
The member of staff who caused the chief to get involved will work extra hard for it not to happen again
People in the business know they have the visible full backing of their boss, in good times and bad
It’s a great learning opportunity for everyone.
In a people to people industry – get your best people in a situation where they can do their best work, this is one of those situations.
And every body knows their worth and their value in the business.
Trust me, it makes for a very happy, highly committed and relatively stress free team working on a common set of goals.
Goal Number 9
Listen to the customer.
They will be the best consultants to your business…all for the price of lunch or a coffee.
How much better can you get?
What do they want?
How are your competitors approaching them and what are they offering them?
What can you do better to serve?
All valid questions.
Don’t make it a talking shop.
Keep your customers in the loop.
Show them you listen.
Help them understand how much you care.
Note – is the customer always right?
Listen to them anyway!
Is the customer feedback always valuable?
Listen to it anyway!
Does your customer always have a better insight into your business than you do?
Listen to them anyway.
You get my drift, I know you do!
Decide the sales goal numbers.
Communicate them out.
Rely on the inventiveness and the creativity within your team to deliver.
Monitor the journey.
Celebrate the success.
Fix the leaks.
Just like life really!
But What About The Sales Team Rewards?
You’ll need a super tight sales process / customer journey map here, trust me it will help you to see how you can make the most out of all the points above.
It will also give you absolute clarity on what your sales team are responsible for, and to what degree.
Next, let’s look at the role of the sales person – and this is where it might get a bit more complicated so having a good road map helps.
Is your sales team simply tasked to bring new customers to the table?
Or do they need to also max the customer spend all through the life cycle?
Or do you have an account development team set up to look at in-life customer spend?
Who is in charge of growing the account?
Get clarity on this, whoever it is, and set some hard numbers that feed ingto those business sales goals.
Sales quotas around what sales revenue should come from new business, from account development, from referrals, from marketing, from conferences, from exhibitions, from webinars…
You see what you’re doing here…simply making sure you have enough revenue streams flowing in to feed the business and hit those sales numbers.
Typical Sales Rewards
Do you pay the sales reps on margin?
Or on turnover?
Or are both of those ok?
Is customer retention or NPS is built in to that payment?
Do you pay on new business and nothing else?
Or do you pay on down line revenues?
You’re about to go hurtling down that same dark rabbit hole, that oppressive tunnel that sales reps love you to crash though, just so you get to the other side without having to really look at what the sales rep brings to the party as far as the goals above are concerned
So again, just STOP!
Think about the bigger picture for just one minute…
Think about the role of the sales person and their defined contribution.
Their role is to bring new customers to your door.
They have one job…to find those customers, deliver to them a no-brainer sales proposition and get a signature.
Maybe there is the added caveat that you want customers of a certain size, in a certain sector, with a certain spend, or frequency of spend…there maybe a handful of criteria attached to that instruction to bring new customers to the business…
And, we should remember, there are loads of stages in that simple set of caveats…
BUT the the only evidence that the sales reps have actually done anything is when the customer pays you their first bill.
Should sales people be looking after down line activities?
I don’t think so.
Remember, you have a team of highly qualified, engaged, and happy employees that look after everything else.
So how you go about rewarding the sales team should be intrinsically tied to their very specific function, and not tied to things that are not their function.
Plus it works the other way too.
They shouldn’t be penalised because something in the down stream didn’t work, the margins diminished by poor quality or a customer complaint.
If you get a chance – read Predictable Revenue by Aaron Ross.
He is a god amongst sales thinkers, and whilst you might see this book is 10 years+ old, it’s a classic.
And it’s a classic for a reason.
It talks about the singularity of each specific function. In this case applied to the sales function alone, but it’s equally valid for application across the business.
If you don’t get a chance to read it, and I recommend you do, then here’s the fast notes version:
- Single point of failure – have one function with a very specific single function and a single number
- Have a rule of having each employee play to their strengths – so don’t have your ace -star new business developer account managing clients, likewise don’t harass your first class account manager out of the door by pushing him to be a hard core sales hunter!
Is It Possible To Keep the Sales Team Happy, Motivated and Fairly Rewarded?
I think so, but it takes some work, and there are some obvious pot holes to avoid if you’re asked to create sales goals
Let’s play devil’s advocate…you decide to reward the sales reps based on the number of customer accounts they open up every month…
In truth, you’re potentially driving behaviors to generate lots of tiny deals.
What happens then?
Think of the impact on sales acquisition costs and the money lost in processing millions of mini deals, having to make hundreds of thousands of deals instead of one big deal that rolls on…it’s easy to see how the sales team behaviours, the business needs and the sales goals are all in conflict with each other.
It’s the simplest of examples, it’s flawed, yet many firms still do it.
How about if you reward based on top line revenue only?
Potentially, you’re risking a tsunami of low margin deals.
How about the number of client proposals your reps send out?
Again, a busy diary doesn’t always translate to a full order book, but you’ll pay the sales rep anyway.
So, we’ve established that setting effective sales goals is simple, it’s just not always easy.
