Great sales goals are inspirational, yet realistic. They motivate the sales force to reach for the next level of performance. Unfortunately, defining effective sales goals is quite difficult. Even superior sales organizations experience times when goals become disconnected from reality – or fail to deliver sufficient sales motivation.
As Sales Cookie, we believe that the best way to deliver effective sales goals is via a well-designed sales incentive program. After all, sales commissions are the #1 driver of sales performance. To deliver an effective sales commission program, you must ensure that:
- Goals remain attainable yet challenging
- Sales reps understand goals and incentives
- Sales reps are paid the right amount, on time
Below are some scenarios where the above conditions aren’t met – and how to fix them.
You sales goals lack a meaningful incentive
Your sales incentive program is essentially your contract with your sales employees. If you ask your employees to deliver X, but your contract doesn’t specify any associated payment, it’s unlikely you will get expected results.
Goals which aren’t backed up by incentives often fail. Reps who are paid commissions always expect to be paid for performance. Sales goals without any associated incentive are essentially meaningless.
Your sales goals are too binary
Instead of defining binary goals (under quota you get nothing), try defining more progressive goals, each one with its own attainment threshold and associated rewards. This allows you to create a virtual goal ladder, allowing every member of your team to climb as high as possible.
Also, defining sales goals and sticking to them makes sense, but too much rigidity can be limiting. If a goal no longer looks reasonable, or becomes misaligned with business priorities, it’s time to make a change to your incentives – even mid-period.
Your sales goals are unrealistic
Unrealistic goals are toxic because they often result in one of the following behaviors:
- Demotivation – “What’s the point? There’s absolutely no way I can reach my target.“
- Frustration – “These goals are totally ridiculous. It’s clear that Finance has no clue.“
- Anger – “Looks like they have money problems and want to steal our commissions.“.
The only way to define realistic sales goals is by constantly measuring performance. About 70% of your reps should be able to attain at least one goal. Another 15% should exceed this goal, and 15% should fail to attain it. In total, 85% of your work force should be able to reach or exceed their target. If it looks like it won’t happen, it’s time to update your goals.
Your sales goals are looking backward
While the past often predicts the future, sales goals should be inspirational and focus on what’s posible. So instead of relying on reporting to define future goals, try to define goals based on real-time forecasting – and keep adjusting. Focus on where you’re going and what the new priorities should be – not on where you’ve already been.
Your sales team wants to earn a larger commission this pay period than ever before. By telling them that you’ve defined goals based on past results, they will feel like the end result will be identical and predictable. Instead, make your team feel like they could win the lottery each time.
Your sales goals are based on collective performance
We get it – sometimes you do need to split commissions between individuals. Or you have no choice but to define goals based on team / territory performance. However, try to limit those whenever possible. Instead, try to define goals where closing even just one more deal will lead to higher commissions.
Each time you make a goal collective, you dilute its effect. Indeed, collective goals don’t make reps feel like they have a stake in each deal. Instead, it makes them more likely to “go with the flow”, and rely on others or general business trends.
If your sales goals aren’t working as expected, consider the following:
- Ensure that each goal has an associated incentive
- Avoid binary goals and create a virtual goals ladder
- Constantly measure performance and adjust goals
- Set goals based on what’s possible (not the past)
- Avoid goals which reward collective performance
If you’ve updated your sales goals, and your incentive program is ready to go, it’s time to deliver on your promise to pay your reps the right amount – on time. Visit us online to learn how you can automate your entire sales incentive program.