How Do I Count The Ways? Part One – Sales Quotas

  | October 11, 2013

This week I begin a three-part series focused on helping your sales team meet and exceed their quota. The first post that follows focuses on quotas, the following week we will discuss the important role that best practices play in ensuring team and company success, and finally we will tie everything together with using the best tools for capturing best practices to maximize return on investment (ROI).

Sales quotas — either you love them or you hate them. Quotas are easy to love when you consistently beat your number from month-to-month. However, they can be an area of great consternation and stress when you are short of your number and you have to scramble five days before the end of the month to close as many deals as possible just to reach quota.

Sales quotas are quantitative goals set by managers to measure and compare the performance of individual salespeople and sometimes teams. Quotas help determine compensation and are critical to revenue projections and growth. Major types of quotas include volume-based, profit-based, and combination quotas.

Sales quotas come in all shapes and sizes. In fast-growing organizations with a strong product set or outstanding solution, quotas are usually set higher and then adjusted up or down based upon market demand and historical success. In more mature businesses with established sales and years of sales data, quotas are more predictable and consistent. All quotas, regardless of type or size, are directly tied to projected revenue and company growth expectations.

Forecasting is an important tool for setting goals, but even the best and brightest sales managers make predictions that miss the mark. Since outside forces beyond control impact the overall economy, comparing results to past performance is one of the most reliable metrics of success. Shift focus from “results vs. forecast” to “results vs. history.” With a closer look, managers may determine that their forecasting methodology is off, rather than the sales team.

As your companies prosper, so must the sales team. It’s important to ensure compensation systems are designed in a way where sales reps make money when the company does. If teams consistently hit quota, but don’t see much reward for their hard efforts, they won’t be hitting quota much longer. On the other hand, overpaying sales reps for low numbers provides zero motivation to close more deals.

Identifying what is working and doing more of that, as well as recognizing where help is needed, is the only way to eliminate the stress of trying to reach a higher sales quota. Use the fear and doubt of failing to meet quota as a catalyst and watch how fast your sales increase. So what are some easy ways to help sales teams meet their quotas?

  • Identify what is working and increase it. If data shows that a certain amount of new leads were prospected per month, it’s then easy to calculate how many more monthly prospects are needed to generate higher numbers. If you’re generating X amount of sales from 40 outbound sales calls per day, then increasing to 50 per day can make a huge impact on increasing revenue.
  • Identify what is not working and fix it! Getting to key decision makers, but the pipeline is not moving? Maybe qualifying questions need to be reworked. If you are struggling to get new leads, then your social selling and lead generation skills need work.

Here at InterviewStream our sales guru, who also happens to be our Chief Revenue Officer, Steve, sets quotas based on historical and industry data, recent quarterly sales, and vast experience of selling for more than 25 years. What do some of our key sales people think about quotas?
“Sales is a numbers game, and the consistent way to assess performance within a sales organization is by evaluating which team members meet their quotas”, says Jessica.

A good sales rep aims to meet their quota, but a great sales rep views a quota as the unacceptable minimum standard and aim to double or triple the number enforced by their managers.

Seen as a progress report a sales quota provides great opportunity for reflection on what went well or was effective, or where one can improve or ask for help, adds Josh.

As Steve always reminds us, “A ‘quota’ is really a guide, your sales Sherpa. Quotas can be positive and negative and quotas can run your life. Mastering the ability to hit your quota is a continuous process. You can arrive, however, your journey never ends. How individuals view ‘quotas’ will tell you volumes…”

If you don’t know where you are going, you’ll end up someplace else. ~ Yogi Berra

By Dr. Chip Pike, Chief Product Officer of InterviewStream

Dr. Chip Pike has worked in business and education for over 25 years with vast experience in delivering measurable improvements to product development, knowledge management, performance evaluation and technology optimization.

Throughout his career, Chip has served in a variety of leadership roles relating to technology, learning and product development, during which he oversaw day-to-day operations and led significant technological advancements and innovations for the likes of Quality Learning, Community Education Partners (CEP), and Accelerated Learning Solutions (ALS).

In addition to his rich educational background, having received a total of four degrees, including his Ph.D. from The University of Miami, Chip brings a passion for technology and research to his role leading the top product innovations at InterviewStream.


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