Nothing frustrates sales people, and therefore business performance, like unclear expectations. (That, and insisting that they sell a product no one needs, like the Yellow Pages). But back to expectations. Even with a clear sales strategy, indeed as part of it, business owners and executives should set clear sales goals and targets for their sales team if they are to improve performance – for the team, and the business. Admittedly, sales goal setting is anecdotal (not a science). Still, with practical examples (two of them scandals), here’s why it is beneficial to set clear goals and targets, how to set them, what hampers such, and how to overcome it.

Benefits to setting clear sales goals and targets

There are untold benefits to setting clear sales goals and targets. The benefit to the business owner or executive is of course predictable income. But income is a result. You can’t control that. What you can control is the process that leads to it. And the more closely you track the progress, the more predictable the income will be. Here are other advantages to setting clear goals and targets. First off, sales is not a desk job and as such calls for a different approach to execution and measuring performance. With a desk job, work comes to you; in selling, you look for the work. The first benefit to being clear on expectations is that performance measurability is not vague; goals promote transparency and accountability.

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Next, sharper focus and better time management. Clear goals and targets help your sales team stay focused on what they need to achieve. Without clear targets, they may become disorganized and waste time on activities that do not contribute to their sales success. In addition, the attainment of goals gives a sense of achievement and movement through the job; clear goals and targets provide a tangible and achievable benchmark for your sales people to work towards; this can be a great motivator. Especially for the challenge driven (goal oriented) sales person. Such is the importance of setting sales goals and targets.

How to get a sales target formula

Setting clear sales goals and targets for your sales team is crucial for achieving business success. Besides involving your sales team in settling them up, as business owner, here are 3 other steps you can follow in setting clear sales goals and targets for your sales team.

First, define your overall business objectives. If as business owner you are unsure of this, this uncertainty will come back to bite you when, even with surpassed targets, income expectations still fall short. What follows is a demotivated sales force because you cannot afford and so refuse to pay them despite them surpassing what you asked them to. So before deciding the types of sales targets to set, be clear on your overall business objectives. For example, that could be looking to increase revenue, expand your customer base, or launch a new product. Once you have a clear understanding of your overall business objectives, you can set sales goals and targets that align with them. For instance, if you are a hotel and this year want to focus value over volume, set targets that reward selling deluxe rooms and the pent house much more than standard rooms.

Terrific Tuesdays

Another way to set clear sales goals and targets is using historical data. Here you analyze past sales data to determine what has worked well and what needs improvement. Look at trends in sales revenue, customer acquisition, and other metrics to determine realistic goals and targets for the future. For instance, the Terrific Tuesday promotion run by Pizza Inn was likely informed by and is intended to boost low sales on Tuesdays.

Thirdly, set individual sales goals and team goals. Individual goals should be tied to specific quotas, while team goals should focus on overall revenue targets. Such goal setting also helped a sales manager ‘force’ sales people to work together and near eliminated fighting over accounts.

set clear sales goals and targets

What frustrates and how to overcome setting of clear goals and targets

The first point of frustration in the setting of clear goals and targets is unrealistic, and therefore unattainable, targets. Take the scandalous case of Wells Fargo Bank in the US. The banking industry average number of accounts per customer there was 2.8. Wells Fargo Bank had it at EIGHT. And why, because, as the bank’s CEO put it, “Eight rhymes with great!” (I promise I didn’t make that up; read more about the case here). Anyway, the result was the scandal of the century. Under intense pressure to perform (coupled with a corrupted corporate culture) the 5,300 sales people proceeded to fraudulently open a whooping TWO MILLION accounts! Much as targets are guided by the business need, the business success is a long-term venture and as such calibrating the targets informed by continual feedback is recommended and sustainable.

Now then. Another reason frustrating the setting of clear sales targets is poor monitoring and evaluation. It is not enough to set targets. Continual and regular monitoring is a must too. The regularity is informed by your sales cycle. For example, fast moving consumer goods institutions may measure daily but those selling transformers much longer. Let us borrow from another (local) scandal. That of Nairobi Women’s Hospital in which patients that didn’t need to be admitted were, and many others that should have been discharged weren’t. Anything to make more sales.

Nairobi Women’s Hospital Scandal

The business was focused more on meeting the set revenue targets, than addressing patient healthcare needs Scandalous and unethical as this was, how the sales targets were monitored was to die for; it’s text book definition how to doggedly measure sales performance. The revenue, commissions, admissions and discharge numbers were being actively monitored and reviews made, hourly, every day, day and night, by none other than the Chief Executive Officer, himself! From a WhatsApp group!

Thirdly is rigidity. Your sales team is a like a class room. For both, performance follows the bell curve. Meaning you have A, B, C and D performers, with the bulk being in the B and C segment. Insisting that you only want As is an unrealistic expectation and is setting yourself up for failure. Best practice is to set up a carrot and stick system that is commensurate to performance, with the rule of thumb being, never ending improvement, training and celebrating successes along the way so as to keep the fire burning. Just like a teacher does through tests, counselling, punishing and exams and the Ministry of Education does with a cut-off mark for joining public universities, colleges and TVETs.

Set clear sales goals and targets

In summary, setting clear sales goals and targets is essential for predicting income and improving the performance of your sales team. It helps to focus your team, motivates them to achieve success, provides a measurable framework for assessing performance, promotes accountability and facilitates continuous improvement.

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