Proper Sales Goals for Proper Sales Practices | Lucidchart Blog
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The following is a Q&A by Software Advice.

Last year, Wells Fargo was fined $185 million after federal regulators announced that employees had opened or applied for 2 million bank accounts or credit cards without customers’ knowledge or permission.

Around 5,300 Wells Fargo employees were fired as a result of the incident. According to the Los Angeles City Attorney, employees opened these accounts in order to “satisfy sales goals and earn financial rewards under the bank’s incentive-compensation program.” Under this program, employees were evaluated and paid based on how many accounts they opened.

Recently, Andrew Friedenthal, market research analyst for the online reviews firm Software Advice, released a new report that studied how small and midsize businesses (SMBs) can set reasonable, attainable sales goals that won’t incentivize fraudulent techniques among your sales team like they did at Wells Fargo. We had the opportunity to talk with Mr. Friedenthal to learn a little more about what his research uncovered.

1) What went wrong at Wells Fargo in terms of sales goals?

Put simply, upper management at the company set sales goals that were unrealistically high. This created a toxic atmosphere of unhealthy competition and fear over job security, so many people in the company bent the rules (and the law) in order to reach those goals.

2) What's the difference between a "negative" and a "positive" sales goal?

A "negative" goal is like the kind they had at Wells Fargo. It's based on what sales numbers you may want to reach but that you can’t feasibly achieve based on the data at hand. It's driven by the gut rather than the brain. Because you can't actually reach this goal using healthy sales tactics, it encourages salespeople to bend or break the rules in order to perform well. "Positive" sales goals, on the other hand, are based on realistic expectations extrapolated from the available data.

Sales Goals

3) What can team leaders/managers do to encourage healthy sales practices amongst their employees?

Set a challenging, "positive" sales goal that is attainable by any hardworking salesperson. This goal will represent the high level of achievement for your sales team, but it's something they can strive for within the confines of non-abusive sales tactics.

4) How can sales goals be used as a positive, motivational force for sales teams?

You can encourage competition within your team that gets everyone to meet, and many to exceed, your goal. If you have a group goal, you can foster cooperation and teamwork so that your highest earners can help struggling team members reach their full potential. Having a goal to aim for is a tried-and-true way of managing both individuals and teams, but that goal has to be realistically achievable by everyone.

Sales Team

5) What role can/should data play when setting sales goals?

The data is everything. You can't just set a goal based on what you'd like to be doing because that goal may be unfeasibly high for your organization. You need to examine your previous and current performance level, look to your resources in the quarter/year ahead, and use that information to set a realistic, reachable goal. Use the data to think with your head because your gut may be influenced by what you wish was true instead of what is actually there in front of you.

What happened at Wells Fargo was, ultimately, easily avoidable. Had management set more realistic goals based on actual data, their employees would not have felt pressured into breaking the law. You can and should set sales goals, whether you're in real estate or the medical field, because they will encourage your team members to work at their highest level. However, those sales goals need to reflect what your team can actually achieve when they're working at that high level. Let the present data guide you, instead of setting a goal based on how you'd like the data to look in the future.

When you set a goal that can be achieved through honest hard work, your team will strive to reach that goal in a productive, healthy manner—and everyone will win.

 

Andrew

Andrew Friedenthal is a Market Research Associate at Software Advice. He holds a PhD in American Studies from the University of Texas in Austin and has previously worked as a professor at both UT and St. Edward's University.

After obtaining a bachelor's degree in Theater from Dartmouth College and a master's degree in Performance Studies from NYU, Andrew moved to Texas to pursue his doctorate. He has also published several academic articles studying comic books and popular culture. He joined Software Advice in August 2016 to cover Sales, Marketing and CRM technology.