11 sales -goal setting

7/28/2019 11 Sales -Goal Setting

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Sales Management: Shaping Future Sales Leaders

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall.11-1Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall.

Setting Goals andManaging the Sales

Forces Performance

Chapter 11


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What Being a Sales Manager Means??

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall.1-2

Meet/exceedsales quota!

Develop yourteam!


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Whats Involved with Goal Setting?

Monitoring Salespeople

Market Conditions

Following Up

Competitor Reactions

Instituting Corrective Actions


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Why Set Sales Goals (Quotas)?

Sales goal (quota):performance standard bywhich salespeople are measured

Sales goals are useful for several reasons

Synchronize direction and efforts of sales forcewith plans developedby top managers

Benchmark performance

Achievement of goalscan be motivating andis usually tied tocompensation


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Using Goals to Guide and ManagePerformance of a Sales Force

Assess ROI

Ensure the effort put into selling products earnsgood return

When sales are short of expectations, may need torevise marketing mix variables

Focus SellingEfforts

Goals help direct efforts toward certain salesactivities

Example: growing markets

MotivateSales Force

Achievable goals can help motivate the sales force

Goals serve as benchmarks to help gauge how repsare doing

CompareResults

Comparing results helps determine what factorscause sales to be lower or higher in one area thananother

Example: competition, customer demographics, etc.


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Global Sales Management:Goals Can Vary

Most people agree on the big picture, but theirimplementation of sales management practicesreflects nuances unique to their home cultures

Some researchers believe that globalization iscausing sales management practices to converge

There are still variations Short-term goals in US

Long-term goals in Japan God willing in Middle East


7/27Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall.11-7

Different Types of Goals or Quotas

Input-Based Goals(Activity-Based Quotas)

Investment Action!

Relate to the observable sellingefforts a salesperson must make

Number of sales calls

Number of presentations

Number of proposals

Number of new clients

contacted Ensure the reps are performing

core selling activities

Output-Based Goals(Outcome-Based Goals)

$$ Earned!

Selling results a rep is expected toachieve

Number of orders received

Revenue generated

Sales volumes

Profits



Typical Input and Output Goals



Using a Combination of Goals

Sales volume traditionally most frequent measureAdvantage: easily counted and analyzed

Advantage: reps understand these goals

Disadvantage: sole metric often does not accurately

provide the complete picture

Input + output goals Ensure certain customer

service activities are

performedAnd certain amount

of profitable sales are made



Pipeline Analysis

Pipeline analysis: how well rep maintains streamof customers at different stages in sales process

Broken into the list

of the Top 5measurements inrecent years


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Pipeline Analysis: Top 5 Steps

5-Negotiation

4-Proposal

3-Presentation

2-Acct. Strategy

1-Qualify Lead



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Metrics Related to Customer Service

Many firms include customer satisfaction andretention metrics in their goals

Customer satisfaction can actually be difficult tomeasure

Sometimes easier to count number of customercomplaints than estimate the service customersare getting More accurate but time-consuming approach is to

develop customer satisfaction measure consisting of anumber of metrics


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Expense Quotas

Keep the costs associated with reps sales inline with what the firm thinks the rep shouldspend in order to be successful

Often calculated as % of sales


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Assigning Weights to Goals


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Choosing the Right Metrics and TimePeriod to Track

Too many measures makes it more difficult tofocus on the critical few metrics More than 7 metrics becomes difficult to manage

Most sales organizations establish their salesgoals on a yearly basis Break down yearly figure into quarters and sometimes

monthly units

Short or rapid sales cycles, such as in-bound callcenters or retail establishments, might use weekly orhourly units


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What About Almost Meeting a Goal?

All-or-Nothing approach

vs.

Reward for reaching part of a goal 90% threshold goal

100% actual goal

110% stretch goal


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Should Salespeople Be Involved inSetting Their Own Goals?

Many firms solicit input fromsales force about the goalsfinally set for them

Helps improve rep moralebecause managers betterunderstand obstacles

Disadvantage: reps have

incentive to lowball goals


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When Is a Sale a Really a True Sale?

Count the sale when theproduct is either shipped orinvoice paid/happycustomer

Difficult with long salescycle products

Compromise: offer partial

credit (~30%) when order isplaced, remainder (~70%)when order ships, etc.


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Reasons for Not Reaching Sales Goals

Flawed sales projectionsbased on limited marketingresearch

Changes in marketing mixvariables resulting in inferior

products or services Increase in cost of supplies

passed on to buyers viahigher product prices

Promotional campaignsdont

produce projected results

Delays or otherproblems withdistribution of products

New competitors andcompeting products enteringmarketplace

Environmental factors affectcustomer demand and cause

customers to postpone orcancel their purchases

Change in laws andregulations preventing orrestricting use of products and

services or making them moreexpensive

Changes in the way firms dobusiness, for example, as aresult of new technology


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Do Goals Ever Get Changed orAltered?

Most companies adjust goals on a yearlybasis; budgets often change more frequently

Shouldnt adjust too many times through year Confusion

Reps feel cheated


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The Process of Setting Smart Goals

SMART format for establishing goals:

Specific

Measurable

Achievable, yet challenging

Realistic

T ime-based


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The Process of Setting Good Goals

Challenging goals generally lead to higherlevels of performance Reps will put forth more effort when their goals are

somewhat difficult vs. too easy or too difficult

Specific, challenging goals lead to higherlevels of effort than general ones Specific, difficult goalsfor example, calling on 6 clients

a daywill lead to higher levels of performance


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Ethics in Sales Management: When DoDifficult Goals Become Too Difficult?

Setting quotas too high with the result that theaverage rep thinks its unobtainable which canvery quickly result in various unethical behaviors Example: just get the job done can lead to reps lying

to customers and other unethical behavior Example: XYZ Climate Control- those a/c technicians

overcharge and recommended unnecessary repairs

Damages reputations, can cause businesses to

close


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Goal-Setting Impacts Performance

AffectPersistence

Harder goals will prolong effort

Tight deadlines lead to meeting completion dates,

which helps work get accomplished

EnergizeReps

Goals are energizing

Higher goals produce more effort than lower goals Knowing whats expected gives reps a target

DirectEfforts

Goals provide focus and direction

Direct attention and efforts toward goal-relevantbehaviors and away from less relevant behaviors

IncreaseProblem-Solving

Goals affect problem-solving skills

People will seek new ways to accomplish difficultgoals


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Practical Guidelines for Setting Goals

Set goals that are easy for sales representatives to understand,

a reasonable challenge to achieve and have clear deadlines for

completion

1

Important tasks not included as a goal may get ignored; if itsimportant, then set a goal for its accomplishment

2

Having too many goals can create stress, keep the number of goals

to a reasonable number; clarify importance for prioritization

3

Get your sales reps to commit (buy in) to their goals by explaining

how they have been set and involve

4


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Practical Guidelines for Setting Goals

Clearly indicate how the sales performance will be measured and

rewarded

5

Provide feedback as frequently as possible; encourage reps to use

alternative approaches to sell if initial approaches dont work

6

Make sure people know you have confidence in their ability to

achieve their goals

7

Failing to achieve a goal should not be viewed as a total failure,

since it should be considered progress on the road to success

8


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Sales Management: Shaping Future Sales Leaders

Copyright 2009 Pearson Education Inc Publishing as Prentice Hall11-27Copyright 2009 Pearson Education Inc Publishing as Prentice Hall

Setting Goals andManaging the Sales

Forces PerformanceChapter 11

11 sales -goal setting

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