Imagine what your organization would look like if every salesperson on the team consistently attained their sales goals. For many organizations, for which even a 60% goal attainment would be an improvement over current performance, it can feel like an impossible dream.
It’s easy to blame individual salespeople for the failure, or sales managers, or even the system. But what if the goals themselves are the problem? An article in Harvard Business Review a few years ago laid the claim that higher sales goals correlate positively with lower sales numbers. They argued that when salespeople are faced with (what they perceive to be) unrealistic goals, they are less motivated to perform, and ultimately deliver sub-par results.
By the same token, setting goals too low can have a negative impact as well, causing the team to lose motivation once they’ve hit their targets. But what if you could set goals that are at once aspirational and achievable, and that actually help your team members to become better salespeople?
That’s the promise of activity- and milestone-based goal setting, an approach that focuses on the daily behaviors of your team to achieve the desired sales outcomes. I want to explore how to set goals that your team will actually achieve, but first, let’s take a closer look at why results-oriented goal setting so often fails.
Most sales goals are results-oriented—they’re based on a revenue goal, a number of transactions, or another result achieved within a set time frame. This approach has many problems, but two in particular have the potential to tank your team’s performance: The approach forces retroactive rather than proactive management, makes faulty assumptions and it’s frequently de-motivational.
Retroactive rather than proactive
A results-oriented approach requires managers to look backward and make adjustments based on historical information that may not currently apply. It also means that any adjustments based on that information happen long after they could have an impact on the current trajectory of performance.
Faulty assumptions and lack of sales coaching
Oftentimes, the result goals do not come with guidance on how to reach them. Assumptions are made that salespeople have the skills and resources needed, or should "figure it out". Also, they are not provided with sufficient support and coaching from their managers.
When results-oriented goals aren’t met, they have the psychological effect of causing salespeople to try less hard the next time. In fact, if the salesperson even perceives the sales goal as unachievable, statistically speaking, they are less likely to try very hard to meet it.
Now let’s take a look at how to set goals that will drive your team’s performance to higher levels.
If you don’t know what behaviors and activities lead to your desired outcomes, then you can’t help your team to achieve those outcomes. Once you know what information you need to qualify leads and to keep momentum in your pipeline, set up a system to track and measure the daily activities such as the number of prospecting calls, types of information to be collected on each call, questions the salesperson asks, which stakeholders they enage with, and so on. Once you are collecting the right type of information, at the right time, you’ll start to see what you need to know. And remember to ensure the quality of these activities, not just the quantity. Coach along the way and don’t assume that your salespeople always know what to do.
Use the metrics you set up to identify which practices and activities have the largest impact on results. Look for blockages in the sales process as well as plays that consistently yield good results. Figure out what your high performers are doing differently on a daily basis, and how they’re clearing those blockages and moving prospects through the process.
Once you’ve identified key behaviors and activities, look at each salesperson individually, and set goals based on their current performance on those behaviors and activities. Instead of focusing on what the organization wants to achieve, focus on aligning what the salesperson can achieve with the organization’s desired outcome, and help them each set personal best goals for the key activities. Make sure that your managers explicitly encourage each salesperson to continually improve on their personal best goals.
Revenue numbers and other results-oriented goals do have a place in effective goal setting. For one thing, sales leadership needs to know what they can expect from the team, so they can run forecasts. Once you’ve identified the critical behaviors, and set goals based on them, you can then project outward the impact of achieving those behaviors on outcomes, and set results-oriented goals accordingly. Because they are based in daily activities and ongoing support, these goals will be much more accurate and achievable, leading to better overall outcomes.
For best results, goals should be visited more than just once a year or quarter. Review activities-based goals with a coach or manager weekly, or initially even daily, as salespeople get experience and start seeing results from their changed behaviors. Frequent adjustments also allow managers to see when a salesperson is struggling to meet goals, and to help them in a proactive way. Because the system is set up to track and measure best practices, the goal behaviors themselves can be adjusted also as the team learns more about what works well.
Some organizations will naturally balk at the extra work involved in identifying and setting activities-based goals. If you’re fine with setting results-based goals and hoping for attainment, then this approach may not be for you. For companies that want to be industry leaders, however, goal attainment must become a priority, and activities- and milestone-based goals are more likely to help you drive new behaviors.
George is the founder & CEO of Membrain, the Sales Enablement CRM that makes it easy to execute your sales strategy. A life-long entrepreneur with 20 years of experience in the software space and a passion for sales and marketing. With the life motto "Don't settle for mainstream", he is always looking for new ways to achieve improved business results using innovative software, skills and processes.