Sales quotas are an essential part of any company and any annual sales plan. When done well, sales quotas fairly allocate business goals into actionable targets. In the same way, they give individuals a way to focus their efforts and strive for achievement.
In fact, pinning down sales quota to any figure can be tricky. This is because several factors affect sales, such as market conditions, how well your products or services align with customer needs, and whether people can afford what you offer.
Yet, there is an objective way to set a quota that incorporates high-level organizational goals while setting realistic expectations for individual sellers. Here are five strategies for setting aggressive but attainable sales quotas.
However, you can ensure you set effective quotas that will bring out the best in your team by following the tips enlisted in this article.
Learn how to set effective sales quotas with the following 5 tips
1. Collect accurate data
The more information you have about your team's performance and how they work with clients, the better you will be able to set realistic goals for them.
Collecting this information may require some extra legwork on your part. However, it will be worth the effort in the long run. This approach will help your sales reps understand the company's expectations and why their quotas are set at those levels.
2. Define success for your organization
This means defining a metric to measure whether the company is achieving its goals. For example, suppose you are responsible for setting the annual revenue targets for 100 people in your organization. In that case, you may decide that each person should generate $200K in revenue this year (or
any other target you set).
A good way of doing this is to look at similar organizations in your industry and ask yourself: "What kind of results would I expect them to achieve?"
However, beware. Defining success as an average is often not enough to motivate people. It can also be discouraging if they feel they are falling short of expectations.
3. Communicate the plan
This part is critical for success! Share the new quotas with your team members, management, and stakeholders.
Communicating the plan is part of your job description if you are in a sales leadership role (or are just taking on that role). You may also want to let vendors know about any changes so that they can adjust their expectations accordingly.
4. Gain buy-in from team members
The team needs to understand how they can help reach the goals. It would help if you communicated how their responsibilities fit into the company's overall strategy and goals.
When setting quotas, ensure you clearly understand how each person on the team contributes to achieving goals and what might prevent them from doing so. This step will help ensure that everyone precisely understands what the company expects of them and how they are supposed to contribute toward reaching them.
5. Be flexible
If a salesperson consistently hits their numbers, it does not make sense to lower their quota. However, suppose they are having a slow month or week. In that case, you can adjust the workload accordingly while raising the performance over time.
Your goals do not need to stay static forever! Make sure that these numbers are reviewed regularly and adjusted accordingly to keep up with changes in the market or other internal factors that affect your organization's performance.
Take the next step towards setting effective sales quotas
Setting sales quotas is not an exact science. However, a few fundamental principles will help you establish effective quotas.
- First, don't overthink it. The best way to set sales quotas is by using data and analytics instead of a gut feeling.
- Second, ensure your quotas are suitable for everyone, not just the company.
- Finally, communicate the goals with your reps. This way, everyone knows what is expected of them and works together toward those goals (and meets them!).
Consider that the impact of an accurate quota setting affects the entire organization, as many other business functions rely on meeting projected sales targets, such as staffing, talent evaluation, and marketing, to name a few.
But don’t be afraid to engage sales reps in the quota-setting process. Allocate more time to setting sales quotas than anticipated, and integrate quota setting into other planning processes.
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Having trouble setting sales quotas? Contact Us to learn how we can help your organization set the right sales quotas to foster success.
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