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Setting sales contest quotas together with company business goals has gotten a lot more complicated. Sales contest managers once measured the calls their sales reps made door-to-door in small breast-pocket daily diaries. Sales quota were round numbers, and sales calls were simple pencil scratches in a travel journal. The sales reps reported their calls when they got around to it, and they might even win a plaque or trophy if they beat their peers.

The whole world of sales quotas has become more fluid, dynamic, and global. The only predictable thing about sales is the unpredictability. In a world where even the days of the week are volatile, it calls for a better approach to quotas, goal setting, and achievement. There is no one-size-fits-all solution, so this article means to start a conversation and discussion thread on the topic of setting goals for your business.

Quota-setting 101:

Business goals

Any organizational decision-making on setting sales quotas requires good data. Good data depends on volume and quality, and quality follows from volume. The more sales leaders know – about the historical performance, customer expectations, business goals, and their sales reps’ potential – the better positioned they are for setting quotas that pursue the company goals and marketplace potential.

Informative data

Organizational leadership has still not truly reached the understanding that data does not equal information. A department of sales reps must gather as much data as possible from which it can draw qualitative and quantitative information. Sales contest data is detail that contributes to the assumptions necessary to solid decision-making.

  • Data that measures current and past sales performance, volume, and revenue will measure the sales reps’ productivity.
  • Data based on goals, sales contest history and business cycles will shape the metrics for future sales quotas, performance, and outcomes.
  • Data identifies the factors that determine the sales team and individual sales reps’ record of accomplishment and what conditions might be undefined, uncontrolled, and unanticipated.
  • Data clocks performance to build timeframes with which you can cost analyze business goals in the context of sales contest or individual performance.
  • Data details the business resources expended and analyzes the consequent revenue.
  • Data forecasts potential for product, markets, and performance.

Without research based on quality data, analysis of individual history and potential, decision-making on quotas is left to corporate models that are rarely or fully informative or intuitive.

Your take-away

 

The take-away from this article is understanding that your sales leadership potential should tell you to consider every sales quota type.

  • Financial Quotas: Companies prefer financial quotas because they are easy to see and calculate; that is, the quota is to sell X number of item Y at $Z price. If revenue and profit are the target, this makes sense.
  • Volume Quotas: Here the pressure is on the number of units sold at whatever price. The motive moves product and inventory, and there is cost and savings attached.
  • Activity Quotas: When leadership calculates and sorts activities, e.g., daily, weekly, or monthly goals met. Such tracks are easy to calculate even when the events run concurrently, such as the number of calls made during a day that lead to a number of sales closed during a month. When you plan activities, such as sales contests, well – defined and communicated – the approach makes up for the lack of historical data or precedent.

As we shall see, sales quotas tend to be fluid and volatile, but these are not advantages to sales leadership analysis or business goals planning. Admitting that such a dynamic is partly virtue and partly energy, the sales leadership needs sales contest quotas that are clear, disciplined, and predictive. Getting there takes experience and skill.

Image courtesy of nongpimmy / ratch0013 / FreeDigitalPhotos.net

Tomek Jordan

advisory board member at Repignite
Interested in Sales Performance Management, Sales Incentive Management.