Sales Objectives and How to Achieve Them
In previous installments (see part 1 and part 2), we shared research findings that revealed there are three types of sales force metrics – measures of Sales Activities, Sales Objectives, and Business Results. We also identified five discrete sales processes – Call Management, Opportunity Management, Account Management, Territory Management, and Sales Force Enablement. Now we will explore Sales Objectives and their links to Sales Activities.
The Things We Want
Every sales force has certain outcomes that it is trying to achieve, like acquiring customers, cross-selling products, or improving salesperson skills. These are the things that the organization wants and the sales force is specifically tasked to deliver. In our research, we categorized these outcomes and their associated metrics as ‘Sales Objectives.’
Recall that the Sales Objectives are goals toward which selling effort is directed. And since they are the outcomes of Sales Activities, we cannot manage Sales Objectives with the same degree of control as the Activities themselves. Therefore, we can only achieve the Objectives we desire indirectly by managing our sales force’s Activities.
For example, a Sales Objective might be to increase your number of new accounts, which could be achieved by putting greater effort into cold calling or by visiting more prospects. You cannot direct a salesperson to have more new accounts, because prospects have to agree to become your customers. But you can set an Objective and then manage the upstream activities. In fact, you should. Again, managing Sales Activities leads to achieving Sales Objectives.
The Four Flavors
Just as we used our collection of Sales Activity metrics to isolate distinct processes, we also used our Sales Objective metrics to discern four categories into which all of the measures fell. It is important to understand the nature of the Objectives your team is pursuing, because it helps you then understand how to achieve them.
The first Sales Objective we called Market Coverage. These metrics tell you how thoroughly and accurately your sales force is addressing your target market, and they are used to ensure that there is enough total selling effort to cover all of your desired customers and prospects.
Sample Market Coverage metrics include:
- Percentage of Customer-Facing Time
- Sales Rep Turnover
- Percentage of Prospects Contacted
Sales Force Capability metrics tell you how effectively your selling effort is being applied. That is, if your salespeople have six hours each day to spend with prospects and customers, how successful are they in advancing opportunities, winning deals, or accomplishing other desired outcomes of their customer interactions?
(Note that a salesperson’s capability is not the same as their skill. Capability includes the skill of the salesperson, no doubt, but it is also a reflection of selling tools, motivation, and other components that affect the effectiveness of a salesperson.)
Sample Sales Force Capability metrics include:
- Percentage of Calls Advanced
- Percentage of Deals Won
- Number of Sales per Call
Product Focus metrics report whether a sales force is selling the products and services that you deem optimal to your company. These could be products with higher profitability or products with some strategic value, such as a new line of products.
Sample Product Focus metrics include:
- Ratio of New vs. Existing Products
- Percentage of Cross-Selling
- Average Deal Size
Customer Focus metrics reveal whether the sales force is attracting, retaining, and growing the company’s targeted customers. These could be customers that are either more profitable or customers that are somehow strategically important, like those in a new market or geography.
Sample Customer Focus metrics include:
- Ratio of New vs. Existing Customers
- Rate of Customer Retention
- Revenue by Customer Type
In sum, these four types of Sales Objectives provide guidance to your sales force about which things are important and what they should be trying to accomplish in the field. You can consider them guideposts or beacons to steer your sales force toward success. However, simply communicating objectives or even aligning them with incentives will not create the desired outcomes. To confidently achieve your Objectives, you must embed them in the day-to-day activities of your salespeople.
Achieving Sales Objectives
Recall that one of our first observations about Sales Objectives was that they cannot be directly managed – they can only be influenced by directing specific Sales Activities. Shortly after we identified the Objectives, we began to look for some way to relate them back to the Activities in a systematic fashion.
We found that Activities do have direct causal relationships with Objectives. More specifically, certain Sales Activities influence certain Sales Objectives. This means that if you set a new Sales Objective, you should know exactly what to do to achieve it… You track backward to the Activities that have an impact on that Objective, and then you manage those Activities proactively.
Suppose that you set an Objective for the year to improve your Customer Retention Rate. You are trying to affect a Customer Focus metric, and there are many Activities that can influence such an outcome. First, you could alter your compensation and coaching to shift the focus of your reps toward servicing existing customers. Or you could allocate more visits to those customers and put an account management process in place to help your salespeople become more intimate with key customer issues. Of course, you would be managing and measuring these Activities all along to ensure proper execution of the tasks.
Or, suppose that you set an Objective to improve your Close Rate. If your salespeople are in charge of the proposal generation and presentation activities, then this would be a Salesperson Capability metric. There are many Sales Activities that could potentially affect this Objective. First, you could provide proposal templates or train your salespeople on how to craft a winning document. Or you might decide to have each proposal reviewed by all internal stakeholders prior to submission. Or perhaps you would make sure that a manager is involved in the planning of any meeting where a proposal is presented. Again, measuring and managing these Activities all the while.
Of course, management’s judgment must be used in all cases to identify the best course of action to influence a given Objective. But the Activity-Objective relationships demonstrated here are useful departure points for good managerial decision-making. And good coaching. And generally, good selling.
Implications for Sales Leaders
By establishing a causal link between Sales Activities and Sales Objectives, we gained insight into what we think has been the missing link in sales performance management: the ability to set specific Sales Objectives and then manage day-to-day Activities to predictably achieve those outcomes. Rather than just asking for the outcomes we want, we can actually inform our sales force on how to accomplish them.
As a sales leader, you must first make certain that you have the right sales processes in place for each of your selling roles. Then you can set clear Sales Objectives and make sure that your salespeople’s Activities are aligned to achieve these outcomes. With clear Objectives and formal Activities, you have the means to set a new strategic direction and ensure consistent execution in the field.
It is also a clever idea to maintain a good mix of the Sales Objectives that you track. Market Coverage metrics give you confidence that you have enough sales effort to accomplish your goals. Sales Force Capability metrics give you confidence that your salespeople are using that effort effectively. And Product Focus and Customer Focus metrics give you confidence that they are selling the right things to the right people. All of these are things a sales leader needs to know, if you want your team to perform consistently at the highest possible level.
In the next installment of this series, we will reveal the different types of Business Results we found in our research and show how you can convert those Business Results into Sales Objectives that will drive your salespeople’s day-to-day Activities.