Successful Goal Setting, Walt Disney and why Stretch Goals are a bad idea
As we move into the 4th quarter of the year it is time to start thinking about setting goals for 2023. For high performance sales professionals it is particularly important to plan ahead, however, this is the time when the unwanted background noise gets the loudest. There are many different philosophies on goal setting and many different opinions about what works and what doesn't. This article will help you dial into your goal setting based on years of battle tested strategies I used to achieve my sales goals over a lengthy and successful career.
When you start to think about setting your sales goals for 2023, there are elements of goal setting that you must examine in order to make it a successful year. First, let's look at some of the philosophies out there and narrow down what a successful strategy looks like. One of the first goal setting techniques people will tell you about is SMART Goals. I have noticed that the acronym is represented in two different ways. Sometimes it stated as Specific, Measurable, Achievable, Realistic, Time Specific. I have also seen it when the R represents the word Relevant instead of Realistic. I like this better because I do not think there is such a thing as an unrealistic goal. (We will return to SMART goals later.)
This bring's me to Walt Disney. In 1952 when Walt conceived of Disneyland, Roy called it a "screwball idea." In other-words Unrealistic. But Walt had known very early on that he wanted to build this park and had taken small steps to get there. The key to achieving goals is repeatable success using structured behavior goals and that is something Walt had. We see other examples of this as well. When Michael Jordan was a sophomore in high school he tried out for the Varsity basketball team and did not make it. Instead he was placed on the Junior Varsity team. He went home and cried and told his mom that one day he would become the best basketball player in the world? Unrealistic? Michael Jordan took small steps on a daily basis to become the best, quitting was never an option. Finally there is Colonel Sanders. Harlan Sanders tried to sell his chicken recipe to over 1000 restaurants, all who rejected it. At age 65 he decided to open his own restaurant and KFC untimely grew to the second most successful chicken restaurant in terms of sales.
The only person who gets to define your limits is you. You choose what you want your goal to be, how you want to achieve it and what is realistic only for you not what someone else defines as realistic or unrealistic. Don't let someone else tell you that your goal is unrealistic, don't let someone else define you. Just get to work.
Stretch Goals and why the don't work.
Next lets talk about stretch goals and why they don't work. When you are goal setting, you must remember that there is a big difference between setting an outcome goal that others might believe is unrealistic and a setting a stretch goal or as they are sometimes called (an audacious goal.) Stretch goals are generally ill-conceived goals handed out by management and almost always cause failure. Instead of a stretch goal, set a big outcome goal! A powerful outcome goal will often require hard work but it is based on a concrete plan and, and if pursued, can be achieved by setting and pursuing behavior goals. (We will discuss outcome and behavior goals in a moment)
Now you might be asking yourself what is the difference between a big outcome goal and a stretch goal? Both are pushing for success, right? While that is true, stretch goals differ from outcome goals because they require you to work differently not harder. In other words, a stretch goal focuses on the big picture while as stated earlier, outcome goals focus on a concrete plan build on behavior goals and a plan of action that gets you to your destination. Think of it this way. Let's say you make a new years resolution. For all of 2022 you spent your free time sitting on the couch watching tv and eating. You decide that for 2023 your are going to join a gym and go everyday, change the way you eat and lose weight. In theory this is a great set of goals but it is a big picture, you have no plan on how you are going to to change your behavior and accomplish it and no small wins. Your chances of success are slim to none.
The philosophy of stretch goals in sales is often employed by sales managers who believe that by giving sales professionals a stretch goal or audacious goal they will push them to perform better. They also believe that even if the sales professional misses the stretch goal that the sales professional will be further along than if they set a lower more achievable goal. This strategy ignores the mentality of most sales people.
I worked at a large Insurance company for many years that assigned stretch goals to both its district managers and agents. These goals were often structured by looking at the most successful district managers and agents in the company and what they were doing to succeed. But there is a problem here. The reason an audacious goal works for the successful district manager or agent is that the success of stretch goals is rooted in small wins. If you are already successful then you can set a stretch goal and incrementally achieve it, however if you are a struggling district manager or agent and you are presented with a goal that you have no idea how to achieve, you will look at it as a mountain that you cannot climb, your mentality will shift to the negative an will give in to failure almost immediately. Sales people are highly competitive by nature but they won't engage in a sales strategy that they do not believe they can win. This causes two problems both of which I witnessed at the Insurance company I worked for. District managers and agents who felt they were faced with a challenge they could not meet would either give up or would engage in unethical behavior to try to meet their goal. I saw it all the time at the Insurance company I worked for. Management was shocked that this type of behavior existed, but they were establishing a succeed at all cost culture even if it meant cheating. In the end it is important to remember that the most successful sales professionals are also the most ethical and that personal integrity is one of the few possessions we have as sales people.
