Best Practices in Sales Compensation Part 5
Setting objectives is a constant balance between meeting your organizational goals and being realistic about the capabilities of your sales team. You want to be aggressive enough to reach revenue and profitability expectations as well as keep everyone motivated, but you don’t want to be so aggressive that your team feels it is impossible to succeed and just gives up.
In part 5 of my Best Practices in Sales Compensation Series, we’ll go over some of the top things to consider for keeping your sales team engaged and successful.
(Read Part 1 , Part 2 , Part 3 , and Part 4 )
When setting objectives for your organization, consider what you absolutely need versus the ideal you want; take into account the resources you have to work with (as well as the market situation and sales productivity); and create a target range ranging from easy to impossible—and place your target somewhere in the middle of that range.
Types of Objectives
There are several different types of objectives you might set for your sales reps. They can be sales process activities like making calls or qualifying leads. They can be progression milestones like hand-off triggers between internal teams or customer signoffs. But for our purposes, we’re going to focus on financial objectives such as revenue and profit.
Best Practices for Setting Objectives
Objectives need to align with organizational goals and provide achievable but challenging targets for the sales team. To accomplish this, consider these practices:
- Make sure that the salesperson has the ability to influence if not fully control, their capability to meet and exceed the objectives.
- Set realistic expectations. Unrealistic targets will stagnate your growth potential and give you a poor reputation with employees (as well as the labor market).
- Provide a clear and visible path to achieving the objective.
- Try to limit the quantity and types of objectives. More is not better. It’s better for a sales rep to be able to focus on a singular goal than to have their attention split in too many directions.
- Lastly, make a plan for what to do if your salesperson exceeds the target as well as underachieve target objective levels.
These are just a few of the very important considerations in setting your objectives.
Take some time to explore my blog or check out my books for a more in-depth look into sales compensation.