Quotas are numerical goals that measure the expected sales performance of a salesperson, a team, or a business unit. They help you forecast sales and plan resources by aligning your sales strategy with your revenue objectives, motivating your sales force, and tracking your progress. In this article, you will learn how to use quotas to forecast sales and plan resources in four steps.
There are different types of quotas that reflect different aspects of sales performance, such as revenue, volume, activity, or profit. Depending on your sales cycle, product mix, market conditions, and sales objectives, you may use one or a combination of these types of quotas. For example, you may use revenue quotas to set a dollar amount of sales for each salesperson, volume quotas to set a number of units or accounts sold, activity quotas to set a number of calls or meetings made, or profit quotas to set a margin or return on investment.
The issue is that forecasts get diluted as you move through each stage of an organization to the point that if each rep hit quota - the company with 2.5x their goal. What this means is that quotas are designed to make sales fail.
The next step is to set quotas that are realistic and challenging for your sales force. Realistic quotas are based on accurate data, such as historical sales, market potential, customer segmentation, and competitive analysis. Challenging quotas are based on ambitious but achievable targets, such as growth rates, market share, or customer retention. You can use various methods to set quotas, such as top-down, bottom-up, or participative. For example, you may use top-down quotas to assign a percentage of the overall sales goal to each salesperson, bottom-up quotas to ask each salesperson to estimate their own sales potential, or participative quotas to involve both sales managers and salespeople in the quota-setting process.
In theory this is a perfect in practice - unrealistic. Sales leaders will veil impossible by calling it challenging. Furthermore use that as a reason to raise quotas but not compensation.
The third step is to communicate and align quotas with your sales force and other stakeholders. Communication is essential to ensure that your sales force understands the rationale, criteria, and expectations behind the quotas. Alignment is essential to ensure that your sales force agrees with and commits to the quotas. You can use various techniques to communicate and align quotas, such as feedback, coaching, incentives, or recognition. For example, you may use feedback to explain how the quotas are calculated and how they relate to the sales strategy, coaching to help your sales force develop the skills and strategies to achieve the quotas, incentives to reward your sales force for meeting or exceeding the quotas, or recognition to celebrate and acknowledge your sales force's achievements.
Alignment is pipe dream. If a sales manager/director/vp says “this is your quota because of XYZ” and the direct report says “I don’t agree with this” will it change? Absolutely not. You can dangle a carrot as much as you want but it won’t have a positive result if the sales process isn’t aligned first
The fourth step is to monitor and adjust quotas based on the actual sales performance and the changing market conditions. Monitoring is essential to track your sales force's progress and identify any gaps or issues. Adjusting is essential to correct any discrepancies or imbalances and to maintain the relevance and fairness of the quotas. You can use various tools to monitor and adjust quotas, such as dashboards, reports, or analytics. For example, you may use dashboards to display the key performance indicators (KPIs) and the quota attainment of your sales force, reports to analyze the trends and patterns of your sales performance, or analytics to forecast the future sales potential and the quota adjustments needed.
Quotas are never adjusted. That would imply blame is with the sales leader and not the sales person. The blame falls down as far as it can go.
Las cuotas de ventas son una herramienta importante para pronosticar las ventas y planificar los recursos en una empresa. Se pueden utilizar para establecer objetivos de ventas, segmentar el mercado, analizar datos históricos, utilizar la tasa de crecimiento medio y monitorear y ajustar las estrategias de marketing y ventas según los resultados del pronóstico de ventas.