January 19/26, 2015; Volume 28/Number 15
By David Romano
As parents we all set goals for our children. Some parents determine what is good for their children and many times create a standard that in some cases is nearly impossible for them to meet. In the flooring industry a very similar pattern of setting unrealistic, unwanted and non-collaborated goals is prevalent, creating a team of underachievers and those who feel unappreciated.
Setting goals can be accomplished using numerous methods. The most common approach is top down, in which the sales or margin performance of a sales associate from the previous year is used as the baseline with some multiplier applied to that number to set the upcoming goal. This approach is rarely effective in driving a higher level of performance because the standard of what is “good” was set by someone other than the one being held to that standard—the parenting paradox mentioned previously.
The most effective method in setting goals for your sales staff is to make those objectives collaborative, or bottom up. How does that work? The sales associate tells you what he or she wants to earn in the upcoming year; with a simple calculation based on the pay structure, the sales goal is calculated. As long as the volume is above a minimum standard the goal is accepted. The great thing about this methodology is if your sales associates are not hitting their goals they will be open to your coaching and instruction. They are less likely to view feedback as an expression of failure if it is in response to standards in which they had input.
Determining the desired profits you want for your business, then taking that number and dividing it by the number of sales associates and setting it as an individual sales goal is like taking a dose of a non-existent drug called “hope-ium.” What you hope to achieve tends to lead to nothing but annual disappointment and a high turnover rate in sales staff.
It has been substantiated countless times that the goals people set for themselves are much higher than the goals others will set for them. In other words, a business will sell itself short if the volume desired is determined by anyone other than those who can get you to the Promised Land.
According to a survey conducted by Benchmarkinc, in which several hundred flooring storeowners participated over a three-year period ending in 2013, setting bottom-up goals with sales staff had the following effects on a flooring business, among others:
- Average transaction: $151 higher than those who did not set goals with sales staff
- Sales volume: total net sales (gross sales minus sales tax and discounts) 26.5% greater than the average and 87.5% greater than those who did not set goals with sales staff
- Owner’s earnings: additional gross payroll for owners was approximately $40,000 more than those who did not set goals with sales staff
Properly setting goals and expectations with your children is eerily similar to managing your sales team. If you let them define what is “good,” help them with strategies to get there and provide structure, discipline and guidance, they are more likely to succeed. And if they succeed, that means your customers succeed and as a byproduct so does your business.