The Science Behind Setting Sales Goals That Boost Performance and Productivity

The Science behind Sales Goals - Fileboard

Every sales team in the world always has one crucial thing in common: setting successful sales goals. While every sales team sets goals; how those goals are manufactured and assigned to sales reps differs greatly. As tons of real life sales case studies show, this variation has an incredible impact on the sustained motivation, performance, and productivity of sales reps.

Don’t set these goals just on a company’s financial ambitions, goals need to be set with the right metrics in order to effectively motivate sales reps. If you want to set goals that are scientifically proven to sales boost performance and productivity, keep reading!

The Power Of Scientifically Approaching Sales Goals

Ever heard of the endowment effect?

Researchers gave students school logo coffee mugs, and then offered to swap chocolate bars for the mugs. But no matter how much they confessed to liking chocolate, no students were willing to trade.

Researchers then reversed the experiment. Chocolate was given first, with mugs being offered in exchange. Interestingly, students now showed no interest in the mugs. Why did this happen?

The key thing about the mugs or the chocolate wasn’t how the students valued their possessions, but the fact that they it was in their possession.

This is called the “endowment effect”. And it takes effect when we begin registering ownership of an object, idea or person. When we feel it is “ours” it becomes entwined with our sense of identity, making it painful to let it go.

Even simply having an expectation of a future possession – or stating a future possession can make us think of something as a part of us. This is why – with regards to motivating people to perform better –  goals trump generic “do good” statements. As we mentioned before, simply setting goals won’t do the trick. Methodically setting those rep-tailored goals is what matters. How do we apply this “in real life”?

How To Boost Sales with Scientifically Set Goals

Ciso takes a scientific approach to forecast and manage sales activities - Fileboard

Cisco has a different approach to goal setting than most. By taking a measured and scientific approach to goal setting, they accurately forecast and closely manage sales activities whilst providing crucial customer data to reps.

The company created a site where managers could view “up-to-the-minute” sales performance listed by region, product line etc. and so on. And it holds data about reps’ pipelines; including the size of each sales opportunity, the ideal type of tech each customer requires, and information on competitors.

This allows Cisco managers host regular pipeline calls and create new forecasts (derived from the data) every week. The numbers are then presented as weekly, monthly, and quarterly forecasts. And according to Sidhu, Cisco’s vice president for worldwide sales strategy “The forecast accuracy for our quarterly numbers tends to be within plus or minus 1% to 2%,”.

Cisco isn’t the only company benefiting from scientific sales goals. In 2004, Aggreko, a Rental equipment company switched to a scientific approach to goal setting. Their results?

By 2015 their sales jumped 29%, and sales force productivity went up by 90%.

So what was different about their goal setting approach?

First, Aggreko executives begin by analyzing data on industry-level drivers for the company’s vertical markets. Then, they calculate the firm’s share of each market to set goals for growth.

After this “comes the bottom-up element: Armed with the data, area sales managers develop a view of territories, accounts, and quotas for individual reps by multiplying potential market size by target shares for each market.”

This process insures that a sales rep goals, expectations, and quotas are aligned with the company’s objectives – without trying to squeeze ill-fitting sales targets out of reps.

So, How Do I Get Started?

Avoid Setting Single Number Goals

Two major factors influence how people pursue a goal: Challenge and attainability.

To actually feel a sense of accomplishment, people need to feel challenged enough by a goal. If the sense of challenge is inadequate, the goal will douse motivation rather than inspire.

Imagine the damage to sales if team members who quickly reach targets start to disengage.

Conversely,  setting overly ambitious goals can also be problem. Because if the mountain looks impossible to climb, people aren’t going to attempt to climb it. That’s why hitting the sweet spot between challenging and attainable is a must.

And that’s the problem with single-number goals. They’re either somewhat attainable,or somewhat challenging; striking the right balance becomes tough.

The solution?

Research suggests ranged, high-low goals: instead of aiming at a single number, have high-low ranges that average the same (securing 10-14 new clients rather than 12). Florida state university researchers tested how this tiny shift can create big change.

