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Sales objectives should be realistic

April 12, 2004
Filed under Archives

EDITOR’S NOTE: This is the second part in a series of columns describing the Four-Step Management Process. These four steps (functions) are being taught in management courses at universities across the country. This column describes the remainder of Step 1, planning.

SET REALISTIC SALES OBJECTIVES
Let your salespeople give you their realistic monthly objectives first. When you lead with yours, they’re your objectives. When they give objectives to you, they are their objectives. It’s a matter of ownership. Your salespeople will be more committed to their own objectives.

Meet individually with every salesperson at the end of each month. How many units do they feel they can sell in the next month? What methods will they use to enhance their selling opportunities? What is each Salesperson looking for in the way of income?

USING THE “PRO” TECHNIQUE
Many salespeople are not accustomed to using a Monthly Sales Planner or Monthly Action Plan. When you ask them how many units they’re going to sell next month, you might get answers like, “Every one I can.” or, “Beats me.” In order to get a realistic answer, teach them to use the “PRO” technique.
– Pessimistic
– Realistic
– Optimistic

Ask each salesperson to determine how many units they could sell during a “worst-case” situation. This is the pessimistic number.

Next, have them project their absolute best-case sales (the optimistic number).

Finally, have them select a realistic number that is somewhere in between. If you think their number is too high or too low, counsel them on how to select a more realistic figure.

The purpose is to establish a realistic goal to be reached by month’s end. Hopefully they’ll do just that. If someone falls short, discuss the reasons why the goal was not achieved before setting the next month’s objective.

THE MONTHLY INCOME PLANNER
There is little value in a monthly objective unless it includes the specific methods a salesperson plans on using to accomplish the goal. These methods, like the sales goal, should be written down so that both of you have a record. I strongly recommend you use a salesperson’s Monthly Income Planner. You can find a copy of this form in my book, The Professional’s Guide to Sales Management. You can create your own form using the following formulas:
– Estimate the daily face-to-face floor traffic and appointments and multiply this number by the days in the month.
– Multiply this number by the closing ratio for this salesperson. The resulting number is the Unit Objective for that month.
– Multiply the salesperson’s Unit Objective by the average commission per-unit-sold and the result will be that salesperson’s projected Monthly Income.
– Use the “PRO” technique to calculate the results. This will give you pessimistic, optimistic and realistic numbers.

Have each salesperson create an Action Plan that they will follow to accomplish the objective. The key is to get total commitment from your salespeople to do what they say they are going to do. It’s much easier to get that commitment if there is a written record.

GETTING ORGANIZED
Once you have set your objectives, it is important to get things ready — to get organized. This means ensuring that you and your employees have all the resources you’ll need to meet the objectives you’ve set. The specific resources will vary, depending on the objective.

Next time, we’ll discuss ways to accomplish this important step.

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