Ok, I’m coming back to the quota discussion.
My last post about quota focused on the importance of quota aligning with business objectives and business strategy. This post is going to tackle perception. The perception of achievability.
RULE 1: Quota MUST BE perceived as attainable.
RULE 2: See rule one.
It’s that simple.
When quotas are not perceived as achievable, sales people just give up and don’t even try. It’s like pricing yourself out of the housing market. No one is even interested in what you have. The reps don’t care about commission, about Presidents Club, about anything. When you set quotas the team doesn’t think are achievable, they don’t even try.
I’ve seen it happen. Management comes out with quotas. The sales team freaks out. Fist line managers are stuck in middle. They push back. They beg Sr. Management to reconsider, they state their cases. Sr. Management doesn’t budge arguing the sales team is sandbagging, and the quotas are more than achievable. Middle managers then try to “sell” the sales teams on the quotas. The sales reps don’t buy it and in the end quota is missed . . . big time!
How do you set achievable quotas?
Set quotas that are data driven not need driven.
“Need” driven quotas almost always come from an executive team trying to meet previously stated goals or objectives. The business plan calls for a certain number even though the original assumptions were wrong, and no one has the courage to challenge them. Commitments have been made to the street, a new product with substantial investment behind it “must” generate so much revenue, potential suitors need to see x amount of revenue. When these things happen, need based quotas are doled out. Need driven quotas are the result of someone, or some group NEEDING the revenue.
Data driven quota’s come from careful analysis of available data like;
- Historical performance
- Market Conditions
- TAM (Total Available Market)
- Product availability
- Sales Support (Insides Sales, Content Marketing, Technical Support, etc.)
- Existing Pipeline
- Sales Investments
- Economic Conditions
- Government Mandates, Legislation etc.
- Sales person tenure (new reps vs established reps)
- Sales person account distribution