are big fans of ‘stretch goals’; but, when goals are too high, people get frustrated,” says the expert. “They check out mentally and hold off until the next period when they think you’ll be more reasonable.”
A LITTLE STRETCH CAN’T HURT Wrong. A goal that’s too high – or one that sales reps perceive has just been plucked out of midair – isn’t merely unmotivating; it’s demotivating, the expert says. “Managers often pick a number
that’s an arbitrary 10 or 20 percent increase over last year’s results. This kind of ‘throw it against the wall and see if it sticks’ mentality rarely works.” One sales rep put it this way: “When goals are too high, it’s not just that the company doesn’t get the revenue. Another bad thing can happen, something that’s more insidious. Not reaching goals is depressing. Good salespeople want to reach their goals – and they feel bad if they don’t. If management sets unreachable goals, the salesperson can crash.”
THE RIGHT WAY TO SET SALES GOALS A goal that’s somewhere between too high and too low is what the expert calls a “peak-effort goal.” “This is the goal that results in high sales and a reasonable payout,” he says. “It’s fair and it’s achievable.”
When trying to set a goal that’s high enough to inspire growth – but not so high that it’s unlikely to be reached – managers should consider the following.
Goals should be tied to variables the salespeople can control. Sales- people can’t control the general economy, so they’ll feel helpless if their goals are derailed by outside factors. But they’ll feel empowered and in control if their goals are tied directly to their own behaviors. Goals should be customized to fit the particulars of each salesperson’s situation. “If one rep has a big terri- tory and another has a small territory,
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then, obviously, the first rep should have the higher goal,” says the ex- pert. “But knowing exactly how much higher requires real skill on the part of management. [Managers] may need outside help to make sure the alloca- tion is fair and motivating.” Goals should be broken down into small bites. He recalls once being in a sales meeting where a CEO stood up and boomed, “It’s clear where we’re going. Our sales next year will be a billion two.”
But the expert asks, “Was that
really a clear goal? Could anyone in that room relate to $1.2 billion? The general goal is your beginning statement, but it must be trans- formed into a series of steps so that it gets down into the hearts and minds of the people who are actu- ally going to do the work. Manage- ment must be able to show their reps the clear path they’ll take to reach that larger goal.”
And then keep checking in. “Sales goals can be predictable if manage- ment spends time helping people set sub-goals that will lead to the desired overall result,” he says. “But, once managers have set individual targets, they need to keep checking
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in to make sure people understand exactly what they need to do. How many people do you have to talk to in a week? How many yeses do you have to get? You can’t just say these things once. There needs to be a series of conversations.”
STAYING FLEXIBLE Be prepared to adjust goals if it’s clear they’re unreachable. “If, after a month, a salesperson has been taking the steps you outlined and still isn’t on track to meet the goal,” he says, “then the overall goal might not be realistic.” When sales goals are unreach- able, everybody loses: The company doesn’t get the revenue, the reps don’t get the commission, and the manager doesn’t get the bonus. If you’re having trouble setting peak- effort goals, consider reevaluating more frequently.
“In a tough economy you may have to adjust your goals,” he says. “But that doesn’t mean failure. It can be the chance to remotivate your team members with a goal they consider to be fair. Sometimes sales can be increased by lowering your goals.”
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