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Sales targets that motivate

# 26 – January 2012

Setting targets and measuring performance is a key aspect in managing and motivating a sales force. Yet, how do we set the targets for them to be perceived as motivating? One often hears that the targets should be challenging yet realistic. “Challenging” because they should force us to put in extra effort – “Realistic” because they should be attainable.

In setting challenging and realistic target levels, good guidance is provided by the 70/90 rule, developed from research on American sales organisations*. This shows that if less than 70 % of the sales people meet their targets, then the targets are not perceived as motivating. It may even have the opposite effect of decreasing motivation. It doesn’t matter if the targets are in fact high or not, but rather how they are perceived. It may therefore be counterproductive to set to target levels too high.

If target levels need to be increased, then actions need to be taken to ensure enough people in the sales force reach these target levels. The targets cannot be simply raised. Ensuring good management practice and process improvement are essential to ensure sales success. Much as a coach would do in training his athletes, it is better to incrementally increase the demand to allow the sales force to develop and adapt.

Just as targets which are too tough to reach are not motivating, targets which are too easily attained can have the same effect. The other side of the 70/90 rule states that if over 90% of the sales people make their targets, then the targets are perceived to be too easy and need to be made more demanding.

Ideal target levels for sales organisations exist when more than 70% of the people meet their targets but less than 90%. These targets are perceived by the organisation to be challenging, yet realistic.

(* Zoltners, Sinha, Zoltners: “Accelarating Sales Force Performance” 2001.)