Help setting fair targets using math: using past data to set sales targets for 2019

Robertos

New member
Joined
Dec 3, 2018
Messages
2
Hello all,

im hoping someone can help me as math is far from my strong point. Please excuse me if this post isnt to protocol but i’ll try my best to explain the problem Im trying to solve.

I want to set some fair targets for a team of sales people , without using the ‘gut feeling’ approach.

Heres the background:

we have 6 sales people between whom an increase in a global target for 2019 financial year needs to be shared. The overall increase is £2m.

The total sales target for this team 2019 is £9m, it was £7m in 2018.

The overal global increase can of course be represented by a percentage (28.57%), and last year the SUM of the 6 sales peoples individual targets was equal to the total target of £7m.

Therefore it stands to reason that to get to the £9m next year i could simply increase each individuals target by the flat 28.57%.

However, each individual didnt have an equal share of the £7m last year, as different members of the team have differing skill sets and levels of experience.

Also, last year each individual member performed differently against their own target meaning potentially some peoples targets were too easy, some were too hard. Therefore increasing each respective target with a flat 28.57% doesnt seem entirely fair.

Ive been using excel to crunch figures, using the 28.57% increase as a starting point for each person, and then trying to reduce or increase this 28.57 % for each individual, based on factors which I can proportion a value to, whilst still ensuring the resulting total global increase remains at £2m. For example, for each person the following values can be expressed as a % or decimal figure.

Indviduals 2018 revenue as a % of 2018 total revenue - percentage share of revenue
Indviduals 2018 revenue as a % of their own 2018 target - percentage to target
individual back order value as a % of global 2019 target - this is how much they already sold in 2018 but will not invoice until 2019, therefore this figure will count towards their 2019 target

id like to be able to create an excel spreadsheet which uses math to set 2019 targets dynamically.

Now I appreciate this is a long post, and my first, so apologies if I’m missing something or this isnt the right forum for this type of problem, but maybe someone will find this interesting enough to warrant some suggestions.

Many thanks to anyone reading this far and for any suggestions you might be able to offer.

Kr

Rob
 

lev888

Junior Member
Joined
Jan 16, 2018
Messages
211
What about their compensation? If it's a fixed salary, shouldn't the targets be proportional to the salaries? After all, salaries reflect skills and experience levels.
If it's commission based, I would increase individual 2018 revenues by 28.57% (not targets, since they were not met by all).
 

Robertos

New member
Joined
Dec 3, 2018
Messages
2
Hi, i understand the comment about fixed compensation, but thats not quite how it works . All the team have a simialar base salary and then take a percentage of their sales as a commission, that percentage is also weighted depending on their individual % to target. So lets say they get a flat 3% commission on sales GP ( not total sales) they then get that 3% altered based on how far they are to target.

So for someone who is 85 % to target, they get 85% of the 3% of their GP.

To be honest, its a compicated way of remuneration, but its uncapped and the higher earners can do very well.

The problem with your suggestion of setting targets based on a flat % raise of 2018 achieved sales means that it wont equal the £ 9m target for the company, so that wont work. Equally, we shouldnt punish the people who have a higher target, as that 28%ish flat raise means a much bigger hike in target than the other folks whose target for 2018 may have been £0.5m etc .

To be clear, i appeciate now after reading other posts on this forum that this isnt set out like a normal math problem. However, i suppose all im asking is that if somone who finds this mildly interesting might suggest a starting point.

I.e why dont you try weighted averages etc ...

Thanks again in advance for any input.

Regards,

Rob


Sent from my iPhone using Tapatalk
 

lev888

Junior Member
Joined
Jan 16, 2018
Messages
211
Regarding the flat % raise, I should've said that the % should be recalculated to get you to the right total.

Yes, the compensation structure is complicated. So, the base salary is the same. Then they get 3% commission reduced by % to their target. Let's say A's target is 100K, B's target is 200K. They both get a 100K deal. A gets 3% of 100K, B gets 1.5% of 100K. This doesn't seems fair. Did I misunderstand?
 
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