It also impacts employee engagement. In a context of generational renewal of sales teams and managerial evolution, how do you ensure that you set goals that are ambitious, realistic, and sustainably motivating for your sales forces?
Setting sales representatives' objectives: a strategic topic
Let's first clear up a fairly common misunderstanding.
No, defining individual sales targets does not only consist of setting the turnover that each of them must achieve in order to qualify for a commission!
- Firstly, the criteria considered 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, etc.
- Secondly, their level of engagement can also be measured by the resources used to achieve it: number of new prospects identified, number of telephone or in-person appointments made, number of sales proposals sent, conversion rate, etc.
- Lastly, objectives can include a collective component and promote cooperation, in addition to individual performance: conditioning variable compensation on achieving a collective revenue threshold beforehand, taking into account the working time spent on internal projects, etc.
It is therefore a real strategic issue involving choices whose impact is not only financial but also managerial: employee engagement and team operating methods partially depend on it.
5 best practices for defining sales objectives
1. Involve the sales team in the reflection
The most common pitfall on this subject is reusing the previous year's model and applying it identically, without questioning its effectiveness. It is useful to plan a consultation phase with the sales team on the subject: get their opinion, their feedback from the field regarding the system already in place, and any suggestions for improvement they may have. Present your own ideas for development before implementing them, in order to test their reaction to the options being considered.
Taking these feedbacks into account ensures greater buy-in from sales representatives to the objectives you will present to them later.
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 relate to a more global vision of the company.
2. Define operating variable elements.
As we saw earlier, there are potentially many criteria that can be considered in defining sales objectives.
Remember that each of these criteria must then be regularly monitored and will factor into the calculation of the sales team's variable compensation. You will therefore have to make choices, otherwise you risk creating a complex and unmanageable system!
Select your criteria (preferably at least 2, and no more than 4) and define their weighting according to the importance you give them.
The incentive system you propose must guarantee the motivation and engagement of your sales representatives over time. For example, you can combine a results objective (achieve €500,000 in sales during the year) with a means objective (schedule 8 prospect appointments per week, etc.).
3. Perform a preliminary simulation of the planned system
The best way to ensure the operational aspect of the selected criteria and to verify the overall consistency of the planned system is to test it. Realizing during the year that the system is not working satisfactorily could have serious consequences for the company.
Based on the figures available for year N, perform simulations to verify that:
- the data necessary for establishing the variables are available (already tracked in your current tracking system, or if not, easily / quickly accessible)
- the calculation of multi-criteria and weighted factors is simple to perform (not a complex process)
- The results obtained are consistent (no significant deviation from the current system).
Also, verify that these results are motivating for your sales representatives! Aim for 70% to 80% of the team (at a minimum) to achieve their sales targets and receive satisfactory bonuses.
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4. Establish 'fair' criteria
For objectives to be perceived as "fair" and generate lasting commitment, they should be defined based on criteria that directly depend on the actions of the sales representatives: number of appointments secured, deals won, etc.
Exclude external factors or third-party interventions as much as possible: within the framework of new business models, in particular, Marketing can intervene on all or part of the stages of the sales cycle; it will therefore be necessary to distinguish it from the actions directly attributable to sales representatives.
Also, as far as possible, adopt a qualitative approach: sending out as many sales proposals as possible, for example, should not necessarily become an end in itself; combining it with a notion of conversion rate allows you to more accurately measure the quality of the work done.
Depending on the situation, it may also be important to consider certain disparities (between junior and senior sales representatives, geographical territories covered, account development and pure acquisition, etc.) to reward not only the results obtained but more broadly the efforts mobilized.
5. Communicate in two stages
Once your system is established in a coherent, efficient, and 'fair' manner, don't neglect the (crucial) step of presenting it to the sales team members!
Plan your communication in two stages:
- A collective presentation to the team, which should explain how it works, inform the team of the criteria taken into consideration, and highlight the overall coherence of the system with regard to the company's objectives (financial, strategic, etc.) and the reality on the ground.
- Individual discussion time with each member of the sales team, to specify individual objectives in detail for each person, and answer any questions raised.
Sales representatives should be able to get a clear idea of the variable compensation they can expect, and translate the objectives thus set into action priorities and concrete organizational elements.
Also, remember to specify how key data will be tracked (weekly reporting, CRM tracking, etc.) and how often the results will be evaluated.
If the defined system adheres to these best practices and is regularly monitored and effectively managed once implemented, you maximize the chances that your sales representatives will actively commit to achieving their objectives and results!
To go further, discover in our webinar, 4 keys to regain control in a difficult situation:
