By Joel McCabe, Sales Benchmark Index (SBI)
I previously discussed how to Make it Rain in Q4 and close the year strong. Today I have shifted the focus to next year. Making it rain is great, but sometimes (as many reps know) that isn’t enough. Oftentimes misguided quotas can become astronomical and outlandish. This blog addresses how sales reps can ensure their quota is realistic and attainable. Many sales reps are forced to accept a quota that is neither. Don’t let this happen to you, arm yourself with knowledge.
Over 65% of Sales Goals are driven by Executive and Corporate expectations. If their projections are unrealistic, so are the sales reps’ quotas. To avoid this, reps should assert themselves into these quota discussions. These discussions must be data-driven and not emotional appeals. The importance of these discussions should not be overlooked. Without them, “Pie-In-the-Sky” quotas can become the norm.
Don’t worry if you aren’t sure how to get started. It’s not always an easy thing to do.
There are two main focus areas of quota setting:
1. Top-Down Quota Setting
2. Bottom-Up Quota Setting
Here’s a quick primer on the first main area of focus. As a sales rep, it’s important to understand how upper management views quota setting. Understanding their perspective will go a long way towards your analysis and case.
Top-Down Quota Setting:
Metrics that mean the most to Upper Management and Owners
- Historical Revenue Performance: Usually the baseline for drafting next year’s quota. For many companies, it is the only data analyzed when setting quotas.
- Market Growth: Often the basis of quota-setting for rapidly growing markets or products. In these instances, historical growth rates don’t accurately predict revenue for the next year.
- Wall Street or Owner Expectations: CEO and CSOs are judged on beating owner expectations. If they don’t meet owner expectations, the whole operation is in jeopardy. Sometimes this metric is all that matters.
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