Setting Goals and Managing the Sales Force’s Performance：中国经济管理大学 MBA课堂笔记《销售管理：塑造未来的领导者》
Setting Goals and Managing the Sales Force’s Performance
中国经济管理大学 MBA课堂笔记《销售管理：塑造未来的领导者》
中国经济管理大学/中國經濟管理大學
Setting Goals and Managing the Sales Force’s Performance
Learning Objectives:
After completing this chapter, students will be able to:
Describe how sales managers use goals to guide and control the efforts of their sales forces.
Summarize the elements of an effective goal.
Distinguish when different outcome and behavioral sales goals should be used.
Identify different resources available to capture information used for making effective decisions on goals.
Apply goal-setting theory in order to improve managerial and motivational practices.
Introducing the Chapter:
Goals or quotas? Historically, discussion about the topics covered in this chapter has been one of the least favorites of our students. A typical comment might be something like, “If you don’t make your quota you’re a goner.” More top flight sales forces no longer use the term “quotas;” in its place they use goals. Goals reflect a more positive perspective and outlook and our presentation of this content reflects that sentiment.
A good way to start the discussion would be to ask students their perception of the concept of a goal, and then compare it with their concept of a quota. Typically, we have found that “goals” conjure positive comments and images, while “quotas” are associated with negative ones. What happens if you don’t achieve your goal versus what happens when you don’t achieve your quota? Goals and goal setting should be looked at in terms that reflect more of the positive contributions. The discussion should focus on the investment that companies have made in their sales force. Students should consider failure to achieve a goal a coachable moment for a sales manager, as opposed to an “Off with their heads!” moment.
Students might be surprised to find out how of themselves are many currently are using some form of goal setting. In questioning, you might find that many are already setting goals for their homework and other activities. They know why they use goals – but a discussion focusing on ‘Where and why organizations use goals?’ is usually productive. This can be followed up with a question dealing with the role of the sales force in achieving a company’s goals.
We conclude this chapter with a discussion on how sales managers can set goals. Many students will recall the SMART (specific, measureable, actionable, realistic and timely) acronym. But can they actually write a goal? How about implementing one? We think this is such a powerful tool that the last part of the chapter addresses the process of setting goals. There is a correct way to set goals that can result in a motivating experience. And, if done improperly, may be at best neutral but most likely a de-motivating experience.
Chapter Outline:
I. Why Are Sales Goals Important to an Organization?
A. Sales goals or quotas are performance standards that direct the resources of the sales force.
B. Sales is not the only profession that uses performance goals or quotas.
C. Production, management, marketing and other functional areas depend on the ability of their sales force to achieve their sales goals.
II. Using Goals to Guide and Manage the Performance of a Firm’s Sales Force
A. Sales goals help motivate the sales force.
B. Sales goals help focus the selling efforts of the sales force
C. Sales goals help assess the financial return of the firm’s investment in its products and services.
D. Sales goals allow for a comparison of results by salespeople in different sales territories and regions.
III. Different Types of Goals or Quotas
A. Input or activity-based goals are observable selling efforts (e.g., number of sales calls or presentations made, number of sales proposals written).
B. Output or outcome-based goals are the results of sales efforts (e.g., number of orders, sales volume, or profit). Sales volume historically is the most used metric.
C. Combination goals include some input and some output goals.
D. Pipeline analysis displays where a salesperson’s accounts are in the sales process.
E. Service metrics are difficult to identify. Lost accounts or complaints are often used.
F. Expense quotas are used to track a sales rep’s selling expenses (e.g., meals, travel, sampling, costs of selling)
G. Weighting the importance of goals helps balance the importance of each element being measured.
IV. Choosing the Right Metrics to Track
A. How many metrics should be counted? It would appear more is better, but at some point too many metrics leads to confusion on the importance of each goal.
B. Experts agree that between 7 and 9 ‘critical metrics’ are appropriate.
V. Choosing the Right Time Period to Track
A. What About Almost Meeting a Goal?
1. Actual goals are the 100% mark.
2. Threshold goals are the 90% of the actual goal and allow for partial achievement.
3. Stretch goals are 110% of the actual goal.
B. Should Sales People Be Involved in Setting Their Own Goals?
1. Involving sales reps in goal setting helps build commitment.
2. Involving sales reps in goal setting may allow reps to underestimate (i.e., lowball) what they may be able to achieve.
