While there are many perspectives on what kind of goals are best to set and easiest to achieve, fewer goal-setting strategies have gotten better PR than the SMART goal.
In case you need a refresher, SMART stands for specific, measurable, assignable, relevant, and time-based. Sound familiar? This acronym has been the framework recommended most to students and professionals alike when it comes to setting goals.
Setting SMART goals can be an effective approach for setting personal or individual goals, however it can be challenging to measure the progress of an entire sales team with this framework. After all, setting a goal is one thing, but having an entire team of people understand and work together to achieve it is another.
In sales organizations, reps can easily get wrapped up in their own quota and workflow. While working the daily grind, employees can become hyper-focused on tasks without understanding how their work connects to the bigger picture. According to McKinsey, 91% of companies with effective performance management processes directly link employee goals to business objectives — in other words, the goals employees are measured against should be tied directly to the business.
These kind of results require a high level of focus and clear alignment on business priorities at each level of the organization, and top companies use the OKR framework to keep team members on the same page when it comes to reaching their goals.
Let’s discuss what OKRs are, and how you can use them to drive success for your sales organization.
What are OKRs in sales?
Objectives and Key Results (OKRs) is a goal-setting method sales teams can use to streamline and simplify their efforts. Using the OKR framework, a sales team can set key objectives and each individual can determine what key results they can drive to contribute to the team’s collective goal.
If a sales team is following the OKR framework to map out their priorities, they would set one overarching goal which is then broken down into smaller measurable goals called key results. These results should be attainable within a specific time period.
When defining the objective and key results, it’s important to gather input from the entire team instead of only having goals come from the top and trickle their way down. According to Harvard Business Review, goal alignment for employees at each level of an organization is a crucial component of employee engagement.
Using this method, each individual on your team has buy-in when setting organizational goals and knows exactly what each individual should be doing to support the team’s broader objectives.
Ready to get started? Check out this overview of what the OKR framework entails.
This defines the qualitative outcome of the goal and what we're looking to accomplish. Your objective should be concise and easy to understand for everyone in your organization.
A set time period to measure the effectiveness of actions taken to meet your objective. Many teams define a three-month period for OKRs to align with their quarterly business calendars.
Measurable results, split into three key results, that increase with difficulty. Think of each key result as a "milestone" getting your team closer to your objective.
Key result one: Quantifiable goal we can accomplish with 80% certainty.
Key result two: Quantifiable goal we can accomplish with 50% certainty.
Key result three: Quantifiable goal we can accomplish with 20% certainty.
We recommend having a designated place to document your team’s progress to your goal at the end of each week. This keeps your OKRs top of mind for members of your team, and keeps everyone accountable for their role in helping the organization reach its goals.
Creating a progress table like the version below and reviewing it with your team on a weekly basis can be a helpful practice.
Now that you understand the basics of this goal-setting framework, let’s review some examples of OKRs in action.
Sales OKR Examples
Quarterly Revenue Goal Using OKRs
First, let’s look at an OKR example of an organization looking to increase its quarterly revenue.
Earn a quarterly revenue of $575,000, a 15% increase over the prior quarter’s revenue value of $500,000.
October through December of current year.
Key result one: Record $25,000 in sales during the launch month of a new product.
Key result two: Close an up-sell or recurring deal with 10% of existing customer base.
Key result three: Decrease the sales cycle from 30 days to 25.5 days.
Leads Goal Using OKRs
Now let’s look at a sample OKR of a sales team looking to work on lead conversion.
Improve lead processes to increase number of qualified leads.
January through March of current year.
Key result one: Reduce number of fields on signup page to streamline the demo request process.
Key result two: Respond to 80% of inbound inquiries within 12 hours.
Key result three: Each rep demos product to 25 new leads each week.
Sales Enablement Goal Using OKRs
Having efficient sales processes is critical for growth. Here’s an example of how a team focused on sales enablement could approach using the OKR framework.
Streamline sales analytics and reporting for better data visibility.
April through July of current year.
Key result one: Identify one central tool to use for all reporting and data management.
Key result two: Migrate data from existing systems into one streamlined system and teach team members how to use new system.
Key result three: Decrease time spent on reporting and administrative tasks by 20%.
As you can see, the OKR framework can fit a variety of goals and initiatives that can ultimately make your sales team more successful and accountable for their contributions to the overall objectives. To learn more about sales goal setting, check out The Ultimate Guide to Setting and Achieving Sales Goals.
Originally published Aug 31, 2020 1:15:00 PM, updated August 31 2020