Sales targets are useless…

Why? Because they generally drive the wrong behaviour.*

Ever since I started my career in sales, I have always found sales targets to me non-sensical. Not because I am against being measured, but because they have generally been set against only one criterion; be that £ value or number of calls per day.

So, let’s take £ value:

A –       Do I aim for one huge order, which looks good in terms of revenue generated and then go home?

B –       Perhaps, instead, I make many calls and sell a small £ value in each call?

In example A, I can consider my day a great success. I hit the £ value in sales that I was set as a target. However, what is not measured is; How long it took me to make the sale, my cost of travel nor if the sale made a profit for the business.

In example B, I can also consider that my day was a great success. But, again, the outcome is the same as A. We have no idea if what I have achieved is profitable for the business and I may also be totally worn out by the hours it took to do it.

Plus, in neither example have we considered what the outcome was for the customer. Are they truly satisfied with their purchase?

As soon as I attained my first sales management position, I took the approach that quality should win over quantity.

Therefore, I always measured the success of my salespeople – as individuals – by a mix of factors:

  • Total value of sales made per day/week/month/quarter/year
  • Total % of Profit Margin generated – Taking into account the ‘Total’ cost of sales:
    • Product
    • Marketing
    • Salary/Commissions
    • Travel and entertainment
  • Customer satisfaction
  • Customer retention – Repeat buying
  • Customer to customer recommendation

Good leaders spend time with their people. Working alongside them, on the job. They coach, train and support.

Great sales managers do the same.

If you can’t afford the time to do this in your business, bring in a coach. It will pay back many times over.

*Goodhart’s Law: when a measure becomes a target, it ceases to be a good measure.

In other words, if you pick a measure to assess people’s performance, then we find a way to game it. I like the illustration of a nail factory that sets number of nails produced as their measure of productivity and the workers figure out that they can get tons of tiny nails. And, if they switch it to the weight of nails made, they get a few giant heavy nails. Or perhaps the story of measuring fitness by steps from a pedometer only to find they get put on the dog.

Some strategies for helping this are to try and find better, harder to game measures, assess with multiple measures, or to allow a little discretion. More detail in this nice little article.

I also liked an idea I read in Measure What Matters of pairing a quantity measure with a quality measure, for example, assessing both number of nails and customer satisfaction of the nails.

Source: https://www.sketchplanations.com/post/167369765942/goodharts-law-when-a-measure-becomes-a-target

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