Setting Sales Quota and KPIs – measurements for growth
Sales Quota setting can often be described as one-part numbers and one-part intuition. Often developed based on attempting to find a balance between last year’s revenue and the expected revenue for the coming year. For many companies, KPIs are standardised and limited to just exceeding sales quota.
When announced, sales leaders and salespeople move into overdrive in an effort to bring them down. At the same time, company executives hold firm and listen to the usual reasons for them being too high or unrealistic in some areas.
For most companies, validation of the sales organisation capability to deliver a number is not rationalised. When a sales quota review is conducted, it provides a fact-based methodology enabling the executive to demonstrate how the quota can be achieved—a working plan of success.
For sales quota to be accepted, and delivered, these four components must exist.
- Fairness – Fairness is an essential principle to follow. Salespeople embrace quotas more easily if they perceive them as equitable.
- Transparency – Fairness is communicated through transparency, which will also play a large part in building salesforce support and engagement.
- Deliverable – Ensure quotas are deliverable, and each salesperson has a clear guide and plan of how to deliver their quota.
- Support – Identify any additional tools that will be required to deliver quotas and prepare in advance to support the sales team timely.
The most significant assumption made is that the numbers being delivered each year in history were managed with the right productivity, focus, and deliverables.
Having completed over 200 reviews of sales quotas, it can be said that 90% of sales numbers were too low, and the company was losing profit directly and indirectly in how the sales team was measured and directed – says Adele Crane
Many companies can lift their sales results toward the 32% mark without incurring increased costs to their sales headcount. It is about understanding what changes are required, the right KPIs and measurement to be applied to deliver the output. Much like in lean manufacturing, you can be working hard and producing results, but lean shows the way to maximise output and minimise cost.
Using the robust Sales Focus Methodology, we can review sales quotas, new quotas and sales goals can be set that are fair and equitable. From those numbers, KPIs and other measurables to support sales implementation are established. Indicators that manage the horizon and show what adjustments are required, what additional support may be needed, and set up everyone for success.
Importantly sales teams are taken through the processes allowing them to understand and make great decisions on how they can better manage their quota and increase their earnings through bonuses and commission plans.
If you would like to discuss quota setting and KPIs – measurement to carefully guide your team into the new normal, please reach out for a conversation.
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