C. When Is a Sale a Sale?
1. When a product is shipped or paid for is a conservative approach to establishing a completed sale. Long sales cycles may, however, make this approach problematic.
2. Some firms devise a partial credit plan to address the length of cycle issues, e.g., 30% when the order is placed and 70% when the order is shipped.
D. Should Everyone Achieve Their Sales Goals?
1. Some organizations believe everyone should achieve their sales goals, others don’t and may expect only between 60% and 80% of the sales force to achieve them.
2. Not achieving sales goals may not be entirely the sales rep’s responsibility. Factors which may contribute to this problem include:
a) Flawed marketing research
b) Changes in marketing mix variables
c) Underachieving promotional campaigns
d) Delays in distribution
e) New competitors
f) Environmental factors than impact demand
g) Adverse laws and regulations
E. Do Goals Ever Get Changed or Altered?
1. Most companies change their sales goals on an annual basis. Most will implement an across the board percentage increase.
2. Some companies may modify their initial goals depending on the influence of non-selling factors in making the goals either too easy or too difficult.
F. What Happens When Salespeople Do Not Achieve Their Sales Goals?
1. Most companies understand that all reps will not meet all goals all the time.
2. Most companies will not immediately see not achieving sales goals as a problem. Only after receiving additional coaching and a continued underachievement of goals persists will this performance become an issue.
G. The Process of Setting Good Goals
1. Goal setting can be a great motivator, and when done incorrectly it can be a de-motivator.
2. Goals set unrealistically high typically lead to lower levels of customer service and may invite unethical behaviors.
3. Difficult goals lead to higher levels of performance.
4. Specific, difficult goals lead to higher levels of effort than do general goals (e.g., 6 calls/days vs. as many as you can).
5. Goal setting works to impact performance because:
a) Goals direct people’s attention and efforts toward goal-relevant behaviors
b) Goals have an energizing function
c) Goals affect persistence
d) Goals affect people’s problem-solving skills
6. Sales managers should follow the following practical goal-setting guidelines when setting sales goals:
a) Set goals that are easy to understand.
b) Important tasks which are not part of a goal may get ignored.
c) Having too many goals creates stress.
d) Try to get sales reps to commit to their goals
e) Indicate how sales performance will be measured and rewarded
f) Provide feedback as frequently as possible
g) Demonstrate confidence in reps’ ability to achieve the goals.
h) Not achieving a goal should not be considered a failure, but progress on the road to success.
VI. Summary
A. The primary purpose of having sales goals is to align the direction and efforts of the sales force with the plans developed by the firm’s top managers.
B. Most companies utilize a combination of input (effort) and output (results) goals for their sales force.
C. Finding the right combination of goals can be a challenging task.
D. Input from the sales rep can help gain their commitment to sales goals.
E. Sales goals should be adjusted to reflect market conditions.
F. Using the principles of goal setting should help motivate a firm’s sales force.
Questions and Problems:
1. Based on the comments offered in the opening profile of Bill Febry, describe the different goals that you think Leinenkugel’s sets for its sales force.
Leinenkugel’s uses a combination of different sales goals including: input goals (e.g., call on 8 to 10 accounts each day; help with 2 promotional events) and output goals (e.g., sales volume levels and distribution goals such as new taps in bars and can, bottle and keg distribution in other stores (e.g., 6-pack bottles and cans; 12 pack cans and bottles; case sales).
2. Sam is a sales manager who prefers to use output measures for goals. Melissa, another sales manager, prefers the use of input measures. Summarize the advantages and disadvantages of both approaches. What type of products/services lend themselves to each type and why?
Output goals focus on the results of selling activities. They may include a number of metrics including: number of different units sold, volume of sales, new sales, and profits. They are easily counted, analyzed and understood. Their disadvantage is that a sole metric or even several may not accurately reflect the entire effort needed to produce the sale. Almost any product or service could use them – they may be particularly useful in products with short sales cycles (e.g. food products). Input goals focus on a sales rep’s observable efforts or sales-related activities. They may include the number of calls (phone and/or in person) or presentations made, the number of proposals written or the number of new clients contacted. They should reflect the steps involved in making the sale can be quantifiable. Their disadvantage is that they may not include any quality component and because they are often self-reports, can be easily manipulated. Products and services that have a longer selling cycle typically use a number of input goals (e.g., insurance).
