Setting sales quotas or sales goals can be challenging for many companies. It is critical to establish realistic and obtainable quotas. Furthermore, when quotas are utilized, setting proper quotas will certainly provide the company a competitive edge. Establishing a vigorous educational program for team members (management included) and leading by example will have a much greater impact on results, than haphazardly setting sales quotas. There are many, in high level management, that believe setting quotas should be totally eliminated.
There are multiple tools, some very extensive, to utilize when it comes to setting sales quotas. Regardless of the extensive tools available, there is no exact science to setting sales quotas and obtaining those results.
Two of the most noteworthy reasons for not obtaining sales quotas
There are numerous reasons for a sales representative not to obtain quotas set. Most noteworthy, there are two we feel are the most important to recognize. Firstly, inadequate efforts of the sales person may be the cause for not attaining a quota set by a company. Remember, the 80/20 rule – 80% of results come from 20% of your team. Aside from that, and secondly, we look at sales quotas and their attainment as a direct reflection of management or the sales leadership performance.
Sales quotas and their attainment, a direct reflection of management or the sales leadership performance.
Too many companies set quotas without any real insight of the ability to meet those quotas
It has been our experience to find too many companies setting quotas without any real insight of the ability to meet those quotas. (One company is one company too many.) Our goal is to educate by sharing our knowledge, based on monitored experiences with vendors and hiring companies over many years of building sales teams and motivating sales team members to higher levels of success.
Customers are not going to buy from you because you have a quota to meet. They will buy from you because they recognize the value in doing business with you.
Below are 6 important tips for setting quotas or goals for successful team results:
Set reasonable expectations
- The landscape for setting sales quotas is all over the board. Some companies will utilize extensive metrics and calculators to determine quotas. Other companies pick numbers from a hat, without any real insight to what quotas are truly attainable. Make sure your quotas are reasonable and obtainable.
Ask for less and obtain more
- Experience and metrics of our vendor clients show those setting reasonable or reduced quotas obtain far better results than those companies that set exorbitant unattainable quotas.
Provide incentives to the sales reps
- Be creative with compensation, financial incentives, creative commission structure and award recognition for obtaining quotas. We have found a financial reward linked to sales results, such as a bonus, has a higher impact on sales reps than those without a bonus reward. Recognition to the sales rep of an achievement will also realize higher sales results.
Flexibility with setting quotas or sales goals
- Work directly with the sales rep to set goals and quotas to be met. Explore with them about their sales territory, relationships and experiences they have. Listen to them when in your first discussions when screening or hiring the candidate. Allowing the sales rep to set the goals can be extremely powerful. Furthermore, after setting the goals or quotas together incorporate these directly in your Sales Agreements for Independent Reps and Distributors.
Validate and Support
- First, prove the quotas being set is obtainable. (This is not to prove to sales team members, but validate for the company the quotas being set are reasonable.) Then, support your team members through education and additional support mechanisms to obtain those goals.
Do not use quotas as a means to eliminate sales reps
- Successful and knowledgeable Reps will see right through this. We’ve heard many companies refer to quotas as “The Perfect Out” for the company. Recruiting and retaining the best sales people could be the competitive tipping point that helps your business to succeed.
“Eighty-five percent of the reasons for failure are deficiencies in the systems and process rather than the employee. The role of management is to change the process rather than badgering individuals to do better.” ~ W. Edwards Deming