Good Quota Management Benefits Both Sides Of The Great Divide

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May 12, 2014
Good Quota Management Benefits Both Sides Of The Great Divide

“If you want to be happy, set a goal that commands your thoughts, liberates your energy, and inspires your hopes.”.. Andrew Carnegie

Hello and welcome, over the last week, I was in New Delhi and Frankfurt, again working with Samsung on a range of programs including defining roles and responsibilities of sales people and helping them with things like setting sales quotas and closing deals.

In my blog last week we discussed, why setting a sales quota is a good thing, so lets now take it one step further and look a the benefits quota setting can bring to f the Sales Team, (Salespeople and Sales Management).

Lets face it most salespeople in the tech industry expect to receive a sales quota. A quota is an effective measurement tool to determine who/what works well. A quota might be a certain amount of sales revenue in dollars or a specific number of units sold. Over-performers may receive bonuses, while under-performers may be targeted for further training.

at1Quota-based plans are considered to be fairer than pure commission plans and I agree with that view. Their effectiveness depends almost entirely on the accuracy of the individual salesperson’s quota.

In a perfect world performance against quota is a salesperson’s primary indicator of success. Failure to meet quota indicates they aren’t doing their job well. Whilst this can be true, if quotas don’t align with a salesperson’s real sales opportunity they will fail, hurting the bottom line and resulting in salespeople leaving the organisation or worse, give rise to a sales force of underperformers.

at2Companies should walk a fine line when setting individual sales quotas. While quotas that are too high can lead to frustration. Quotas that are too low prompt many salespeople to stop working after they reach their goal.

The harsh reality is, territories are not created equal, and the relative differences impacts how much a salesperson can sell into a particular territory. If these differences are not taken into account during the quota-setting process there is potential for failure and you may lose a great salesperson to a competitor.

After determining territory potential, most corporates use data-driven methodology based on analysis of existing sales data and sales potential in each territory for setting the quota, to ensure fairness and accuracy.

It’s very important to keep the process of quota setting consistent. Just giving the market potential data to sales managers without direction can lead to applying data ineffectively. This in turn can confuse the sales team and compromises the effectiveness of the compensation plan.

One of the most important and effective tasks prior to rolling sales quotas out is to give the Country/Regional/Local Sales Managers the opportunity to refine them. This ensures managers buy into the process and agree with the final goals delivered to their sales teams. There may be legitimate territory-level discrepancies that Country/Regional/Local Sales Managers should be given the opportunity to correct.

at3

Setting fair and effective quotas reap enormous benefits—from improved sales team moral, to lower incentive costs and higher overall sales.

Til’ the next time…. Andrew

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