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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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall.11-3
Whats Involved with Goal Setting?
Monitoring Salespeople
Market Conditions
Following Up
Competitor Reactions
Instituting Corrective Actions
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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall.11-4
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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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall.11-5
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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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall.11-6
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
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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
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Typical Input and Output Goals
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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
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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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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall.11-12
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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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall.11-13
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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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall.11-14
Assigning Weights to Goals
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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall.11-15
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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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall.11-17
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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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall.11-18
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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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall.11-19
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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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall.11-20
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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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall.11-22
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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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall.11-23
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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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall.11-24
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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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall.11-25
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
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Important tasks not included as a goal may get ignored; if itsimportant, then set a goal for its accomplishment
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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
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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall.11-26
Practical Guidelines for Setting Goals
Clearly indicate how the sales performance will be measured and
rewarded
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Provide feedback as frequently as possible; encourage reps to use
alternative approaches to sell if initial approaches dont work
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Make sure people know you have confidence in their ability to
achieve their goals
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Failing to achieve a goal should not be viewed as a total failure,
since it should be considered progress on the road to success
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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
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