The unrelenting pressure of ever increasing sales budgets
For many sales managers it doesn’t seem to matter what else you achieve during the year; if you don’t achieve your sales budget, the year isn’t considered a success.
Adding to the pressure, budget is one of the main areas where the sales manager ends up being ‘the meat in the sandwich’. There seems to be:
- Unrelenting pressure from above to keep improving performance year on year. No matter how good last year was, this one needs to be a little better.
- Persistent rumbling from the sales team about the extra demands placed upon them – especially when bonuses seem to be tied to ever more demanding targets.
Sales managers need strategies to get their teams to buy into targets and to have them take accountability for achieving them.
Involve your sales team in setting targets
Think about how the overall sales budget for your team is set. If it is decided in a board room and handed down to you, it is probably both demanding and frustrating. In this situation, sales managers often shake their head and question the sanity of the people setting the targets for them.
If you were involved in setting the budget, it is probably still demanding but at least you had some influence and you understand the big picture context for the numbers.
Is there any reason you can’t apply this principle with your own team? Instead of carving up the overall budget into individual targets and simply telling each person what they need to achieve, could you involve them in setting those targets?
A very successful sales manager that we deal with brings her team together each year at budget time. She explains the teams overall target and the thinking behind it. She then allows the team to put together a plan for achieving the target including the way it will be divided up between them. It isn’t always conflict free but at least it is dealt with – up front and once – rather than being a lingering under current of discontent that undermines performance for the next twelve months. Her sales people may still feel their targets are challenging but at least they feel accountable for them because they were involved in setting them.
Action: involve your people in setting their own targets as much as possible – as long as collectively their targets will achieve the team sales budget
Reward collaboration not just competition
A natural extension of this participative target setting approach is challenging the way you reward sales performance. Is all of your emphasis on bonuses, incentives and recognition for achieving individual targets or is some of it based on the teams overall performance?
A study was conducted in which people were given a puzzle to do. Some groups were asked to work by cooperative rules, others had competitive rules. By monitoring brain activity the researchers were able to see that the participants experienced cooperation as being more pleasurable than competition. In addition, the cooperative groups were far more productive as they were actually able to complete the puzzle the competitive groups spent most of their time impeding each other and made little progress.
On a practical level, in the hundreds of sales teams we have worked with, we have observed that:
- Pure competition works OK – but for every ‘winner’ there is a ‘loser’ so overall team performance remains fairly static
- Pure cooperation works better – but it doesn’t reward the highest performers. It may even take away the incentive for striving.
- A combination of competition and cooperation is most effective – it encourages the team to work together to get results and also provides an incentive for the ‘stars to shine’.
Action: create incentive programs for your team that make achieving the team goal the major priority and add extra bonuses for individual excellence
Set some target points throughout the sales cycle
Another client we work with breaks the annual targets for his sales team into monthly targets – pretty standard stuff. However, because of the specific product and industry, he also knows the milestones a sales person needs to reach in order to achieve the final target. In his industry, those benchmarks look like this:
- 100% of budget by the middle of the month – anything that is sold after that will not process until the following month
- 70% of budget by the start of the month
- 40% of budget by the start of the previous month
These milestones are specific to this client – but you almost certainly have similar milestones that are an early indicator of progress. The big advantage of them is that remedial action can be taken when it will still make a difference. When you realise at the end of the month that budget won’t be achieved, it is too late.
The same client uses these benchmarks for the overall team sales target as well as with each individual.
Action: identify some intermediate benchmarks for progress towards a budget and use them to identify the need for corrective action early
The money is important but others things should be counted as well
An overall goal can be overwhelming – and one of the ways to make them more achievable is to break them down into simple daily actions. If you want to personally save $10,000 this year, that can seem like a large amount. If you look for ways to save $30 a day, that can be more achievable and, if repeated every day, will exceed the goal.
The same approach can be applied to a sales budget. For example, the monthly target could include an overall dollar amount plus some activity targets – number of calls prospecting for new customers, number of revenue generating meetings with existing clients, etc.
This gives each sales person daily activities that they can focus on to achieve the target. It also helps the sales manager isolate performance issues – if the activity targets are being achieved but the sales budget isn’t, the problem is with their skills rather than their effort.
Action: add some activity targets to the sales budget for each person so they can focus on ‘how’ as well as ‘how much’
Break the bust and boom cycle
The key to avoiding a mad scramble to achieve budget each month is to have sales people performing more consistently. For the sales person getting themselves established, this can be challenging. A focused period of prospecting for more customers can be followed by a busy time delivering on the results of that prospecting – with little time to allocate to new prospecting.
This creates that boom and bust cycle. Whenever we see a sales person doing really well (or really poorly) we can look back at what they were doing three months ago (or whatever your sales cycle is) and see the explanation.
The problem that this creates is that turning performance around can take time – if they start focusing on the right basics today, it can take as long as the full sales cycle to start to see results from that effort. It’s like the old saying that you should drink before you feel thirsty - otherwise you are already dehydrated.
One of the most successful sales people to ever go through our Sales Academy attributes much of his success to one simple habit: he has a new business target that he hits every month regardless of how busy he is. Even though he sometimes has more business than he can handle, he still makes prospecting for more customers a regular part of his routine.
Action: set some minimum monthly levels on key activities that need to happen regardless of what else is going on
Reward, celebrate and train
Be careful of becoming so ‘head down, backside up’ that you forget to take time out for these three things. You can ignore each of them with no obvious immediate impact but mid and long term the cracks will start to appear.
When you are driving a sales team hard, consider these things the maintenance you need to do to keep them roadworthy!
Action: Decide how you will use rewards (see the earlier suggestion about collaboration) and schedule it in your planner. Also have a regular planned celebration (maybe the end of each month) and do some spontaneous stuff as well. Commit to regular training session – a combination of something short and internal each month with a day of externally provided training every 2-3 months works well.
Twelve survival tips for the busy sales manager
Hitting budget is one of four areas and twelve tips included in a free resource we created to help every the under pressure sales mananger - the Essential guide to staying sane for the busy Sales Manager which you can download here.
Another resource that will help you hold yourself to a high standard are these free and inspirational wall posters - constant reminders of quality leadership habits.
Editor's note: This post was originally published in November 2014 and has been revamped for comprehensiveness and better readability.