3. Customer service receives a lot of lip service and press, but when it comes down to using it as a sales goal, it presents some problems. Develop a possible customer service goal that could be used in a B2B setting.
Almost any number of goals could be developed. They might range from the simple (e.g., no complaints were made by customers) to the more sophisticated, (e.g., customers completing a post-sale or post-visit survey ranked us at a certain level or we were recognized in a public poll).
4. Naperville, Illinois, located southwest of downtown Chicago, has undergone rapid growth. It is now the second largest city in Illinois, next to Chicago. As a sales manager, you knew the time would come when there were more potential clients than your present sales force could handle. Your organization has authorized splitting its two Naperville sales territories under your control into four. What type of goals do you think would be the most important to focus on given the situation?
With twice as many sales personnel in the area, you would expect that input or activity goals should be very important (e.g., number of new accounts contacted, number of proposals and presentations made to new accounts). With additional time available, one might also expect the amount of time spent with existing customers would increase, as would customer service. Output measures would be expected to increase in a gradual fashion as prospects are turned into customers.
5. The sales goals for one of the territories you manage have been set at $1.1 million for the current year. There are three sales representatives in this territory: Jose, who is one month out of training; Katie, who has five years of experience and is considered an average performer; and Kim, who has 12 years of experience and is a top performer. Set three goal levels for each representative and explain your rationale for each.
Jose has only one month of field activities. Input goals will assist him in how he spends his time. Threshold goals might be the initial focus. Katie appears to have the experience, but may be missing some motivation. She should be routinely making the actual goals with encouragement to focus on achieving more stretch goals. As a top performer, the sales manager would want to keep obstacles that prevent Kim from selling out of her path. She may already be achieving stretch goals and may want to focus on capturing some key accounts.
6. A number of factors can impact a salesperson’s ability to achieve their goal. What are some of these factors?
Some factors that impact a sales rep’s ability to achieve their sales goals are within their control and some are not. When reps are not achieving their goals a sales manager would want to consider how they are spending their time (input or activity goals). If their time allocation seems in order then an examination of the quality of their work would be warranted. Some factors affecting goal attainment are outside of a rep’s control. The goals may be in error as a result of flawed marketing research, changes in marketing mix variables, underachieving promotional campaigns, delays in distribution, new competitors, environmental factors than impact demand, adverse laws and regulations, as well as other factors.
7. As a student you probably have had some courses with only one or two exams or papers. Likewise you’ve probably encountered some courses at the other end of the spectrum where many aspects of your performance were graded. The same situation could be said to exist in sales. As a sales representative, which end of the continuum would you prefer? As a sales manager, which end would you prefer? In each case, explain your rationale.
Students’ responses to this will be mixed, but most should prefer somewhere in the middle. Using the classroom analogy, most find the use of only one or even two measures of their performance not something they like. They might see think that using too few measures may not accurately capture all their efforts and just be too risky. At the other end of the continuum, students probably don’t want to have homework and quizzes taken on a daily basis either. This extreme might cause more stress than they want. Most will prefer some position more toward the middle. Moving to the sales arena, they likely will have similar opinions about the number of performance measures they would like used to capture their efforts.
8. How well and in what situations do “all or nothing” goals work? What problems do you think a sales manager might encounter by rewarding salespeople who only partially meet their goals?
This question should generate some interesting discussion. Students may be concerned about an all or nothing approach. They will likely prefer some reward for partially meeting a sales goal. This seems natural, especially for a newer less experienced sales person. However, be sure to point out that commission sales are largely based on the ‘all or nothing’ approach. Getting “close” to making a sale does not mean you made the sale.
There are several potential problems a sales manager might encounter by rewarding sales people who only partially meet their goals. These reps may become satisfied with what they get, even though they are not meeting their goals. As the number of these situations increase, the sales manager may end up with a sales force that is sub-par in terms of productivity and profitability.
9. Are coaching and mentoring skills involved in goal setting? If so, explain where and how they should be incorporated.
Yes, coaching and mentoring behaviors are involved in goal setting. Goals are meant to direct behavior. They help identify where things are going correctly and where they are not. The advice of a coach and/or mentor in correcting these behaviors can be very helpful in working toward achievement of goals. Similarly, when goals are not met, having a coach/mentor help address any disappointments and work to reposition the rep for another set of goals can be helpful.
10. As a sales manager you know that goal setting can be motivational. If you are about to set goals for your sales force, what are some of the behaviors you want them to demonstrate?
