Does it sound familiar?
Especially for those in sales, we have all experienced the situation when in the middle of the year we realise that we have done already our target. Of course, the opposite many times occurs, whereby we are reaching the end of the year and we understand we will not make our target as we are far from it.
There are situations that justify for an organisation to alter the sales budget in the middle of the year, sometimes more than once. Targets are not settled in stone and it is a vibrant part of the sales organisation.
Here are some preliminary rules we need to follow.
Budget/Targets are there to stay: Changes should not happen, unless there is a very important reason to do so. The fact that a few sales people in the sales force are not going to make targets is not a reason to change them. If you are also realising all of your sales people are overperforming, is not again fair to change targets just because you realised you set the targets wrongly in the first place and you are going to pay more than you thought so.
New targets need to be decided following the same process you have on deciding targets in general: No target change should take place for one individual alone, or without following the same thorough analysis you do when you decide budget in general. If you decide to change the target for a person, giving less for example, you need to think the impact of this to the overall figures. Are you going to increase budget in another sales person, are you expecting to make this budget out from another sales channel?
Follow the formal process of approval: No matter if the change is small or big and the target is changed only for one person, the committee that approves commissions needs to approve also this small change.
When to consider changing targets in the middle of the year?
What triggers the need for a target change?
No strict rules here as I believe an organisation needs to be agile to accommodate new sales objectives, new product offering, etc. I believe sales management is the one that can think of the factors that justify the change and monitor them. It can be for example the number of people reaching above fifty percent of their target or how many people have made more than a hundred and fifty percent. It can be also other factors such as the concentration of sales production into a single product line or others. Generally speaking, I think that if one sees a good part of the sales people not making more than fifty to sixty percent projected/forecasted for the year, then reconsider targets is needed.
Other considerable factors though are those that have nothing to do with the company. An economic crisis for example, is the one that changes the dynamics and the prospect of any company. Under such conditions, budgets need to be again reconsidered. Let’s not forget, the sales compensation plan is not just for showing sales people how to make targets, it is there as a tool to keep them motivated.
Another factor justifying the change of targets in the middle of the year, is company related changes. For example, the acquisition of another company may create additional sales prospects such as making another product available to upsell.
You must log in to post a comment.