When companies approach the end of their fiscal year, their sales leaders start thinking about the next year. One of the key parameters to figure out is the sales quota to be assigned to salespeople.
The percentage of salespeople who reach or overachieve their set quota can be considered established measures of sales effectiveness. Likewise, it is common knowledge that the percentage of salespeople who do not reach their set quota indicates room for improvement, which brings the above question into mind – when it comes to sales quota attainment, whose performance is measured?
The Sales Leader View
There is little doubt that quota attainment measures the performance of the sales person. Setting a sales quota high to motivate salespeople to give their best is considered good management. As salespeople are rarely in the position to argue about the quota assigned to them, this probably the view that prevails within most companies.
The External Observer View
From a third party perspective, the cause for not attaining a quota may be inadequate efforts from the salesperson, or that the quota was wrongly set. In the latter case, sales quota attainment then indicates sales leadership quality.
Testing Your Quota Setting Practice
As a sales leader, you might consider the following questions to help you assess your quota setting practice.
When setting a quota for each salesperson, do you:
1. Consider the potential number of ideal customers in the salesperson’s territory?
2. Apply valid conversion rates – prospects to leads, to opportunity, to proposals to close – to determine the percentage of the prospects who are likely to buy?
3. Consider the amount of time the salesperson has been assigned to the territory?
4. Consider the mix of existing and new customers in the territory?
5. Factor in the average deal size to determine the monetary value of the quota?
The more questions you answered with a ‘No’, the more likely it is that your quota setting is biased. Quotas might then be perceived as unattainable even with best efforts by your salespeople. This would likely affect their motivation and morale negatively, at the time when they are most needed to persist in a tough environment. I am not advocating that quotas should not be challenging for the salesperson, but more so that it should stay within reasonable limits.
If you want to motivate your sales team but answered ‘No’ to several questions, you should question the factors that are hindering you from adhering to the principles suggested by the questions. If the hurdles you find are insurmountable, then it’s best to stop measuring the performance of your sales team through sales quotas.
Christian Maurer is a Paris-based independent Consultant, Trainer and Coach who helps B2B organizations increase their sales productivity by improving Sales and Marketing Effectiveness. He is a member of Top Sales Experts (www.topsalesexperts.com), an accredited Funnel Coach with align.me and is the author of the blog “The Ultimate Sales Executive Resource” (https://ultimatesalesexecresource.blogspot.com). For comments, feedback and enquiries, he can be reached at [email protected]