And, from experience, the simpler any reward structure it is, the better it will be for all involved.
Is a Good Sensible Sales Goal Really Too Much to Ask?
A sales goal that supports loyalty and commitment from buyers and works for buyers, the business and the sales function…is it too much to ask?
Here are some of the matrix factors you may want to consider…
– Size of deal
– Minimum order value
– Average order value
– Sales potential
– Sales acquisition cost
– Customer longevity
– Planned frequency of purchase
– Spend potential
– New logo referral potential
Either way, we can agree that to create sales goals, you need to wear lots of hats, satisfy many agendas, make money, maximise efficiency, get the biggest ROI on business resources and ensure your customers get treated fairly.
How to Create Sales Goals
Look at the agendas and needs of the specific direct and indirect elements that are in the control of the sales rep
Build a matrix of the common areas of aligned goals and common areas of conflicting or misaligned goals i.e. areas where the business benefits but the sales rep doesn’t, that may be a customer who comes on board with an initial small spend but due to internal delivery becomes a huge spender, how does this sit within the reward structure for the sales person.
Then flip the switch, how about when the sales rep benefits to the cost of the business?
Start building a dozen or so scenarios that exist or could exist within the business where the business or the sales person can potentially lose money or
Look at the areas of misaligned goals and seek to gain goal alignment, where there is value. Where there is no value or the marginal gain is just that, abandon this goal alignment.
Acid test wearing each of the hats. Make it as complex, and the losses and gains as small or big as you like…trust me when I tell you that the value is in the discussion.
The Value is Always In the Discussion When You Create Sales Goals
It’s a simple process.
It’s just not an easy one.
Managing expectations and really understanding what keeps people interested in doing business within your business, whether they are employees, investors, customers, owners…yet
Why do so Many Business Reward Mechanisms Fail to Deliver?
Just to be clear…I’m talking about sales quantity and sales quality…including turnover, profit and customer loyalty.
After all, these are, arguably, the three cornerstones of most thriving/surviving businesses.
Failure is primarily because most sales directors and business owners tasked to create sales goals focus on the on target earnings (OTE) of the sales team and the balance with basic salary
They want the good news story…
It’s a great line to throw out at an interview that ‘you get 10% of everything you sell’
How much sexier is that line compared to….’you get 15% of everything you sell as long as your average order value is £x, your NPS is 7.8+, your average sales acquisition cost is less than y% of the order value, and your average rolling margin remains above z% for every rolling three month period’
Which bonus structure would you rather be on if you were the sales guy?
But which package gives the greatest level of discipline in the sales team?
Which sales package drives the best behaviours?
And, which set of sales goals is more equitable?
Which sales goal package gives total freedom to the sales function to sign whatever business they want because there is self management and accountability built into the sales goal?
Setting Sales Goals That Work
Having sales goals simply based on revenue is a very contentious set up and is prone to exposing the business needlessly.
NOT having a more business aligned set of goals for the sales team causes a plethora of problems, and can cause interdepartmental friction, again, never a good thing.
Inequity drives resentment and envy…is that really the culture you want to foster?
Sales Reps Need A Reality Check – Create Sales Goals To Support This
The biggest reality check being that sales functions often forget that they exist to feed the business and allow the business to make profit.
Expecting to take a cut from the top line is just a tad too greedy and frankly unsustainable…but it doesn’t stop some sales reps having their hand out with exactly that demand.
Plus, revenue top line commission based sales bonus plans, geared solely around closing business at any cost becomes the norm in some firms if this management blind spot is extended and exploited.
Shaking heads and wringing hands does little to soothe the issue, and business owners and managers can’t really blame anyone other than the guy in the mirror.
Create sales goals that foster the right behaviours, the right activities and have built in self correcting performance levers.
Because that’s what’s good for everyone.
Everyone inside the business.
And outside of the business.
Designing a set of sales goals and sales reward mechanisms that treat the sales team like grown-ups to self manage based on their own accountability and understanding may take time, but it’s worth it.
And it’s the best sales goal and reward framework in the long run for everyone in the business and definitely goes a long way to fostering a collegiate working environment.
Create Sales Goals to Build Sales Leadership in Every Target Carrying Sales Exec
Irresponsible selling means competitor growth, depressed margin and running to stay still.
Eliminate the race to the bottom.
Get the reward framework aligned with business goals and the customer life cycle from day 1.
Give full accountability to the sales team with interconnecting sales goals.
Create the sales goals to manage the sales team behaviours.
Coach to the desired behaviours using the results because that’s what they are there for.
It’s worth it!
Good luck with setting your sales goals, it can be fun and the discussions enlightening, because the real value is always in the discussion.
p.p.s. Now you can stay up to date with the latest free digest of sales improvement and business development insights.
The The Advanced Business Achiever is perfect for sales team briefings, daily sales huddles and in house b2b sales training.
Remember – create sales goals that feed the business, if you’ve still got questions about this or any other aspect of sales management or sales performance improvement, you can call for a confidential chat – contact Carol on firstname.lastname@example.org or call 0779 002 1885