When you hear the term “performance goals,” the first thing that comes to mind likely has to do with revenue. But if hitting a quota is the only goal on your sales team’s agenda, you’re missing out on a huge opportunity as an effective leader to bring out the best in your team.
There are myriad performance goals managers can set for their teams. And if you want to build a high-performing (and well-rounded) sales team, you should be setting as many goals as possible.
5 characteristics of effective performance goals
Before we jump into what kinds of performance goals are effective, it’s important to define what effective performance goals actually are. No matter what type of goal you’re setting for your team, there are certain characteristics effective performance goals share when using the SMART framework:
Without these characteristics, it can be difficult for a goal to inspire a high level of performance within your team. For example, if your goal isn’t specific, your team is going to be confused about what, exactly, it’s supposed to do. If your goal isn’t achievable, your team is going to be discouraged from the get-go—and it’s not going to get results.
Before you set a performance goal, make sure it ticks all the necessary boxes—otherwise, you’re setting your team up to fail.
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“People need to feel like the goals are achievable. If they feel defeated before they even get started, they’re not going to be successful.”
Revenue vs. process-based performance goals
The different types of performance goals you can set for your team mainly boil down to two categories—revenue-based goals and process- or activity-based goals.
Revenue-based goals are based strictly on, well, revenue. So if your team has a $100,000 sales quota each quarter, that’s a revenue-based goal.
A process-based goal doesn’t measure success based on revenue. Instead, it’s based on hitting a certain level of activity, like making 75 calls each day or scheduling 15 sales demos each month.
And if you want to build a top-notch sales team, it’s important to leverage both. Revenue-based goals give your team a concrete number to work toward—which directly affects your organization’s bottom line. But building a high-performing sales team is about more than just revenue—which is why process-based goals are equally important.
“If you just give someone a revenue goal, that’s all they focus on. And so if they hit it, they can take their foot off the gas—and if they miss it, they don’t pay attention to the process,” says Kevin Dorsey, vice president of inside sales at PatientPop. “If you build goals that are process-based, whether that is dials, emails out, new leads, referrals or tasks for things that [the sales representative] always can control, it puts them in the driver’s seat—and I believe that’s what leads to better overall performance.”
Finding the “sweet spot” for performance goals
Setting a variety of both revenue and activity-based goals is important for building top-performing sales teams. But so is making sure that those goals are at the right level; high enough to inspire the hustle, but not so high that your team feels overwhelmed or demotivated.
“People need to feel like the goals are achievable,” says Michelle Wideman, chief customer success officer at Dell Boomi. “If they feel defeated before they even get started, they’re not going to be successful.”
There’s no one-size-fits-all approach to finding that “sweet spot” for performance goals—and there are different schools of thought on the most effective way to find it. A lot of the sales information out there says to set the bar high—and, even if your team doesn’t hit its goal, it’ll still do better than it would have had the bar been lower.
But in his experience, Dorsey has found the opposite to be true. “I believe people actually work harder to overachieve than to achieve,” says Dorsey. “I’ve actually seen performance go up when I lower a goal, but now people are trying to hit 120%, 130%, 140%. It feels better to work harder to overachieve than it does to achieve.”
If you do decide to set the bar high, it’s important to make sure you celebrate your team’s smaller successes as they work toward the larger performance goal. “Goals should contain an element of stretch targets to optimize overall performance, but consequently, also reward the teams for their accomplishments [along the way],” says Michael Ridenour, head of industry relations and sales operations at The Kraft Heinz Company.
Performance goals are only one essential part of sales team success
It sounds counterproductive, but sometimes the best way to build a high-performing sales team is to move the focus away from numbers and performance goals—and, instead, focus on the team as a whole.
“If you were to ask any of my managers what their job is, they would not tell you to hit numbers,” says Dorsey. “They would not tell you to hit their goals. My managers’ job is to make their reps better.”
Invest in your team. Figure out what makes them tick. Focus on helping them become better versions of themselves, both personally and professionally—and the performance goals will take care of themselves.