Sales Quota and Business Objectives

Yesterday I talked about setting quota. I realized it was a much bigger topic than I realized so I promised I would break it down into a series of posts.

I’ve decided to start with aligning quota with business objectives.  To me it’s the most important. Quota should be the single representation of the companies overall goals. In other words, whatever you are looking to achieve from a business perspective should directly align with every sales person quota.

Think of quota like Hanzel and Gretal bread crumbs.  Now imagine the bread crumbs didn’t lead them home but somewhere else. That, in essence, is what happens when quota and business goals don’t align.  Sales people are making progress in the wrong direction.

Unfortunately, it’s not uncommon.

To avoid misalignment and to make sure quotas are aligned with business goals and objectives, start with the companies strategy. Identify exactly what you want your KPI’s to be and how they are going to be measured. With most companies, revenue is the default metric. However, this being said, it’s not always what the company wants or needs. This is where the sales strategy comes in. Yes, the end goal is revenue, but how does the strategy attempt to get the new revenue?  Does the strategy call for new logos, increase in margins, new territories, new partners, selling down stream, selling up stream?  Understanding what the revenue strategy calls for should play a HUGE role in how quota is set.

If you’ve determined growth for the year is coming from a new product being introduced into your existing market consider establishing quota based on revenue from the new products. If the strategy calls for new account penetration or new logos then considering creating quota based on new account revenue.  The simple point is quota must tie not only to revenue targets but also the specific types of revenue called out in the sales strategy.

In addition to revenue, it is perfectly acceptable to have a margin or profit quota or even a quota on types of products sold.  I’m not a huge fan of product quota, I’d rather see the quota on the revenue of the product. But, that being said, sometimes just getting the product in the hands of customers is what is needed.

Quota is the goals established for the company broken down and delivered to each sales manager and sales person. If they aren’t properly aligned, they will be rowing in one direction while you are rowing in an another.

Row together, make sure quota aligned with strategic goals.