There are a number of principles that can make goal setting a motivational experience. Goals should be challenging, yet achievable. They should be specific. Goals should be easy to understand. Important tasks should be included in goals, otherwise they may get ignored. Having too many goals creates stress. Try to get sales reps to commit to their goals. Indicate how sales performance will be measured and rewarded. Provide feedback as frequently as possible. Demonstrate your confidence in the reps’ ability to achieve the goals. Not achieving a goal should not be considered a failure, but progress on road to success.
Answers for Chapter Caselets:
11.1 All In A Day’s Work
The sales manager, Hannah, has several issues going on in this role play. Ella is a young and promising sales representative. However, her limited maturity has a tendency to show through. After six months with the company she sent an email to the vice-president complaining about the “gas guzzling SUV hogs” they were driving. While her environmental concerns were appreciated, her communication was considered a bit out of line.
Hannah’s bigger issue with Ella today deals with Ella’s replacing in-person customer contacts with on-line customer video contacts. She purchased the pc-video cameras for some of her customers and has been doing this for nearly two months without the knowledge of the sales manager. Now, that Hannah has ‘discovered’ this change of sales protocol on her own, Ella indicates she was about to cover it in their next meeting. Ella also reports these should be considered the same as an in-person call for her activity report (which is how she has been handling it).
Hannah’s second issue is with Syd, a member of the sales force for three years, with a mediocre sales record. Both Syd’s sales performance and customer service need to improve.
1. If you were Hannah, how would you handle your meeting with Ella?
Ella’s immaturity is showing. She should be encouraged to make her positions know, but consider the best time and place to do so. In essence, she needs to be encouraged to “Tone it down”. While her environmental stance on using fuel efficient cars and video sales are applaudable, she needs to work within the system. She might consider having more of an informal conversation with the sales V-P and suggest she be a pilot case for a hybrid auto. Changing the sales process without informing Hannah, regardless of her environmental stance, was going too far. Discussion should focus how to positively channel Ella’s enthusiasm and energy.
2. If you were Hannah, how would you approach your session with Syd?
Discussion should highlight how the principles of goal setting should be implemented.
3. What specific goals would you suggest for Ella and Syd to improve their performance?
Ella’s goals might include getting back in front of customers. However, this might seem like a great opportunity to test out how a firm can reduce their carbon footprint. Hannah needs to work with Ella and see if they can help focus Ella’s experiences and energy on the company’s sustainability or green goals.
Recommendations for Syd should consider looking into why his performance might change from quarter to quarter. Additionally, some work should be done to determine why his customer service ratings are only adequate and how he might improve. They might end up with a more steady and positive sales and customer service trend lines.
11.2 Sandwiched In
Devin is being pressured by the need for immediate income to help care for his grandparents who raised him and the need to make a sales goal. He could reach the goal if he pressed a loyal customer to make a big purchase, but he is concerned that such a large purchase might not be in the company’s interest.
1. If you were Devin’s sales manager, what would you recommend he do in this case?
The discussions should consider long-term needs versus short-term needs. If making the sale jeopardizes his relationship with his most loyal customer, he might be encouraged to re-think that. Additional discussion might include things he and the organization could do to help him with his immediate financial stress.
Role Play:
Oval Track Promotions
This role play deals with a sales rep (K.R.) who is not pleased with the way top-down setting of sales goals impacts her sales territory. Oval Track Promotions sells advertising and other promotional opportunities aimed at NASCAR® enthusiasts. Sales goals are set by top management and are typically an across the board increase. K.R. believes this process is particularly unfair to her because, out of all territories, her territory has the least interest in racing.
While K.R. is considered a good performer in terms of results, she is outspoken and clearly upset by the goal-setting procedure. The discussion should include dialog about the importance of getting buy-in from the sales rep as well as an understanding of the goal setting procedure of top management. While K.R. may be unhappy, it may be that the sales manager has little recourse in this situation. The sales manager should be sure that they address the areas that they do have control over and work to focus on those areas in which they can be of assistance to K. R. in her achievement of her sales goals.
Self-Assessments:
In your copy of Sales Management, you will find an Access Code Card. By using this code at www.pearsonhighered.com/tanner, you will gain access to the SAL program. Students will find an Access Code Card in their copy of the book as well.
IDI – What’s My Decision-Making Style?