High Performance Sales and Goal Setting for Success
Outcome Goals vs. Behavior Goals. Do you know the difference between an outcome goal and a behavior goal? Both are important and should be used when setting and achieving your sales goals for 2023.
Outcome Goals: Outcome goals focus on your endpoint. It's your final destination, the final goal that you want to achieve. Successfully achieving your outcome goal will be tethered to successful pursuit your behavior goals.
Behavior Goals: Behavior goals are the goals you will use to take the baby steps necessary to achieve your outcome goal. A behavior goal is the what? (Committing to making 100 cold calls a day and holding yourself accountable is a behavior goal) Behavior goals can and should be tied to (Specific, Measurable, Achievable, Relevant) SMART goals in terms of monitoring your progress. Making your behavior goal Specific means defining what you will do to achieve that goal and using action words to define it ex: I will schedule 3 presentations per week. Making it Measurable means being able to evaluate your success with achieving that behavior goal. If your idea was to contact 12 prospects a week to schedule 3 appointments and you are falling short that you know you have to re-evaluate how many prospects you need to contact to get to your 3 presentations. Achievable the idea here is to know that your goal is one you can accomplish. We are about to look at how to reverse engineer your numbers so you will know that your outcome and behavior goals are achievable. Relevant. This means that your goal is one that improves your business in some way, which will happen as you move along the year with hitting your daily, weekly and monthly behavior goals. Time sensitive. By building your monthly behavior goals this will take care of itself.
In the example below we are setting an outcome goal and providing the steps to get to your outcome goal. Your job will be to set in motion the manageable steps you need to take to set your behavior goals in motion and achieve your outcome goal. The beauty of this system is that you will know exactly where you are and how to make up for a month when you did not hit your numbers. This could be if you go on vacation, are out sick or come up short for any reason.
When you start thinking about your goals for 2023 you must first know your numbers. This means understanding what drives your goals and what numbers you need to get there. Once you know that, then it is a matter of reverse engineering. For the sake of this example let's say that your goal is to make $250,000 in 2023. It is a given that in order to get there you will exceed your quota. For this example we will work with 20% commission per sale at 100% commission. If you are a salary plus commission sales professional then you will need to work your salary into the numbers.
Outcome Goal $250,000. It is important to start at the the end of the year and work back to the beginning that way you know how much you need to earn in commission each month to hit your goal. This will also set in motion your thought process of what your behavior goals need to be. With an outcome goal of $250,000 per year you will need to close enough sales to earn $21,000 per month.
Closing 3 sales per month. If your average sale is $35,000 and you make 20% commission on each sale that means you get paid $7,000 commission per sale and need to close 3 sales per month. Now with that in mind you next need to know your closing ratio and and length of your sales cycle.
Closing ratio. The average closing ratio for a $35,000 sale is 30%. Since we are talking about high performance sales professionals I am going to put it at 40%. That means to close 3 sales per month you must make 12 presentations per month or 3 presentations per week. If I were running these numbers for myself I would build in a safety net and set my behavior goal at 15 presentations per month.
Lead to prospect to presentation conversion ratio. The next set of numbers is important because you absolutely need to know your lead to prospect ratio. If you need to make 15 presentation per month, how many leads do you need to contact to get to that number. This is really a question you will have to answer for yourself. It will depend on your active pipeline, how you prospect and your success rate from contact to presentation. Once again I am using average numbers but lets say it takes a sales professional 5- 6 contacted leads to set an appointment. This means that you need to contact 90 leads per month to set 15 presentations per month to close 3 sales per month. When broken into small daily steps you only have to talk to 5-6 leads per day. All of the sudden this goal is not as daunting as it once seemed. It all about setting the right behavior goals.
In the end, IGNITING your career as a High Performance Sales Professional is all about knowing your numbers and keeping your activity level up. This happens by setting your Outcome Goal and supporting it with your behavior goals. Setting manageable behavior goals as SMART goals will make it easy to stay on track and adjust your goals if needed. This formula will set you up for success! As Brian Tracy once said "Activity equals results. If you want to increase your success, increase your activity." See you in the winners circle!