Choosing a sales objective may seem like the easiest part of the sales compensation plan, but it’s actually a deceptively complex process. Not only are there a number of variable factors to consider not just in choosing the type objective but also the size and scope of the objective. There’s also a lot at stake.

Of course, a good sales objective will motivate your sales force to drive your company’s revenue to higher profits. But it will also build trust between you and your salesperson. 

On the other hand, an unattainable objective will not only discourage your sales force, but also destroy trust. After all, if you train them, offer them an incentive, and then send them out to do an impossible job, they aren’t going to want to keep working for long. 

That said, here are five tips to keep in mind when setting your sales objectives:

Base it in Financial Reality

Before setting an objective, do your homework. Obviously, you’re hoping your salesperson will bring in more revenue for your company, but how much more? And will that target cover the fixed and variable costs associated with employing that salesperson until they can be productive? Take a real and conservative look at your current incoming revenue. Factor in the time it takes to onboard and train a new salesperson, any base pay you intend to provide, as well as bonuses and commissions. 

Taking the time to complete these steps will help you set a realistic financial objective and prevent a number of negative effects that come with poorly set objectives. You can read more about this process in my book. 

Align it With the Sales Role

Ideally, you will have an objective in mind before hiring a salesperson, that way you can design the role specifically for the objective. If you need to shift objectives for an already existing salesperson, you will likely need to factor in additional training. 

For example, if your objective is increased sales revenue, your salesperson will need to have the training and power to close deals with existing accounts. If your objective is acquiring new leads, you’ll need train your salesperson in whatever method of lead generation your company is using as well as establish their incentive pay to reward for achieving the objective of acquiring new leads.   

Make Sure It’s Realistic

It’s important to find that balance between realistic and challenging when setting a sales target. If you have an objective that’s easy to hit and you’ve provided a competitive incentive for selling, you could quickly find yourself paying out more than you can afford in variable pay. On the other hand, if the objective is impossible to hit, your salesperson will eventually quit trying and you won’t have any results.

Consider utilizing the S.M.A.R.T. acronym for setting goals: Specific, Measurable, Attainable, Relevant, and Time-Based. These components are helpful for any time of objective setting. You will want to follow when defining the type of measure but also when modeling out scenarios of performance before it is delivered as the quota.

Provide Tracking and Transparency

Be clear and transparent about the role of the salesperson and their objective in the overall financial state of the company. It’s a good idea to treat your salesperson as more of a partner than an employee.

By providing them with adequate tracking mechanisms, they’ll be able to behave proactively and creatively in achieving their objective in a timely manner. This also gives them a sense of ownership in the outcome so that they will hold themselves accountable to results, freeing you up to manage other areas of the business.

Consider the Overachievers

If you haven’t yet considered your pay curve, it’s a good idea to take into account what happens after your salesperson meets the objective. You will want to understand how underperformance and overperformance impact pay and your underlying financials as an organization. If you’ve set your sales objective too low, you may need to consider reducing accelerators, utilizing per deal caps, or setting organization-wide targets to manage costs associated with the incentive. 

Even if your sales objective is aggressive, you may still have a salesperson whose motivation surpasses the intensity of the objective. You want that sort of drive and ambition on your team, so tread lightly, as you don’t want to discourage your salesperson from pursuing targets aggressively. Remember that people respond to incentives, and you will want to think through the behavioral effects of the decision

Setting realistic objectives is just one part of the highly complex process of building a sales compensation plan. For a more robust walkthrough of the overall process, check out my book Starting Simple: Sales Compensation.