Drive Success through Effective Quota Setting
Set the Right Number
Most sales organizations assign goals to their sellers, including sales quotas which are an integral part of the sales accountability system. Quotas align sellers with corporate objectives are a yardstick for performance coaching and provide measurement for sales compensation.
When functioning correctly, sales quotas provide a shared understanding of revenue objectives between sales management and the sellers.
However, sales quotas result from a complex analysis that includes variables that will significantly impact your revenue goals. Alexander Group helps sales leadership get sales quotas right by using industry best practices that align with your strategic objectives.
Achieve Sales Objectives & Motivate Teams Through Accurate Quota-Setting
Sales quotas are a powerful tool in driving seller motivation and ultimately achieving your organization’s revenue goals. However, the consequences of setting quotas either too low or too high can include diminished sales force morale, increased attrition, reduced motivation, higher costs and missed revenue targets. Steps to improving your quota setting include the following steps:
- Start with the quota process: Who is involved in your current quota-setting process? Sales and Finance and the sales representatives play a role. Your sellers can provide quality forecast data and deep knowledge of accounts. Their participation in the process often boosts confidence in achieving quotas and facilitates transparency. In addition, you will need to define your prescribed process, and when are quotas typically distributed. A documented quota process is key in ensuring quotas are set right.
- Select the quota allocation methodology: There are many quota-setting methodologies, and choosing the appropriate method for each type of sales role is critical. The allocation methodology must correlate to job type, number of assigned accounts, seller’s knowledge of buyers, customer buying process or revenue segment. Quota methodologies should also include a combination of bottom-up seller input and top-down leadership allocation. This approach incorporates sales opportunity and history and helps maximize the likelihood of achieving your organization’s business plan.
- Monitor the quota process & achievement: After quotas have been determined and communicated to the sales force, the sales organizations should establish an audit process to continuously track the quota setting and allocation process. Auditing sales quotas regularly helps to identify opportunities to improve the process. Additionally, sales dynamics are constantly changing. Changing environments and markets may require updates to the quota-setting process.
- Perform annual planning: Procrastination can derail your quota-setting and allocation goals. Many companies focus on achieving this year’s number before setting next year’s goals. Consistent, timely, annual planning, combined with a proven methodology, pays big dividends.
Alexander Group can help you assess and redesign your quota programs to enable your sales teams to achieve your revenue goals. In addition, we can help you through the quota-setting process, choosing the correct quota allocation methods and ensuring you have the necessary governance program for ongoing monitoring.
How to Select the Right Allocation Methodology
Each year, many companies wonder what will work best for this round of quota allocations. Alexander Group recommends a sober look at last year’s attainments and the first six or nine months of this year.Read the Article
Get Quotas Right Now
Learn more about how to assess and redesign your quota programs. Contact an Alexander Group Quotas practice leader.