The Perils and Possibilities of Sales Goals

If you’ve been paying attention to the news recently, you’ve probably heard about the trouble financial services company Wells Fargo got into for creating fake bank and credit card accounts for unknowing customers. The story received a lot of coverage in the media, and even rated a Music Man-themed mocking on Saturday Night Live.

The SNL Wells Fargo wagon bringing something special . . . or criminal


In response to the public outcry resulting from this revelation, Wells Fargo has announced that as of January 1, 2017, it will eliminate all product sales goals in its retail banking. However, this decision has left many economic pundits wondering what was actually at the heart of Wells Fargo’s problems. Was it the sales goals themselves? Or was it the way those goals were implemented?

We’ll let the proper authorities puzzle this out in regard to Wells Fargo, but you might be wondering about the implications of this controversy for your own team.

Is setting goals motivational or problematic? How can you create an atmosphere that fosters competition without encouraging fraud? What can you do to protect your team, the company and the bottom line?

In this article, we’ll discuss how small and midsize businesses (SMBs) can set reasonable, attainable sales goals that won’t incentivize fraudulent techniques among your sales team.

Create a Positive Culture

The first and most important way to keep everything at your company above-board is to create a corporate culture that values honesty and good-faith behavior instead of cutthroat competition.

If those at the top value these things more highly than making sales at any cost, that attitude will filter down to all employees. According to Peter Chun, the vice president of inside sales at Lucid Software, two sales teams with the same goal can take different approaches to reaching those goals, which may have vastly different results:

“[Let’s say] one manager presents in a certain way and it’s really positive and shows a clear path of how they’re going to get there and has a plan. And you can have another sales team that has the exact same goal but doesn’t have those pieces in place, doesn’t have the clear, defined plan, doesn’t have a culture of encouragement. And it’s the same goal, same number, that both teams have, but one is perceived more negatively and it can cause unacceptable behavior from the reps on that team.”

Peter Chun, VP of inside sales, Lucid Software

The role of the team leader, then, is to set the tone for your team. If you want to discourage unethical behavior, you must model the positive, productive behavior you do want to see.

According to David Kirk, the co-founder and chief revenue officer of CloudApps, “It’s about moving the middle, looking at your core performers and making your core performers more and more like your top performers. You don’t do this to then drive your top performers to do more.”

You also need to be vigilant when it comes to bad behavior that you wish to avoid. Jeff Kear, co-owner and marketer at Planning Pod advises conducting regular audits of salespeople to prevent fraudulent activities: “Basically, the idea is to spot check the reported sales and even follow up with the clients to assess the sale and to see if they are being served well.”

The best way to perform these “audits” is to be open and honest about them. You’ll want to regularly meet with your team to check in on how they’re doing. The more transparent you are with them, the more transparent they will be with you in return.

Part of good corporate culture, then, is not just looking toward a goal, but looking at the entire pathway to that goal, and viewing sales as a journey rather than an endpoint.

View Sales As a Journey

When you set a sales goal for your team, you need to consistently remind them—and yourself!—that the goal is simply the destination of a larger journey. According to Kirk:

You have to understand what the key things are to do along the way and do them habitually. And if you do those things, and you do those things right, the destination looks after itself. So the motivational part comes by motivating, directing, coaching, nurturing, encouraging people to do those things along the journey.

David Kirk, co-founder and chief revenue officer, CloudApps

To use sales goals as a motivational tool therefore requires a focus that goes beyond the numerical value of that goal. Rather, it needs to be something that is reasonably attainable by a motivated sales staff and part of a larger sales performance plan

In a Gartner report that discusses enterprise-level business decisions to buy sales performance management (SPM) software, “Three Techniques for Creating and Managing an Effective Sales Performance Management RFP Process,” by analyst Melissa A. Hilbert (available to Gartner clients), Hilbert also points to the need to map the entire journey: “It is essential to define upfront what success looks like (from both a business and operational perspective.)”

Hilbert goes on to explain that leaders need to, “Define business and operational success (including metrics) with all of the line of business groups, including sales, sales operations, finance, IT and HR.”

So, when creating your sales plan, and setting your sales goals, you should get input from various groups throughout your company as to what they define as “success.”

An effective sales performance plan takes into account not just the bottom line, but also the cultural and organizational standards that are of value to the company.

Thus, sales goals need to be measured in a nuanced manner, not just through strict revenue-counting. You want your team to hit a certain sales goal while staying ethical and without overtaxing themselves. The best way to do this is to set expectations for performance and behavior that are based on hard facts and numbers.

Base Your Expectations on the Data

Kirk believes that situations such as Wells Fargo’s are created by managers and companies that base decisions on hunches and wishes rather than data:

“Salespeople were expected to meet unrealistic numbers, and, as the management must have known to some degree, in that atmosphere, people will bend rules to survive.” Successful managers, on the other hand, “don’t use gut feelings to drive things along; they use evidence. They are very evidence and fact-based.”

This means that you need to put in the work and set realistic goals that can be achieved without acts of malfeasance on the part of a sales team. Monitor your sales pipeline over time and use past metrics to determine what looks reasonable for the future. Sales force automation software can help with that through clear, intuitive dashboards that analyze this data.

Pipeline visibility in NetSuite CRM
 

Don’t just use this data for your own internal metrics, though—share it with your team. Mike Scher, co-founder & CEO of FRONTLINE Selling, notes that:

“Having some content on how the quotas work and are set, and how the goals were set, is really important. Being able to have that data, that helps people understand that it wasn’t just a number that was pulled out of thin air.

Mike Scher, co-founder/CEO, FRONTLINE Selling

If you want your team to perform at their highest level, then you need to be clear with them regarding why you’re asking them to hit a particular goal. When they know that, they will be more likely to challenge themselves to exceed your expectations.

Encourage Healthy Competition

Mike Scher points out that “salespeople are really all about achievement. . . . so a sales goal has to be viewed as something that’s attainable but requires effort. The way successful salespeople are wired is they’re competitive. And competitive people enjoy the stiff competition.”

Just don’t make second prize a set of steak knives
(From Glengarry Glen Ross, Source: Cook’s Direct)


Setting a challenging goal will thus help your team perform better by spurring on that competitive spirit, albeit in a collegial way, which your corporate culture should demonstrate to them. The way to make sure that these goals aren’t set too high, though, is by examining the data and creating benchmarks that, according to Scher, “are realistic and challenging at the same time.”

David Kirk expresses this slightly differently, highlighting the need to make the thrill of friendly competition an inherent part of your corporate culture:

“A lot of what we’re doing here is about changing the way the business works, impacting business results, but you only do that by changing behaviors, and the most effective way of changing people’s behaviors is to make it fun and engaging.”

Takeaways

If you want your sales team to succeed at a level of maximum productivity, you must make sure they are challenged and engaged in a process that values waypoints as much as it does endpoints and that creates realistic expectations for them based on clear data. In this way you can use sales goals to your benefit without risking becoming the next Wells Fargo.

When you set those goals, be sure to keep these “do’s and don’ts” in mind:

  • Do encourage a culture of positive feedback and good-faith actions.
  • Don’t simply set your sights on sales goals as an endpoint without considering the benchmarks along the way.
  • Do base your goals on the data at hand; not on hunches or unreasonable desires.
  • Don’t bore your team with goals that are too easily attainable.
  • Do email me at andrewfriedenthal@softwareadvice.com for more information. I’m happy to help you figure out what your own SFA software needs might be and connect you to one of our expert software advisors for a free, no-obligation consultation!

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