Individual Sales Target Statement:
All quota carrying salespeople have a written revenue target for the current measurement period. If they have authority to vary the price of what they sell, they also have a written profit target for the current measurement period.
Rate the truth of this statement on a scale of 1 to 10.
Not true or unsure = 1
Partially true = 5
Completely true = 10
Score between 1 and 10 according to the degree of the truth in this statement with respect to the sales plan being assessed.
Salespeople with a revenue target but not a profit target, who can vary the price of what they sell, will discount to win business without regard for margins or profitability.
Salespeople with a profit target but not a revenue target, who can vary the price, will also discount to win the business for any amount of margin. They have no incentive to care about the ratio of margin to revenue or the overall profitability of the organisation.
Lower prices make a salesperson's job easier and so they tend to exert pressure to reduce them. Even if they are not allowed to give discount, they can influence pricing policy through selective customer feedback and opinion. Therefore sales targets should always reflect both the revenue and the profit needs of the business.