Ready, Set, Goals!
May 18, 2004
Filed under Uncategorized
As the fourth quarter of 2002 wound down, Lyon, vice president of sales for the independent segment of Minneapolis-based Travelers Express Company, was facing a new year with an old challenge: increase sales.
Travelers Express is a leading provider of money orders and payment services throughout the United States. The company's MoneyGram money transfers and other bill payment vehicles are sold through large retail chains like Albertsons, as well as small grocers and other independent retailers.
Lyon, who oversees a team of about 50 independent sales representatives, was charged with increasing the company's total number of approved agent applicants (retailers interested in offering MoneyGrams and other Travelers Express products).
"Applications coming into the company had flattened out. We were looking for a new way to motivate sales reps - a way to put some energy into the signing of new accounts," Lyon says.
New Twist to a Timeless Solution
Lyon tackled this pervasive challenge with a timeless solution - goal setting. This time, however, he added a twist. He wanted each rep to set his or her own goal and take ownership of it. This was accomplished by using a patent-pending goal-setting methodology called GoalQuest™ created by BI, a Minneapolis-based performance improvement company.
The self-determined sales goals energized the Travelers Express reps so much that they wrote seven months of business in the first three months of 2003.
The GoalQuest formula incorporates critical tenets of successful individual goal setting, including those sited by academicians Gary P. Latham and Edwin A. Locke. The two researchers identified seven key principles that contribute to achieving goals, including participation in setting the goal and specifying parameters for success.
Self-determination is a vital step. "Generally, corporate goals are set on the top floor and shake down through various levels of management before they are handed to the sales force," explains GoalQuest Product Manager Dave Smith.
"Because the process is top-down, there is no opportunity for dialogue. The goals are simply quotas that often are rejected or ignored, and thus have little or no impact on performance."
People must be convinced that the goal is important, and that they are critical to the overall success of the company itself. Making the goal-setting process a collaborative effort turns whiners into winners.
"If I had given them the objectives to meet the results that we ultimately got, we would not have gotten there," Lyon says. "They would have thought I was smoking something funny. By letting them set their own goals, the results were absolutely unbelievable."
Managers' Goals Aren't Tough Enough
Although Lyon was pleasantly surprised at what his sales team accomplished, researchers Latham and Locke would tell him it makes perfect sense. Studies show that the more difficult the goal, the higher the level of performance. Of course, this finding assumes that there is commitment to the goals and that individuals possess relevant knowledge concerning how to perform the task. And it obviously does not help if the goals are totally preposterous.
"Goals affect the intensity of effort," Latham states in a 1997 research report entitled "Motivation Through Goal Setting." "People expend effort, other things being equal, in rough proportion to the difficulty of the goal. If your goal is to increase sales, it means you will not spend your time on activities irrelevant to sales."
Hence, it behooves managers to have salespeople set their own goals because the good ones will set higher targets for themselves. "In hindsight, I may have made the goals even loftier than they were," says Lyon of Travelers Express. Many sales managers who have used GoalQuest report similar second thoughts.
To Infinity and Beyond
Take, for example, Brad Christensen, a Utah-based territory manager for Shaw Industries Inc., the world's largest carpet manufacturer. Shaw Industries has run the GoalQuest program for its 750 territory managers nationwide during the first six months of 2002 and 2003. Christensen is a two-time Level-III winner and a top-10 performer nationally in both campaigns.
"If they came up with a level five, I'd choose that," he says, eagerly pondering the concept. "I don't know if I'd hit it, but I always want to hit that top level or hit nothing at all."
Ironically, Shaw Industries invested in the GoalQuest program mainly to drive the performance of sales reps who are not as self-motivated as Christensen. "We wanted to engage that middle 60 percent and get them to perform like our high-flyers," says Kurt Paulson, director of product marketing at the flooring giant. The program performed well in that regard also.
"Involving that middle 60 percent in selecting their own goals rather than forcing one down their throats provided the largest significant impact we've ever had," Paulson says.
Shaw Industries has focused its GoalQuest campaigns on getting new carpet styles into the 20,000 nationwide retailers that territory managers sell to. "Getting our new styles to market is a huge factor in our overall success," Paulson explains. "Those territory managers who get their new styles to market routinely have significantly higher sales growth than those who don't perform."
Shaw has run the GoalQuest incentive program from January through June in each of the past two years. The numbers from this year's campaign speak for themselves: A total of 161 territory managers hit their GoalQuest target, almost double the number from when the program was introduced in 2002. New style sales for this group was slightly more than 15 percent of total sales, and average sales growth from the same period one year earlier was 14.17 percent.
In comparison, territory managers who did not hit their GoalQuest mark averaged 5.6 percent of total sales from new styles and actually experienced a drop in overall sales of one-half of 1 percent.
Overall, Paulson is elated with the results. "The most significant bottom line is that we brought out fewer SKU's and still had a better performance than the prior year in square-yards per SKU, margin dollars per SKU, and net sales per SKU. We got better performance with fewer styles!"
Talk It Up
Another essential element of successful goal setting is frequent measurement and feedback. "People have to know how well they are doing before they can decide whether to focus their energies differently, work harder, or develop better strategies," Locke writes. "To maximize performance, it is critical to have both goals and feedback." Feedback can be in the form of memos, e-mails, charts, printouts and reports or, as Paulson used in his campaigns, musical voice mails.
"Communication keeps you motivated," agrees Christensen, the top-10 performer from Shaw Industries. "We could always access the standings on our own, but public talk about it reiterates that it's just as important to the front office as it is to the reps."
Frequent communication keeps everyone engaged. "You have to keep them informed how they are tracking against their goal or the program will fail," says Lyon. "You can't give them results only near the end and hope that they are going to succeed. The more times you report to them, the more it keeps the pressure on for the sales rep to beat their goal."