Friday, February 11, 2005

How to set sales objectives properly?

Usually sales objectives are set in terms of volume of business to be signed by a certain date or in terms of growth of turnover over a period or as improvement to the gross margin of a line of products... I wonder whether all of these objectives are properly formulated. I mean to examine how adequate it is to be setting objectives that are not strictly dependent on the mobilisation of the people who will eventually be assessed for their ability to reach the said objectives. This is actually something I learned in the NLP class I attended: "proper" / adequate formulation of objectives. I found it to be extremely powerful, so I thought I would use the tool to think a bit about the ways in which sales objectives could be set.

Let me use an analogy for a minute before proceeding further. Let us assume I am an actor and decide that my objective is to make the public applaud my performance without interruption for at least 15 minutes, because that is for me a good indication that my performance was good. Is it "fair" to be setting that objective given that it is not solely dependent on me and on my will? Indeed:
- the public may love the performance and still not applaud for 15 minutes for whatever reason
- the public may not like the performance even though it was excellent
- ...

So is it "harmonious" (I told you Harmony is important to me and I will write something about its role in business sometime) for me to define a criterion,
which is not solely dependent on my acting, to measure my success as an actor?

In a way, something similar happens with sales. When I set for myself the objective of signing at least 15 new customers this year, is it a gracious way of doing things? Should I consider it a failure if I sign only two who will generate twice as much turnover as my forecasts with 15 new customers? Should I consider it a success if I get 15 new customers to sign for something they don't need or I don't feel like delivering to them? What if despite my doing my job in the best possible way there are not 15 new customers by 31 Dec 2005 and? What if...

How would it help harmony (and therefore my business since a sustainably profitable business is also a manifestation of Harmony for me) to formulate objectives that are solely dependent on me? If I do so, can I afford to attach "rewards" and bonuses to those objectives given that their occurrence will not necessarily mean "turnover now", much less "immediate return"? How can I formulate objectives that are solely dependent on myself (which is "fair" and harmonious in my view) and still have the drive it takes to make my business fly?

I believe that incentives are not always productive methods for building sustainably profitable and recurring business. Incentives are not necessarily to way to achieve quality of sales, assuming they are a proper way to achieve quantity of business. Yet, focusing solely on quality of sales is a conspicuous lack of Harmony for me, because both quality and quantity TOGETHER are important.

Photosho_1 So I guess that "dry" targets of quantities are not enough to drive sales activities that can help build a sustainably profitable business. It is also necessary to set goals that are solely dependent on the actions of each and every person participating to the sales operations. That second part of the equation is more often than not forgotten in targetting and setting of objectives. It is also absent from approaches like the balanced scorecard. And it is definitely absent in consulting activities that are solely interested in improving performance indicators or indeed in governments that are exclusively focusing on reducing a rate or unemployment (sometimes by "creatively adapting" the definiton of "unemployed")...

Thoughts in progress...

"Progress lies not in enhancing what is, but in advancing toward what will be" - Khalil Gibran

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