Planning for Your Next Fiscal Year: Sales QuotasPlanning for Your Next Fiscal Year: Sales Quotas
I'm always surprised when I work with sales teams that don't have assigned quotas. Assigning quotas is an essential strategy for VARs to grow their businesses. With the fourth quarter here, it’s time to think about how assigning quotas can be beneficial to your business.
December 20, 2012
salesquotaI’m always surprised when I work with sales teams that don’t have assigned quotas. Assigning quotas is an essential strategy for VARs to grow their businesses.
With the fourth quarter here, it’s time to think about how assigning quotas can be beneficial to your business.
Quotas Can Help You Reach Your Growth Objectives
Quotas are a distribution of a company’s revenue target, plus some slush in case a rep or two doesn’t meet his number. When you set out to assign quotas, check to ensure several things:
You’re setting reachable goals for your reps.
Your commission plan is achievable and within budget.
Your company growth objectives can be met.
Your operations team is staffed appropriately to meet demand.
We worked with a VAR this year who first got in touch with us in November of last year. He was planning his strategy for 2012 and realized that if he didn’t make any changes to his sales team, there was no way the company would meet its new-year revenue objectives. He examined the company’s pipeline, assigning quotas and assessing the length of each salesperson’s sell cycle and their average sale.
After doing his homework, it became increasingly clear that he had to make changes. He was fortunate enough to catch this issue in time to hire a new sales rep and train his team to prospect more effectively to meet their new year revenue objectives.
If this VAR didn’t make it a practice to assign quotas, he may not have stumbled upon the sales organization changes that needed to be made until it was well into the following year–and too late to achieve his objectives.
Quotas Can Be Used as a Litmus Test for Revenue Objectives
When setting quotas it’s not uncommon to uncover staffing gaps, especially if you have growth objectives.
After analyzing the quotas he’d assigned to his reps, another VAR we work with realized he’d need to replace a sales rep who had left the company six months earlier. The company hadn’t felt the impact of that rep’s absence because the owner had been uncovering and closing large deals the previous rep otherwise would have worked. When the owner assigned quotas across the sales team and discovered he, too would have to carry a quota, he quickly determined it was time to hire an additional rep so he could get back to running the business and not impact the coming year’s performance.
Without setting quotas, it’s unlikely that the VAR owner would have realized this need, and would have had to take on the role of a full-time sales rep.
Quotas Allow You to Hold Reps Accountable
Once quota expectations are communicated, they can be used to hold your reps responsible for meeting their revenue goals. With quotas in place, you can easily monitor whether your sales reps are meeting your expectations. Even better, you’ll know as a manager what your expectations are by setting quotas to use as guidelines.
When a rep isn’t meeting his or her quota, it’s a red flag to address sooner rather than later. You may uncover issues that relate to training, talent, territory or unrealistic quota expectations. These can all result in a company’s annual revenue being significantly impacted. When you’re monitoring quotas you’re able to identify the root issue and respond quickly.
Setting quotas is uncomfortable for many VARs, but it will dramatically improve the chances that your sales reps will meet your revenue and growth goals.
Kendra Lee is a top IT seller, prospect attraction expert, author of the award-winning book, “Selling Against the Goal” and president of KLA Group. Specializing in the IT industry, KLA Group works with companies to break in and exceed revenue objectives in the small and midmarket business (SMB) segment.
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