Kestio

How to set the "right" objectives for your sales people?

The definition of your sales staff's individual objectives is a very important issue: the achievement of these objectives is crucial to the economic and financial security of your company, but not only.

It also has an impact on employee commitment. In a context of generational renewal of sales teams and managerial evolution, how can you ensure that you set objectives that are both ambitious and realistic, and that motivate your sales force in the long term?

 

Setting salespeople's objectives: a strategic issue

Let us first clear up a common misunderstanding.

No, setting individual sales targets is not just about setting the turnover that each sales person must achieve in order to be eligible for commission!

 

  • On theone hand, the criteria taken into account to evaluate their effective contribution to the company's objectives can be multiple: margin generated, percentage of sales achieved on a particular offer or target, number of new customers signed up, etc.
  • On theother hand, their level of commitment can also be measured by the means used to achieve it: number of new prospects identified, number of telephone or physical meetings held, number of sales proposals sent, conversion rate, etc.
  • Finally, the objectives can include a collective component and encourage cooperation, in addition to individual performance: conditioning of variable remuneration on the prior achievement of a collective turnover threshold, taking into account the time spent on internal projects, etc.

It is therefore a real strategic issue involving choices whose impact is not only financial, but also managerial : the commitment of employees and the way in which teams operate depend partly on it.

 

5 good practices for defining business objectives

1. Involve the sales team in the reflection

The pitfall that is most often observed on this subject consists of repeating the previous year's model and applying it identically, without questioning its effectiveness. It is useful to plan a consultation phase with the sales staff on the subject: take their opinion, their feedback from the system already in place and any suggestions for improvement. Present them with your own ideas for change before implementing them, in order to test their reaction to the options under consideration.

Taking this feedback into account will ensure that your sales staff will adhere more closely to the objectives you present to them later on.

Consulting them does not mean involving them in the final decision, but it is useful to know their perception and to integrate it into your thinking, among other criteria that come under a more global vision of the company.

2. Define operative variable elements

As mentioned above, there are potentially many criteria that can be taken into account in setting salespeople's objectives.

Don't forget that each of these criteria will then have to be regularly monitored and will come into play in the calculation of the variable part of the sales representatives' remuneration. You will therefore have to make choices, otherwise you will be setting up a real gas factory!

Select your criteria (preferably at least 2, and no more than 4) and define their weighting according to the importance you attach to them.

The profit-sharing system you propose must guarantee the motivation and commitment of your sales staff over the long term. For example, you can combine a result objective (achieving €500,000 in sales over the year) with a means objective (making 8 prospect appointments per week, etc.).

3. Carry out a preliminary simulation of the proposed system

The best way to ensure that the selected criteria work and to check the overall coherence of the proposed system is to test it. Finding out during the year that the system is not working satisfactorily could have serious consequences for the company.

Using the figures available for year N, carry out simulations to check that :

  • the data needed to establish the variables are available (already tracked in your current monitoring system, or if not, easily/quickly accessible)
  • the multi-criteria and weightedcalculation is simple to carry out (not a gas factory)
  • the results obtained are coherent (not too great a difference with the current system)

Also check that these results are stimulating for your salespeople! Set a target of 70% to 80% of the team (at least) meeting their sales targets, and receiving satisfactory bonuses.

Discover the KESTIO webinars, where we discuss

all topics related to business performance with our experts: 

Fabien Comtet, CEO

Dominique Seguin, DG

Nicolas Boissard, Marketing Director

 

 

 

 

 

4. Establish "fair" criteria

In order for the objectives to be perceived as "fair" and to generate lasting support, it is desirable that they be defined according to criteria that are directly dependent on the actions of the sales staff : number of appointments made, number of deals won, etc.

Exclude external factors or third party interventionsas much as possible: in the context of new business models, in particular, Marketing can intervene in all or part of the sales cycle; it should therefore be distinguished from actions directly attributable to salespeople.

Also, as far as possible, adopt a qualitative approach: sending as many commercial proposals as possible, for example, should not necessarily become an end in itself; combining it with a notion of transformation rate allows you to measure the quality of the work carried out in more detail.

Depending on the case, it may also be important to take into account certain disparities (between junior and senior sales staff, geographical territories covered, account development and pure conquest, etc.) in order to reward not only the results obtained but also the efforts made.

5. Communicate in two stages

Once your system has been established in a coherent, efficient and "fair" way, don't neglect the (crucial) step of presenting it to the members of the sales team!

Plan a two-step communication:

  • A collective presentation to the team, which should make it possible to explain how it works, to inform the team of the criteria taken into consideration, and to highlight the overall coherence of the system with regard to the company's objectives (financial, strategic, etc.) and the reality on the ground.
  • An individual discussion with each member of the sales team, to specify each one's individual objectives in detail, and to answer any questions raised.

Salespeople need to have a clear idea of the level of variable remuneration to which they are entitled, and to translate the objectives thus set into action priorities and concrete organisational elements.

 

Also consider how key data will be monitored (weekly reporting, CRM monitoring, etc.) and how often the results will be evaluated.

 

If the defined system meets this set of best practices and is regularly monitored and effectively managed once implemented, you have every chance of getting your sales people actively engaged in achieving their objectives and results!

 

To go further, discover in our webinar, 4 keys to regain control in a difficult situation: 

Pensée pour s’intégrer parfaitement dans votre quotidien d’entrepreneur et vous accompagner dans votre développement

Newsletter Kestio : Toute notre expertise commerciale et marketing à portée de clic !