Whats the point of Sales Targets?

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“Targets are not negotiable” – Dave Gammon

Do you set targets for sales and for your salespeople?

I have sales targets in my own business and find them invaluable, primarily as a way for making me focus on two things

  • the levels of activity I am undertaking in my business
  • whether my approach is improving over time and new marketing or sales approaches are working or not. 

What I have noticed across my client base is that attitudes towards target setting and the approaches taken vary wildly, but seem to be associated with beliefs around how sales actually works. 

A strongly ResponseABLE, approach tends to result in targets being set, based on careful analysis of customer history and new potential customer or products. Conversely a ‘below the line’ approach is characterised by no targets, arbitrary % uplifts or a ‘never mind’ attitude to missing them.

But as this video shows, the presence, or absence, of targets is only half the problem.

 

Who cares if you miss?

 

What attitude do you, and your people, have towards sales targets? It is the response and consequence of achieving, exceeding or missing targets that is the important factor in how valuable they actually are, as a performance tools.

I have five simple principles that I hold when coaching sales people against their targets when discussing performance against sales targets with salespeople (or anyone responsible for making sales). I’ve found that they have helped me have meaningful discussions about performance that keep everything above the line

The target is not negotiable – The time to debate a target is when it is being formulated. The analysis and assumptions used to formulate the target should be discussed and shared widely. But once set the discussion ends and the focus moves to action.

Know your numbers – Anyone serious about their performance will know their numbers and the averages and ratios that drive their results. In sales this means understanding the levels of activity (calls, meetings, quotes) and the quality of approach (conversion ratios). It is the understanding of these numbers that gives people the ability to calculate how to hit their target each month.

 

 
Pipeline flow, not size – I’ve seen plenty of bulging pipelines (all those deals we think are about to close). Relying solely on business in the pipeline is sales folly. It comes from the over optimistic nature of sales people (who often confuse courtesy with intent) and a refusal to embrace the law of diminishing intent (the exponential decrease in propensity to buy once the meeting is over).

Week one as week four – Looking at the timing of activity and results within the month. Backloading activity results in a panic to just about be able to reach target, often at the cost of margin or relationship. Get your salespeople to treat week one as week four and push hard early in the month. This is the key to exceeding targets. 

Its always your pe
rformance – There are only two reasons customers don’t buy. Either it was the wrong product or service for them at this time, or the salesperson failed to demonstrate to the customer that it was. When a salesperson truly understands this it opens them up to a world of continuous effortless improvement through reflecting on their performance. 

So next time you are looking at your personal performance against sales targets, or reviewing your sales teams results, why not print off this checklist and keep these principles in mind during the conversation.

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