All leaders want to motivate their salespeople to be the best they can be, and, most of all, they believe that challenging sales goals are the right motivation. If 10-20% of retailers do not meet their targets, it is mainly a problem. But if most vendors don’t meet expectations, goals are a problem.
Five Cases Where Higher Sales Targets Can Lead To Lower Sales
Ambitious corporate executives. The computer manufacturer came up with a new server. Ambitious managers set corporate goals based on optimistic expectations, not market reality analysis. The seller communicated the target. The vendors quickly found the goals unattainable and almost stopped offering the new server, focusing on other product categories with more achievable goals that allowed them to earn more. Setting goals damaged the company’s entry into the server market and exacerbated the already desperate situation.
Systematic increase. The CEO increased the objectively set company goals by 5% in a company providing professional advice. The sales manager quickly added another 5% – to be sure, and the regional leaders added another 5% – say “what if” … Until the sales targets were pushed down to the sales staff, they were increased by a total of 15% compared to the original company goal. The sellers perceived the targets as unrealistic, and only 30% achieved their usual performance. In summary, the initial sales target was exceeded. The CEO and the whole team congratulated, but the situation disgusted the sellers so that many of them (mostly the “best”) went to the rival. The CEO packed the company within two years as well.
Weak market dynamics. The financial services company has set goals in times of a booming economy. When the recession took place in the second quarter, it was clear that the targets were unrealistic in the given situation. By the end of August, less than 10% of retailers had some chance of meeting their targets. The sellers were disgusted and angry that the company did not treat them fairly. Most whistled it and started to keep business for another year. They hoped that the goals would be set more favorably. Although the leaders considered lowering the targets for the first half of the year, they did not agree because they feared that they would damage the company …
Incorrect goal redistribution formula. The company leaders from the pharmaceutical industry have set a challenging but reasonable company goal – growth of 20%. They set a target for each seller equal to 120% of the amount he had achieved last year. The best sellers have warned that the goals are unfair. “I had a great year, so they rewarded me with even tougher goals, even though there is no longer such great growth potential in my territory.” in this) they easily exceeded the set targets without much effort. The top players thought: “I will not meet the target this year, the best strategy will be to stay back and set a lower target for next year.”
“A challenge for the stars.” When management set a challenging regional goal for me, I gave a disproportionate share of that goal to my strongest salespeople – the ones I could count on to achieve, “explains one sales manager. With this logic, weak sales people easily achieved easier goals, and the best salespeople were not sufficiently rewarded for their hard work and above-average results. Strong sales people observed that weak salespeople made more, bringing less money into the company and the impact on morale was catastrophic.