Setting goals & managing the sales force's performance

1. Saad Elhalafawy
16 Feb 2017
From: CSE text book
SMEI-USA
Setting Goals &
Managing the Sales
Force's performance

2. Learning objectives:
• Describe how sales managers use goals to guide and control the efforts of
their sales forces
• Summarize the elements of an affective goal
• Distinguish when different outcomes and behavioral sales goals should be
used
• Identify different informational resources available to capture information used
for making effective decisions on goals
• Apply goal setting theory in order to improve managerial and motivational
practices
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3. • Companies rely on their sales forces to generate the revenues they need to
stay in business
• Setting and achieving a firm's sales goals is an important responsibility for
sales managers, which is considered as their number one challenge
• Goal setting is a powerful sales management activity when it is done correctly
• Setting sales goals begins at the corporate level with the study of economic
indicators in key markets
• It is the sales manager's responsibility to help ensure that their reps achieve
their respective goals by:
• setting clear expectations
• help reps develop the needed skill sets and
• hold them accountable to reach their goals
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4. Goal setting
• Sales goal or quota is a performance standard by which sales people, sales
reps, and sales managers alike are measured
• Sales people use goals to benchmark or target their own performances within
a specified time period. And in most cases they are compensated based on
their meeting those goals
• The primary purpose of having sales goals or quotas is to synchronize the
direction and efforts of the sales force with the plans developed by a firm‘s top
managers
• Goal setting is not just picking target it includes monitoring salespeople, market
conditions, and competitors reactions, also instituting & following up corrective
actions if they are needed
• Sales managers can use a software to monitor which actions are working and
which ones are not and analyze those actions by territory & region
• These actions may include altering the sales messages related to them,
focusing on different potential customers, and coaching sales people who need
help
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5. Why are sales goals important to an organization?
• Because most sales representatives work independently and outside
the immediate presence of their sales managers so goals need to be
in place to help motivate and guide their performance
• Almost 80% of companies will spend 2 months or longer preparing
their annual forecasts. the majority will simply use last year's plus a
certain percentage model, while about 30% will use external third
party data
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6. Using goals to guide and manage the performance of sales force
helps to:
1. Motivating the sales force by having achievable goals
2. Focus and direct the selling efforts of the sales force
3. Assess the financial return on the firms investment and its products and
services, as a result the first top managers might need to re-formulate one or
several of the marketing mix variables
4. Compare the results achieved by salespeople in different sales territories and
regions
Setting goals in Global Sales Management:
Coordinating the goals and supporting compensation system that help achieve
the business objectives for each unit has recently led to the creation of
positions such as Director of Global Sales Incentive Design and the Director of
Global Sales Compensation
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7. Different types of goals or quotas
• Input based goals or activity-based quotas, relate to the observable selling
efforts a sales person must make
• Input goals ensure that the reps are performing the firms core selling activities
• Use of CRM systems have helped to authenticate activities completed and
improve the validity of those measures
• Unfortunately efforts alone don't always produce results that's why out- put goals
are important
• Output or outcome based goals are the selling results a salesperson is
expected to achieve including the number of orders, sales volumes and profits
• Sales volumes generated has traditionally been the most frequent measure
companies use to set goals for their salespeople, which has the advantage of
being easily counted and analyzed, and salespeople understand them. But the
disadvantage is that a sole metric may not accurately reflect the entire effort
needed to produce the sales or to provide a complete picture of what is being
sold
• As a result many organizations will utilize a combination of input and output goals
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8. • A Pipeline analysis shows how will a sales person is maintaining a stream of
customers at different stages in the sales process
• A Dashboard is a visual representation of various performance measures
• Expense quotas are used to keep the costs associated with a sales person's
sale in line with what the firm thinks the representative should spend in order
to be successful as well as keeping the firms expenses in line
• Sales persons who go over the expense percentages allotted to them usually
have to justify why they did it so. however sales people whose expenses fall
far short of the percentage allotted them might not be using all of the
resources available to them and could possibly be losing sales as a result
• The last step in GOALS analysis is determining which of the goals are more
important than others
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9. Choosing the right metrics and the right time period to track
• Having too many measures made it more difficult to focus on the "critical
few" metrics
• "What gets measured gets done. But only metrics that get inspected have any
significant impact"
• Most practitioners agree that having more than seven metrics becomes more
difficult to manage, and a frustration for those trying to achieve them
• The time period can be a yearly, quarterly, monthly, or even weekly or hourly!
