/ Guest Post

What’s The Point Of Sales Targets?

This is a guest post from Terry Russell, Founding Director at Terry-Russell Ltd


Photo by Marc A / Unsplash

Targets

Target - an objective or result towards which efforts are directed.
"the car met its sales target in record time"

synonyms:
objective, goal, object, aim, end, desired result;
plan, purpose, intention, intent, design, aspiration, ambition, ideal, hope, desire, wish, holy grail
"they exceeded their profit target last year"

Why do we have targets in sales? Is it to motivate our salespeople? Will that bit of pressure get them over the line this month? And how much pressure is a bit? And what about next month? A bit more pressure?

Too often in sales, targets are a top down imposition creating short term success at the cost of sustainable results. Worse, they can encourage behaviours misaligned to our brand promise and damage a business reputation in the longer term.

Poorly communicated and managed targets can create short termism and be little more than a wish, a hope or even worse a boast (to save face when exposed in a team).

Targets that are agreed and managed in partnership can create focus and most importantly purpose and a plan.

The Importance Of Ownership

The benefits of an engaged workforce are well known (improved productivity, lower absenteeism and turnover, improved customer service, greater operational efficiency and even enhanced business value) and engaged sales people are more connected to the organisations purpose and values, and, committed to its and their own future. Many things contribute to engagement and involvement is key amongst them.

Ensuring salespeople own their numbers is essential; imposition disengages producing the opposite of the list of benefits above. I always found having honest, open conversations with sales people about their needs and wants and those of the business to be simple and effective. For instance, a typical business works pretty well on a 25% split of income. If a sales person wants to earn say £100k, they would need to produce £400k in income for the business. This figure might be called the budget; the minimum a salesperson needs to sell to ‘wash their face’. Transparency of this nature enables clarity and ownership.

Once the ‘budget’ is communicated and established a conversation can now take place about a ‘stretch goal’ where we introduce challenge stress; important in building trust, engagement and enhanced performance.

Start With WHY!

Simon Sinek tapped into something we all instinctively know to be true. So why do so many managers talk about the What first; the target?

Understanding a salespersons motivators, their personal purpose, is the critical first step. Once we all know the Why, we can move onto the How. This in turn will deliver the What.

Many years ago I managed a guy called Chris. Chris was a nice guy, one of those ‘middle order batsmen’. He had talent but would only ever shows signs of his true potential very occasionally. It’s fair to say I was more frustrated by this than Chris.

One day at our monthly one to one Chris announced he was getting married (for the second time). I congratulated him and we talked about what that would mean for him and his two daughters and his new wife. Chris revealed that despite his joy at getting married he couldn’t realise his dream of taking his new wife on honeymoon due to financial constraints. We had his why and I asked him to not only think about where he’d like to take Tracy (his new wife) but to cost it out precisely. At our next meeting we built a plan over six months that would allow Chris to earn the extra money he needed to take Tracy on the honeymoon of their dreams.

The Sales Equation

Once we have purpose (the Why), we need to know How. Ambition without a plan is pointless. A salesperson must know how they are going to realise their budget and achieve their stretch goal. For a salesperson to be successful they must know their numbers and this means understanding the details of the sales equation.

Sales = The number of customer conversations X the quality of customer conversations

It doesn’t matter if you are selling software licenses, business loans, investment opportunities or cars, this equation always applies. It not only allows salespeople to plan and deliver on their goals but also to work smarter rather than simply harder in doing so.

The starting point is to understand the key stages in your sales process. A simple, typical example will look something like the following:

  1. Initial contact
  2. Discovery meeting
  3. Presentation
  4. Gain commitment (close).

Sales people also need to know the businesses key metrics. Again a simple example may be:

  1. Total income
  2. Average value

Sales Activity

Screen-Shot-2018-07-09-at-15.01.53

Which one is the ‘best’ salesperson in the sales activity grid above?

You could answer this question in a number of ways depending on your perspective. I think both salespeople are equal; they both sold income to the value of £10,000. How effective and efficient they were is different. Salesperson A worked ‘harder’ in the sense they carried out a total of 100 meeting in the month. B carried out a total of 90. Salesperson B appears to be able to convert Initial Contacts into Discovery Meetings better than A and Gains commitment (closes) almost twice as effectively. However, is this at the expense of their average sales value?

The key to this information is it provides indicators. These numbers are not facts, they provide us with information to explore and understand. They enable us to ask questions, to coach, to challenge, to support. When we encourage ownership of numbers the best salespeople come to us and say "I’m thinking about changing this about my approach" or "I’m struggling with my conversion rate here, what can I do to improve?"

And then we work in partnership to build a plan in support of our sales teams purpose.

And when this happens, what’s the point of targets?


About the author: Terry is the Founding Director at Terry-Russell Ltd. He is known for his energy, enthusiasm and ability to challenge and to “tell the truth in a way that’s easy to hear and accept”. He has a very practical approach to both business and personal issues and an ability to get to the heart of the matter quickly.