Note: Having previously discussed discrete sales processes and when to use them, we now explore sales objectives and their links to selling activities.
Every sales force has certain outcomes that they are trying to achieve—for instance, retaining more customers, cross-selling products, or improving salesperson skills. In our research we categorized these outcomes and their associated metrics as "sales objectives."
Recall these are goals toward which selling effort is directed. As the outcomes of sales processes, they cannot be managed with the same degree of control as the processes themselves. Objectives can be managed only indirectly by managing salesperson activities at the process level.
For example, a sales objective might be to increase your number of new accounts, which could be achieved by putting greater effort into cold calling or by visiting more prospects. You cannot direct a salesperson to have more new accounts, but you can set an objective and manage the upstream activities. Again, managing sales processes leads to achieving sales objectives.
How Many Sales Objectives are There?
Just as we used our collection of sales process metrics to isolate distinct processes, we also used our sales objective metrics to discern five categories of objectives into which most of the measures fell.
The first sales objective is sales force capacity. These metrics tell you how much effort you can get from your sales force, and they are used to ensure that there is enough total selling effort to cover all of your desired customers and prospects.
Sample sales force capacity metrics:
• Percentage of productive time for reps.
• Percentage of market opportunity covered.
Salesperson capability metrics tell you how effectively your selling effort is being applied. That is, if your salespeople have six hours of capacity each day to spend with prospects and customers, how successful are they in advancing opportunities, winning deals, or accomplishing other desired outcomes of their customer-facing activities?
Note that a salesperson's capability is not the same as their skill. Capability includes the skill of the salesperson, no doubt, but it is also a reflection of selling tools, motivation, and other components affecting the effectiveness of a salesperson.
Sample salesperson capability metrics:
• Percentage of calls advanced.
• Percentage of deals won.
• Number of deals with discounts.
Product focus metrics report whether a sales force is selling the products and services are deemed optimal to your company. These could be products with higher profitability or products with some strategic value, such as a new line of products.
Sample product focus metrics:
• Percentage of new versus existing products.
• Percentage of cross-selling/upselling.
• Average deal size.
Customer focus metrics reveal whether the sales force is attracting, retaining, and growing the company's targeted customers. Examples could be customers who are either more profitable or somehow strategically important, like those in a new market or geography.
Sample Customer focus metrics:
• Percentage of new versus existing customers.
• Percentage of customer retention.
• Percentage of share-of-wallet.
The final type of sales objective describes a sales force's human capital. All of the hiring, training, motivating, rewarding, enabling, and coaching that takes place in the sales force management process show up here as a more skilled, potent, and engaged workforce.
Sample human capital metrics:
• Average skill level of reps.
• Percentage of sales force turnover.
• Number of months ramp-up time.
In sum, these five types of sales objectives provide guidance to your sales force about the things that are important and the things they should accomplish in the field. But simply communicating objectives, or even aligning them with incentives, will not create the desired outcomes. To do that, you must embed them in the processes or day-to-day activities of your salespeople.
Achieving Objectives through Formal Sales Processes
Recall one of our first observations about sales objectives was they cannot be directly managed—they can only be influenced by directing specific activities within sales processes. Shortly after we identified the objectives, we began to look for some way to relate them back to the processes in a systemic fashion.
We found processes do have direct causal relationships with objectives. More specifically, certain sales processes influence certain sales objectives. This means if you set a new sales objective, you should know exactly what to do to achieve that objective. You track backward to the processes that have an impact on that objective, then you manage the activities within that process.
Suppose you set an objective for the year to improve your customer retention rate. You are trying to affect a customer focus metric, and there are four sales processes that could influence such an outcome.
First, the sales force management tools of compensation and coaching could be used to shift the focus of your reps toward servicing existing customers. Second, you could use your territory management process to allocate more visits to those customers. Third, you could put account management processes in place to help your salespeople become more intimate with key customer issues.
Finally, within an opportunity management process, you could alter the qualification criteria to limit the number of new prospect pursuits. Of course, you would be managing and measuring these processes all along.
Or, suppose you set an objective to increase the percentage of proposals won. If your salespeople are in charge of the proposal generation and presentation activities, this would be a salesperson capability metric. There are four sales processes that could potentially affect his objective.
First, there are sales force management activities you could select, such as providing proposal templates or training the salespeople on how to craft a winning document. Second, you might put an action item in your account or opportunity management processes to have each proposal reviewed by all internal stakeholders prior to submission.
Or perhaps you would place action items in your call management plans to ensure a
manager is involved in the planning of any meeting where a proposal is presented. Again, measuring and managing all the while.
Sales management processes are relevant to every category of sales objective, since training, coaching, compensation, and other tools can have an effect on any outcome. But account management processes will not help an organization increase its sales force capacity. Territory management processes cannot be used to influence metrics of salesperson capability or product focus.
Depending on the selling roles in your sales force, and consequently, the sales processes you have in place, there are different but predictable ways to manage your sales force to achieve specific sales objectives.
Of course, management's judgment must be used in all cases to identify the best course of action to influence a given objective. But the process-objective relationships demonstrated here are useful departure points for good managerial decision-making.
Implications for Sales Leaders
By establishing a causal link between sales processes and sales objectives, we gained insight into what we think has been the missing link in sales performance management: the ability to set specific sales objectives and then manage day-to-day salesperson activities to predictably achieve those outcomes.
As a sales leader, you must first make certain you have the right sales processes in place for each of your selling roles. Only then can you set clear sales objectives and make sure your salespeople's activities are aligned to achieve these outcomes. With clear objectives and formal process, you have a means to set a new strategic direction and ensure consistent execution in the field.
In the next installment of this series, we will reveal the different types of business results uncovered by our research, and detail how you can convert these into sales objectives to drive your salespeople's day-to-day activities.
Jason Jordan is a principal of Go To Market Partners, a sales management consulting firm, and the director of research for the University Sales Education Foundation.