Many sales organizations struggle to consistently attain corporate goals, despite carefully setting sales quotas every quarter. With all we have learned about quota management, why do we keep getting it wrong?
Effective quota planning pulls together different functions inside an organization, including sales, sales operations, finance, and even product management or marketing. Just like any other complex, collaborative process, setting quotas can be difficult. Though they’re based on tangible factors, it’s often the core values at the foundation of your company that take reps closer to their targets - and your overall objectives.
Great Principles=Best Practices
“Motivation is what gets you started. Habit is what keeps you going.” – Jim Rohn
Start off with a basic rule in mind: always set quotas that are challenging, yet achievable by your typical rep. Rewarding exceptional top performers should not come at the expense of others. Overly aggressive quotas affect team morale, lead to frustration, and result in an overall decrease in performance.
Fairness is an essential principle to follow. Sales reps embrace quotas more easily if they perceive them as equitable.
Fairness is communicated through transparency, which will also play a large part in building sales force support and engagement.
Make quotas as accurate as possible by relying on diverse and current data. Draw insights from both past performance and future expectations.
Nothing stays the same forever. Market conditions can shift – dramatically sometimes – making initial forecasts and quotas obsolete. In terms of team morale, flexibility is vital.
Quota planning used to be a “jump off a cliff and build an airplane on the way down” type of process. Not anymore. Keep the above principles in mind and you too could be on your way to a great start to the quota-setting process. Still, there’s a long way to go before you can truly celebrate success.
The Five Stages of Effective Quota Planning
Here are the five main stages of quota planning that your organization must master in order to dominate the game:
Successful forecasting needs to be a scenario-based process, taking into account both the past and the future. Forecasting is not about looking into a crystal ball or being right all the time. Strive to minimize the margin of error, make the right assumptions, and take the acceptable amount of risk.
There‘s a variety of quota-allocation methodologies you can choose from, and each one has pros and cons. The key is to go for the methodology best suited to your business, and then reassess its effectiveness from time to time.
Remember that change happens at unprecedented speed today, so stay connected to the local and global environment. Change or re-assign quotas to maximize the chances of meeting the company’s sales targets, while maintaining fairness in the sales organization. Analyze and understand the results of your sales reps and adjust your quotas to realistic ones that motivate your team to perform. Also, keep in mind that quota and territory management go hand in hand: changes in territories might mean you have to rethink targets. While paying attention to all these change factors, be careful not to adjust too often: trying to shoot a moving target is frustrating and causes mistrust.
Communication is the most important part of quota-setting. Communicating expectations in due time is as important as choosing the right calculation method. Late quota communication is a major source of dissatisfaction for reps. Keep communication timely and transparent to maintain satisfaction amongst reps.
Another thing to consider is that it’s important to communicate with sales reps all year long regarding their satisfaction with quotas, territories, and the compensation plan in general. Discuss quotas in the context of incentive compensation as a whole.
5. Ongoing Management
Continuously reviewing sales performance against targets is crucial, especially in volatile markets or conditions. Look out. Lagging performance may signal a need for coaching, but it may also point to a need to reassess your quota-allocation methodology.
Do you want to find out more about the principles, stages, challenges, and best practices of quota management? Visit our sales quota management page to find out how Optymyze sales quota software and services can help you hit sales goals every time.
Quota Allocation – Leverage Technology to Apply the Best Methodology
Find out how SPM technology enables accurate quota allocation. Watch this on-demand solution showcase to see the Optymyze Sales Quota Management solution in action.