Sales Solution, as Taught by Eli Goldratt · Lesson 9 of 9
Managing sales without targets
Freed time doesn't sell by itself, and a monthly target pulls people straight back to the old habits. Review the enablers instead of the result, judge by “better than before”, manage tactics weekly, reward how well they are carried out, and start with a pilot.
Three months later. The desk is running, inside sales is calling, two of Neha’s nine people now do only business development.
Neha: “Here’s my problem. Whose target is it now? The developer opens the door, inside sales takes the enquiry, the desk sends the quote, the field salesperson negotiates. If the month is short, who do I shout at?”
Ruth: “Why do you need to shout at anyone?”
Neha: “Because that’s how sales is managed.”
Ruth: “And that’s how your people ended up spending eight per cent of their time selling.”
Can this be managed with targets?
Three questions show it can’t:
- Target for whom? The developer, inside sales, the desk, the field salesperson? No single person now carries a sale from start to finish.
- Authority and responsibility no longer match. A target on one person makes him responsible for work done by others.
- What would the target do? Exactly what it did before. It would pull everyone back to the work that closes within the month.
“Tell me how you measure me, and I will tell you how I will behave.” — Eliyahu M. Goldratt
And when the freed time is reviewed only by the final number at month-end, there is no way to know whether it is being used well. It usually isn’t.
Review the enablers, not the target
The new review looks at the enablers of sales, every week:
- The funnel, stage by stage. For business development: appointment scheduled, application study, offer presented, enquiry generated. For inside sales: calls scheduled, demos, quotations, negotiation. For each stage, the number of opportunities waiting, and how many are red: waiting there longer than the time allowed. A stuck opportunity is caught in its second week, not explained in a post-mortem.
- Next week’s plan. Is the salesperson meeting the right prospects, three or four a day?
- Influencers. Architects, consultants, contractors: who is being worked on?
- Interactions with new customers, the conversion ratio, order booking, billing, throughput and receivables, each as a trend.
Each parameter is reviewed at the pace it can change: interactions with new customers weekly; the funnel weekly, expected to improve within two to four weeks; conversion, order booking and throughput monthly.
Better than before
The guiding philosophy is short:
- No predetermined baselines. Continuous improvement is great. Improvement every fortnight is a great performance.
- Colour by trend, not by target. Green: improving over the last two cycles. Yellow: marginal improvement. Red: no improvement in the last two cycles. The colours decide the order of the review, reds first.
- Remember that every measure can be manipulated if someone sets a target on it, directly or indirectly.
- One review, not a ladder of reviews. Instead of the branch reviewing the team, the region reviewing the branch and the national head reviewing the region, the senior people join the same weekly review, so tactics on the ground are corrected directly. All parallel reviews stop.
- Implementations learnt one more thing: don’t publish the dashboard to the front line. Its purpose is to direct management’s help, and a public red becomes a public punishment, which brings back the fear of targets.
Pause and think: the national sales head sees that 67% of one branch’s parameters are red. What should he do?
- Join that branch’s weekly review to see which tactics are stuck
- Send the branch a stronger target
- Ask the branch for a written explanation of every red parameter, with a recovery plan by next week
Frequent review of tactics is the only way to detect obstacles, and to find where seniors have to intervene, before it is too late. The dashboard tells him where his time is needed, not whom to blame.
Management by tactics
Where a parameter needs to improve, the team defines a tactic: a specific action for tapping new opportunities, improving conversion or growing the enquiry base. Each tactic is tracked weekly: start date, expected result, status this week, status last week.
| Observation | Tactic | Status after a week |
|---|---|---|
| Electrical contractors haven’t started giving enquiries | Visit all six contractors and start getting enquiries; sign agreements | 3 visited, 3 pending; 3 agreements signed |
| Low enquiry base | Focus on developing key architects; plan small architect meets | Target list ready; meet plan discussed in review |
| Most enquiries stuck at the budgetary stage | Assess the top five: why are they stuck, what moves them to the next stage? | Manager to join three customer visits |
| Upcountry enquiries unclear | Find the source of each and the dealer’s involvement | Manager and salesperson to visit three dealers about eight enquiries |
How to reward
The objective of evaluation is not to judge, but to ensure that more and more people do well.
So the criterion becomes how well the tactics are implemented, and only frequent observation can see behavioural change. One company rated its people in four categories and paid its variable pay by category:
| Rating | Description |
|---|---|
| Marathoner | Fast and effective in implementing the tactics; proactive |
| Runner | Moderate speed; needs frequent support |
| Jogger | Very slow; needs prodding |
| Walker | No progress; casual approach |
Too big a change? Pilot it
Neha: “It sounds right. But it’s a lot to change at once, and I’m not sure of all the ramifications.”
Ruth: “Then don’t change it at once. Two branches. Establish the process, the structure, the review formats. Let it stabilise until people understand the new way of working. Then roll it out.”
What to expect
Results from companies that implemented this way of working:
- A furniture maker’s B2B division: call rate up from about 2 to over 3 a day; the base of hot and warm enquiries up 140%; order booking growth up from 8% to 40% a year; back-office productivity up 50%. Two business developers per branch were taken from a team of eight without hurting current sales.
- A lighting projects business: enquiry levels up as much as six times in the branches where it was rolled out; customer visits up from 1–1.5 to 3–4 a day; 20% growth in billing where the rest of the country was flat.
- A garment exporter that separated business development from order management: its order book grew from 45 to over 70 days, filling a season that used to be a slump, with new international brands added.
Anil: “So the shops get an offer they can’t refuse, the distributors get one too, and our own salespeople finally get time to sell.”
Ruth: “And all of it from three questions. What to change: the measurements and the policies that kept your sales team and your channel busy with the wrong things. To what: offers built on the customer’s constraints, and capacity used for selling. How to cause the change: one layer of resistance at a time, starting with agreeing on the problem.”
Check your understanding
Answer all five. Get four right to complete the course.
1. Why can’t a divided sales process be managed by individual targets?
- Targets are too low
- No single person carries a sale end to end, so a target fits no one
- Salespeople dislike targets and perform better when they are trusted
- The law forbids it
And a target pulls people back to short-horizon work.
2. A “red” in the funnel means…
- The salesperson missed the monthly target for that stage
- The customer is unhappy
- An opportunity has waited at a stage longer than allowed
- The order was lost
Caught while it can still be moved.
3. Under “better than before”, a parameter is red when…
- It hasn’t improved in the last two cycles
- It is below the annual target
- It is the lowest in the country
- It fell once
Colour by trend, not against a baseline.
4. People are rewarded on…
- Sales value booked against the plan, each quarter
- Number of visits
- Seniority
- How well and how fast they implement the agreed tactics
The objective is that more people do well, not to judge.
5. The safest way to introduce this change is…
- All branches on day one
- A pilot in two branches, stabilised before roll-out
- A memo from the CEO
- A new incentive scheme to reward early adopters
Establish the process, structure and reviews, then expand.