Sales managers the world over will tell you, universally, that they want team
success. No doubt your company is much the same - if the team can make a
certain number for the year, they'll be pleased, you'll be pleased and most
importantly, your boss will be pleased.
That magic annual number is nothing more than a goal, or target. Hit that and
"Bob's your uncle" (a British equivalent to the French expression "et voilà!").
The only problem with annual targets is that they are so far distant that they
don't seem real. People will procrastinate, make excuses, get distracted and
do other things.
So how, as managers, do we get the team to focus on the targets in the distance,
today?
We divide up the annual targets into monthly (bite size) pieces and then focus
the team on their goals for the current month.
Near-term targets motivate salespeople to deliver sales results.
As end of year approaches, management meetings are filled with recaps of the
past year, post mortem analysis of why things happened as they did, and new goal
posts are set for the year ahead. A departmental sales goal is set and it's
one that managers have to live with for the next 12 months.
Turning an annual departmental sales target into individual monthly targets:
• Divide the total annual target by the # of sales reps
• Divide the annual rep targets by the number of months in a year
Manchester Toys needs to achieve £12.0 million in sales next year to make plan. To do this, the team of 5 sales reps each will each need to generate 1/5th of the £12,000,000 - giving them each an annual target of £2,400,000. Dividing this by 12, each rep is then left with a monthly target of £200,000.
In order to account for differences in salesperson experience, time in position, skills and pay grade, targets can vary accordingly. One approach to handling these differences is to use performance from last year in making the calculation.
The below example assumes last year total sales of £11,000,000, thanks to the
results from each:
£2,530,000 - Bob
£2,310,000 - Jill
£2,200,000 - John
£2,090,000 - Ailsa
£1,870,000 - Aaron
Example Intermediate Calculation
First, subtract sales order value for last year from the target for next year and divide by the last year total, to get the percentage increase, then round up to make sure targets will combine to beat the team total needed by end of year:
£12,000,000 - £11,000,000 = £1,000,000
£ 1,000,000 / £11,000,000 = 9.09090909% increase
Round to 9.1%
Next, calculate % share of total sales for each salesperson last year:
(£2,530,000 / £11,000,000) = 23% Bob
(£2,310,000 / £11,000,000) = 21% Jill
(£2,530,000 / £11,000,000) = 20% John
(£2,310,000 / £11,000,000) = 19% Ailsa
(£2,530,000 / £11,000,000) = 17% Aaron
Note: If your developing salespeople (Ailsa and Aaron) are expected to deliver more, based on their increasing skills and pipeline development, you may want to modify their percentages upward from their levels shown in example B.
Also, if Bob is going to be called upon for mentoring and development of the sales team, based on his obvious success, he may need his target brought down accordingly.
Now, calculate the last year total x salesperson share percentage + 100% (109.1% total) for each person:
£2,757,700 (£2,530,000 x 109.1%) - Bob
£2,517,900 (£2,310,000 x 109.1%) - Jill
£2,400,200 (£2,200,000 x 109.1%) - John
£2,280,190 (£2,090,000 x 109.1%) - Ailsa
£2,040,170 (£1,870,000 x 109.1%) - Aaron
Now, divide this figure by 12 to get the monthly individual target for each person:
£229,808 - Bob
£209,825 - Jill
£200,016 - John
£190,015 - Ailsa
£170,014 - Aaron
Compare these numbers to the simple example, where each salesperson had a flat £200,000 monthly target for each. Set clear, achievable, near-term goals by using monthly targets tailored to each salesperson's skills, pipeline and tenure. Use the previous year sales order volume to tailor targets.
Next Steps Forward
For additional strides ahead, consider combining your targets with actuals into a single leaderboard-style view, put it up on a wall-mounted TV for the entire team to see and watch as the recognition drives your team by motivating them to achieve at peak!
See how you can easily create leaderboards and push your team to beat target each and every month.
Take the next step forward and combine targets with actuals and put those numbers on a wall-mounted TV leaderboard.
See It In Action
Find out how easy it is to beat target with Target Dashboard software for sales managers. Start building your competitive advantage, today.