• What about almost meeting a goal?
Most companies don't take an all or none approach. A more typical approach
is to reward sales people for reaching the 90% mark which is called
threshold goal, the 100% mark which is actually goal or 110% more which
is stretched goal
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10. • Should sales people be involved in setting their own goals?
About 60% of firm’s tend to include bottom up input in their goal setting. the
greater the number of accounts the more likely sales management will use a
top down goal allocation approach. The fewer the accounts the more likely
sales personnel will be to participate (i.e. the bottom up approach)
• Drawbacks: lowball, easy to achieve. Combination is better with little
negotiation
• When a sale is a sale?
To take a conservative approach one would count the sale when the product
is either shipped or paid for. However this can create a problem for an item
with a long sales cycle
Some firms will deal with this problem by giving reps partial credit (e.g. 30%)
when the order is placed and the remaining credit 70% when the order is
shipped
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11. Should everyone achieve their sales goals?
• Goals should be set with the expectation that sales people will be able to achieve
them
• Most companies prefer to have the average target exceed 100% with the expectation
that 60 to 70% of the sales force personnel will achieve their goals and 30 to 40% will
not
• So why don't more sales people make their goals? Mostly the answer is behind the
pool skills or lack of motivation. Also other factors may include:
1. Wrong sales projection based on limited marketing research
2. Offering higher product prices due to increase in the cost of supplies
3. Promotional campaign that don't produce the results projected
4. Delays or other problems with the distribution of a firm's products
5. New strong competitors enter the marketplace
6. Environmental factors that affect customer demand like natural disasters that
cause customers to postpone or cancel their orders
7. Change in laws and regulations that prevent or restrict the use of products or
services or make them more expensive
8. Changes in the way firms do business for example as a result of the new
technology
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12. Do goals ever get changed or altered?
• The intent is to set the goal once a year but the reality is that some goals will
need to be adjusted. In some cases a company's sales might exceed its
expectations as a result the firm will increase its sales goals and the goals its
reps must achieve!
• Factors that might contribute to this: if a competitor dropped out, or a change in
economic conditions
• If the goals are being Adjusted upward sales people will often feel cheated
• What happens when salespeople don't achieve their sales goals?
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13. The process of setting good goals
• Goals can truly be a double edged sword!
• Researchers found that difficult sales goals alone did not result in unethical
behaviors on the part of a firm sales force. However they certainly helped
set the stage for those behaviors
• When sales reps were given exceedingly high goals they often focused
primarily on activities that generated more sales and deliver less Customer
Service
• All studies yielded 2 consistent findings about the use of goal Setting:
A. Difficult goals lead to higher levels of performance
B. Specific difficult goals lead to higher levels of effort than do general
ones
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14. • Goal setting works because it impacts people performance in 4 ways:
1. Goals direct people's attention and effort toward goal-relevant
behaviors and away from other less-relevant behaviors. So they provide
focus and direction
2. Goals have an energizing function
3. Goals affect persistence
4. Goals affect people's of problem-solving skills
• The most important thing about goals is having one
• Goals help give you direction focus drive and a sense of accomplishment
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15. Guidelines that should be followed when setting reps goals
1. Set goals of that are easy for Sales Reps to understand difficult to achieve and
have exact deadlines for completion
2. Set an important tasks as a goal otherwise they may be ignored
3. Having too many goals can create stress
4. Try to get sales reps to commit to their goals by explaining how they have been
set
5. Clearly indicates how the sales performance will be measured and rewarded
6. Provide feedback to sales reps as frequently as possible so they know if they
need to redirect or increase their efforts
7. Make sure people know you have confidence in their ability to achieve their
goals
8. Selling efforts typically increases up to a certain point but will decrease as goal
levels increases
9. Failing to achieve a goal should not be viewed as failure. it should be
considered progress in the road of success
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16. Thanks
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