Sales manages must make many decisions about how they set goals. This short instrument addresses an individual’s decision-making style and classifies it as either based on a rational or logical approach or as an intuitive style. The style an individual uses is of interest in determining how they gather information. Rational types will utilize facts, details and cause and effect logical. An individual with an intuitive style focus more on relationships between ideas and weighs options against personal values more than logic (i.e., gut feel).
IC7 – What’s My Attitude Toward Achievement?
We all have to strive to achieve our goals. This instrument was developed to measure attitudes toward the success and achievement of others. The instrument developers believe the results can help individuals better understand why they react the way they do to others’ success and how important achievement is to one’s personal goals. Note that this was developed in
Using Videos:
Go to the website with videos from Selling Power and consider the two videos selected for this chapter. Listed below are potential ways to introduce each video and questions you might consider to encourage further discussion after you have viewed the videos. To access the videos go to www.pearsonhighered.com/tanner.
Sales Quota Management Robert Youngjohns
Be prepared --Robert Youngjohns is a fast talker and covers a great deal of ground quickly. In this clip he discusses a variety of topics about quotas, from both the individual level and the organizational level. He discusses some of the reservations that reps have to quotas (i.e., they don’t understand how they were set; they believe they are based on favoritism and politics). He believes the way companies can get a buy-in from reps is to be sure that reps believe the quota is achievable. He describes how companies can better inform reps about the setting of quotas which includes examining what happened last year, how territories have changed and what are top management’s and the sales force’s assumptions about growth. This segment closes with a discussion about how realistic it is for most firms to think that about 70% of their sales force should achieve their quota.
Here are some questions you could ask the class to look for and consider:
1. What are some concerns reps typically have about quotas?
2. Why are quotas often not understood by reps?
3. What are some of the reasons for NOT adjusting quotas at mid-year?
Goal Setting Ron Hubsher
This brief video presents a couple new twists for goal setting. Ron Hubsher discusses how he likes to set goals in a team environment. He thinks that everyone should share their goals. The benefit of this practice is that others can help reinforce your efforts. For example, imagine you were working to earn money for a Harley. Now your colleague can ask ‘How close are you to getting that Harley?’ He believes the camaraderie of the goal setting helps reinforce efforts. He also discusses how one company includes feedback levels for each individual on a dashboard so they can see how close they are coming.
Here are some questions you could ask the class to look for and consider:
1. How comfortable would you be to share your goals with others in your work group?
2. Mr. Hubsher thinks it is important to visualize your goals. How could you do that as a student? How could you do it as a sales representative?
Full Case Recommendation:
Freedom Telecom a well established telecommunications company, had been a great company to work and sell for. As a result of an unethical executive team’s actions, the company’s stock as well as its image, was now in the trashcan. Many clients, as well as younger employees, left the firm-- its future is in jeopardy. A new wave of ‘turn around’ managers were brought in to breathe some life back into the company. A new VP of Sales has imposed a top-down set of sales goals that an established sales manager is being forced to implement. Discussions should include how sales goals are developed and implemented, as well as the leadership styles of the VP and the sales manager.
Other In-class Exercises:
Setting Personal Goals - Motivational Speakers – Brian Tracy and Zig Ziglar
Brian Tracy is one of many nationally known motivational speakers. In this 2-minute video clip he describes a simple exercise that helps focus and prioritize your personal goals. From his description of the exercise, you can see how this activity may be very appealing. It’s simple, it helps you focus, it can be rewarding. It is a nice, feel good, self -development activity. Go to http://www.youtube.com/watch?v=2iDbs3vh6KM&feature=related.
Over the years, another popular motivational speaker has been Zig Ziglar. This 5-minute clip describes a series of 4 steps that he recommends (in his ‘unique’ style) individuals should follow to set goals. Note: Ziglar’s style may come across as a bit preachy to some students and the audience’s clothing is out of style. You might want to call this a ‘classic’. Go to http://www.nightingale.com/LandingPages/IY/Ziglar2.aspx?promo=intgooga372&org=intgooga372&gclid=CIbckozxvpYCFRJdxwodGiSJxw
First Hand Experience - Interview a sales person and/or sales manager.
If students have an opportunity to talk with sales managers or sales reps, they should ask them what type of goals the sales force has. Include a discussion of how goals for a 3-month rookie would differ from someone with 5 years of experience. Would there be any difference between a veteran with 5 years of experience and one with 10 years of experience?
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