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Implementing a Quota Structure That Works

March 29, 2018
Kyle Brown

Kyle Brown

Sales Management

Once you’ve got a winning sales process in place, you can fine-tune the goals that will set your reps up for success.

Over time, quota attainment becomes one of the clearest indicators of whether you’re setting the right sales goals, whether your team is able to achieve those goals, and if your revenue growth is consistent.

However, finding the right sales quotas for your team is more than just mandating an ambitious number that keeps your team motivated. In fact, aggressive sales quotas can backfire and damage your company.

These are the stages of quota-setting that your organization must master in order to dominate the game:

Forecast based on Data

A lot of people overthink forecasting.

In fact, forecasting is often a huge struggle for sales leaders.

Because it’s impossible to predict the future, successful forecasting needs to be a scenario-based process that considers both the past and what could happen tomorrow.

This is where data comes into play.

If you’ve been measuring sales metrics for a while, you can easily spot trends to see when quotas were met, and when they weren’t.

Look for things like the average number of sales per month and who typically hit those goals.

Was it only the top performers, or was it more of a mix?

Consider what your conversion rates look like from beginning to end.

How is the data around an opportunity flowing through the pipeline? Are there any gaps?

Keep in mind that it’s important to not aim too high, or too low. Goals that are too aggressive will make your team feel like failures and ultimately drive them away. On the other hand, goals that aren’t aggressive enough are incapable of motivating and inspiring your top performers. Getting reliable data and defining these models is where sales forecasting software is incredibly useful.

Adjusting Your Forecasts

It goes without saying – a lot of energy is required when creating your sales goals for each new year. And unfortunately, those goals rarely last beyond Q1.

Whether it’s reps not hitting their numbers, customers leaving, or the economy simply not behaving — your forecast will always be subject to change.

This doesn’t mean you’re not still committed to your forecast; it just means you’re going to have to make some adjustments.

Depending on if your sales forecasts annually, quarterly, monthly, etc. — how often you adjust those forecasts depends on what your sales cycle looks like.

If a sales cycle is six to 12 months, a manager might not look at the team’s sales forecast very often. But if the sales cycle is less than six months, new developments in the pipeline are more likely to occur, so managers should examine the forecast more often.

But proceed with caution.

Changing up your team’s forecasts too often can lead to frustration and mistrust, so it’s important to use your best judgment.

Communicating with Reps

Just as in every area of sales, communication is the critical component of how you set your quota.

Whether it’s over email, or in a 1:1 with your reps (we recommend both) — maintaining transparency is key.

Every step of the quota-setting process should involve your reps, with transparent and sensible expectations. One bad move (late quota communication, inaccurate forecasting, etc.) can lead to anger and resentment among reps, and that’s the last thing you want when you’re trying to achieve quota attainment.

Just getting started? Download this sales forecast template to get the building blocks you need to forecast better.

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