A.      Sales targets

HubSpot reported that 40% of companies they surveyed in the US, missed their revenue targets in 2020. As lockdowns persist, the prospect of many companies missing their 2021 target looms. With expenses directly linked with anticipated targets, that will have a catastrophic impact on the bottom line. Sales teams carry the burden of delivering the sales targets; we better target correctly!!

Do not confuse, however, planning some growth, after a disastrous year for many, with the right growth. Targeting should reflect the maximum possible achievement!

Which truth to follow In periods of uncertainty, as we are currently going through, differences in opinions among the leadership team, as to which market and exactly when the situation will return to “normal”, and what this “normal” looks like, amplify. Exactly these differences make sales target setting an even bigger controversial point.

Therefore, the first step would be to align on what we call “the single source of company truth”. That includes defining the exact assumptions /parameters we base our scenario.

To develop an alternative “truth”, for a contingency plan, is also a must.

Ideally, a specific team should be made responsible to regularly check the signals (i.e., exact opening or closing of markets, major moves of competition, supply chain disruptions) and centrally update the scenarios and the targets.

Inside and Outside assistance Third-party experts and data can help visualize the timing and nature of the next normal. Even better, leadership members, to directly contact your key customers and connect with local industry experts and exchange their predictions of the future. 

Such outside inputs will blend with the internal strategy directions on market share targets, bottom line protection measures and innovation introductions and form a clearer top down target.

Top down versus bottom up. Include a bottom up target setting to show the front-line perspective and allow for effective bridging.

Just remember when negotiating the final target that in every industry and in every crisis, there are teams which cope better and consequently deliver better results. Just ensure to stretch your teams to beat the market by 2-3 percentage points!

Target Innovation launches. If you happen (which you should) to have planned a major innovation launch or a significant promotional drive, target setting is even more crucial.

Here, more granular factors will play a role. Have you redeployed resources to inside sales, adopted new business models and focused on new channels which are appropriate to win? Have you shifted the targets accordingly?

Do you operate in full capacity or are there key people missing because of illnesses in their families?

Is the team fully capable to operate under the current circumstances, or do you need to set up the always-postponed training to upscale them? (see here my article on the post-Covid sales capabilities and training)

What is the level of support budget allocated for that purpose? If you plan budget cuts, then aiming at the usual sales under strained market conditions would be disastrous.

An ambitious but feasible target personalized per sales rep (!!), is key for stretching the capabilities of the sales teams. Forget the split per historic contribution to sales or fixed amount per SR; the same o’ same o’ will not work now.

B.      Sales incentives

There are some eternal principles that will always apply: reward should be a) fair b) linked with stretched but achievable targets, c) cover the minimum living of the employee and d) be motivational.

Practical steps The proportion of base pay increases while variable drops.

Thresholds become more flexible and more proportional. While in the past 60% of the target may not give any bonus, now this may indeed give 60% of the bonus.

Discretionary pay becomes more important, especially when talent is to be retained. Just only be careful not to become the plug of an otherwise leaky compensation plan, therefore make it data informed!

Short term acting What is certain to become more important are SPIFs, Special Purpose Incentive Funds: short-term rewards encouraging specific actions like selling a specific, important new item or opening a new significant account.

Team based In circumstances like now, the heroic rep with the unexpected great deal at the last day of the month is already extinct.

Multifunctional, team-based selling has already replaced the rep; Sales, Marketing and Customer success are working together to satisfy the customers who are currently operating in extraordinary mode, mostly remotely.

Adapt their incentives and rewards to team based. Each member’s role and level of impact will be the basis to reward them accordingly. As debating and controversial as it may be, a leaders’ role is to take such a decision. 

Incentivize launches In case of launches or major promotional drives, selling to existing customers and ring-fencing them is very important, but also more feasible, than reaching out to prospects. The design of the incentives should reflect that. Beef up the incentives for new clients acquired and celebrate them internally to motivate more reps to replicate the success. 

Where to start? Agree on the single source of truth of returning to normal and devise a short-term action plan for the next few months. Targeting and incentives are essential to drive the Salesforce. Challenge your team, however, to think of how the new normal is going to look like and be assured that the short-term rewards you will decide will form the basis for the future incentives, since normal will never return to what it used to be.