In one study, members of a weight loss club wanting to lose 2 pounds per week were split into two groups:

  • A single number goal group: “lose 2 pounds per week”
  • And a high-low range goal group that averaged the same: “lose 1 – 3 pounds per week.”

So how did this influence the motivation and effort of subject?

Only 50% of those given a single number weight loss goal carried on trying longer term. But – by enrolling in an extra 10-week program – nearly 80% of those given high-low range weight loss goals did.

Promoting sustained efforts to sales goals and quotas is a huge challenge for managers and leaders. But as this research shows, assigning high-low goal ranges can help create a stronger balance between challenge and attainability; leading to more durable, long-term sales efforts.

Treat High Sales Goals With Caution

Treat high sales goals with caution - Fileboard

Everyone’s heard of parents who prioritize their children’s education above all else.

No matter how much their child achieves, they’ll always push them for more. They’ll higher round the clock tutors, and replace their free time with a constant barrage of bonus assignments and mountains of essays.

Some companies have the same mentality towards their sales reps. They assume “higher goals translate to reps thinking creatively, working even harder, and more motivation”. However, aggressive sales goals might actually harm sales.

In his HBR article, Marketing professor Andris A. Zoltners cites potent case studies that highlight the damage overly ambitious sales goals can cause.  In one study according to HBR, the VP of sales added 5% onto the original goal to secure a safe margin before letting it go to the regional level. Then, the regional directors added another 5% before assigning goals to district managers. And guess what they did?

Yes, they piled on another 5% safety cushion. So how did the sales team respond?

Only 30% hit their individual number. But at the national sales meeting, the VP congratulated the team for hitting the overall target number. This frustrated the team, and resulted in the VP leaving, and top performers defecting to rival companies.

To keep your sales goals in check:

  • Track sales performance and behaviour metrics – Focusing on shiny metrics like bottom line, revenue and deals closed, will lead to hard time understand what’s causing sales. This in turn makes judging the predictability of sales even more challenging.
  • Keep an eye on market dynamics – In another study, a financial services company set goals in a booming economy. Then in the second quarter when the economy wasn’t as vibrant, fewer than 10% of salespeople had any chance of making goal. And most of them left the company in anger. And as we know, replacing salespeople is pretty costly. Have a firm grasp on the market so you can set reasonable goals.
  • Make sure sales goals are clear and aligned – Don’t make the same mistake as that company who kept tacking on higher percentages to sales goals.
  • Use sales goal friendly tools like Fileboard – Fileboard makes hitting sales targets more enjoyable and rewarding. Some features include – a sales leaderboard, the ability for reps to start competitions, digestible daily goals, progress tracking, and positive reinforcement.

Get Reps To Write Down Goals

A study by the University of California confirms the power of writing down goals.

Why? Because writing down a goal brings clarity, declares purpose, and helps activate the endowment effect mentioned earlier.

But don’t stop at just general goals. Get reps to write down the steps that lead to those goals also. So if a rep knows he needs to send out 40 proposals to get 1 close, get him to write down his intention to hit 40 sent proposals a day, and make that a mini goal.

Closely Monitor Sales Goals

Monitor your goals frequently to get where you want to be - Fileboard

Setting goals is only half of the equation. The other important half that many don’t get?

Frequently monitoring your goals.

Unless goals are monitored by day or week, your team will not get where they want to be. There’s plenty of tools and apps out there for monitoring sales goals. Honestly, just asking reps to keep an excel document tracking their sales activities and performance can do the track.

This can be great for touching base and reviewing performance at the end of each day or week, and assigning new goals depending on the reps performance.

Sales Goals take hard work to achieve!

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Conclusion

All sales leaders want to challenge their salespeople to be the best that they can be, and most know that goal setting plays a huge role.

Setting goals isn’t the simplest thing to do. There’s a fine balance to strike between challenge and attainability, the goals that are set need to be tailored to individual rep performance, and sales goals need to be monitored closely.

By applying the points above to your sales goals, you can set goals that actually spur salespeople on, instead of giving them a boring number to chase.