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CHP 11: Setting Goals and Managing The Sales Force's Performance

Companies set sales goals and quotas to guide and motivate their sales force in meeting revenue targets. Goals are used to measure sales performance, determine compensation, and align sales efforts with company strategy. There are different types of goals, including input-based goals measuring activities, output-based goals measuring results, and pipeline analysis of customers in the sales process. Companies reward salespeople for meeting threshold, actual, and stretch quota levels to incentivize performance. Setting specific and challenging but achievable goals focuses sales efforts and energizes the sales force to persist and find solutions to meet their goals.

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106 views2 pages

CHP 11: Setting Goals and Managing The Sales Force's Performance

Companies set sales goals and quotas to guide and motivate their sales force in meeting revenue targets. Goals are used to measure sales performance, determine compensation, and align sales efforts with company strategy. There are different types of goals, including input-based goals measuring activities, output-based goals measuring results, and pipeline analysis of customers in the sales process. Companies reward salespeople for meeting threshold, actual, and stretch quota levels to incentivize performance. Setting specific and challenging but achievable goals focuses sales efforts and energizes the sales force to persist and find solutions to meet their goals.

Uploaded by

HEM BANSAL
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We take content rights seriously. If you suspect this is your content, claim it here.
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Chp 11: Setting Goals and Managing the Sales Force’s Performance

Companies use sales force to meet their revenue goals. To monitor this, sales goals are used. Goal
setting is an important aspect of sales force management and if done correctly can prove to be a
powerful activity.

 A sales goal (quota) is a performance standard by which the salespeople- sales representatives
and sales managers alike- are measured.
 The main purpose of setting these goals is to synchronize the direction and efforts of the sales
force with the plans developed by the company’s top management.
 These goals are used as benchmarks to measure performance within a stipulated period of
time.
 Compensations are based on these performance and act as motivating factors.

The importance of sales goals in an organization-

 Sales jobs are time consuming, and the sales people work outside the organization and
independently. Goals acts as a way to guide performance
 Other business activities greatly depend on the sales to happen.

Using goals to guide and manage the performance of firm’s sales force-

 Motivating the sales force


 Focus the selling efforts of the sales force
 Access the financial return on the firm’s investment in its products and services
 Compare the results achieved by salespeople in different sales territories and regions

Different types of goals or quotas-

The metrics/types of goals should represent that the performance is important to the company. They
are-
1. Input based goals or activity-based quotas: this is the efforts made by the sales person. E.g.
number of calls made, number of presentations given, number of sales proposals made.
2. Output (outcome) based goals- the selling results a representative must achieve. Eg. Number
of orders received, revenue, sales volume, profits generated.
3. Pipeline analysis- shows how well a salesperson is maintaining a stream of customers at
different stage in the sales process.
4. Expense quotas- used to keep the costs associated with a representatives sales in line with
what the firm thinks the representative should spend in order to be successful. The costs
involved in outing on demonstrations, entertaining customers, trials of products, lodging and
other travel costa etc.

Meeting a goal

The companies do not take an “all or none” approach. A more typical approach is to reward
salespeople by the following:

1. Threshold goal- achieving 90% mark


2. Actual goal- meeting 100% mark
3. Stretch goal- meeting 110% goal
Finding the correct combination of goals and not overwhelming sales representatives with too many
types of goals can be challenging task for sales managers. The majority of organizations tie the
performance of their salespeople to the compensation they receive, which is frequently based on the
percentage of their goals they achieve.

The process of setting good goals:

 Difficult goals lead to higher levels of performance. Sales representatives will put forth more
effort when their goals are somewhat difficult versus too easy or too difficult.
 Specific, difficult goals lead higher levels of efforts than general ones.

Goal settings works because it impacts people’s performance in four ways:

 Goals direct people’s attention and efforts towards goal relevant behaviours and away from
other less relevant behaviours. They provide focus and direction. E.g. When a new product or
service comes out, more efforts needs to be placed on selling it.

 Goals have an energizing function. Higher goals produce more efforts than goals that are set
at lower levels. Knowing what level of sales is expected of them gives sales people a target to
aim for.

 Goals affect persistence. Harder goals will prolong the expenditure of effort. Tight deadlines
lead to a more rapid work pace than loose goals.

 Goals affect people’s problem-solving skills. When faced with completing difficult goals,
people will seek new ways to accomplish them.

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