Sales Quotas are an imperfect sales management tool, and the quota-setting process has its share of drama, “horse-trading,” and “hand-to-hand combat” with the finance team.
We run through the process yearly, hoping that quotas will yield reliable results and that sales and finance will celebrate. Not!
Don’t set sales quotas so high they are unattainable (not fair to the salespeople), and don’t set them at a level where 90% of your team will hit quota (not fair to the company).
Compensation is a separate conversation that often distorts quotas over time, particularly with many tenured salespeople. Don’t modify quotas to adapt to compensation targets, as distorted quotas become disconnected from financial goals.
Suppose you have a salesperson selling computer servers to Amazon as an assigned account. In that case, she should have a much higher quota than salespeople with a smaller or lower growth account or prospect base.
Tenured salespeople tend to end up with the most prominent accounts, yet we often see their quotas on par or negligibly higher than their team members with smaller accounts or books of business.
Higher growth accounts should come with higher quotas for the assigned salesperson than their peers.
Compensation software companies love this type of plan because they know it hurts your brain to explain the compensation plan, much less track the compensation. A best practice is to split quota, but never allocate more than 100% quota, period.
Getting help from third-party tempers the emotion out of the process and has a better chance of striking an ideal balance between the interests of sales and finance.
Why not try a different approach to set quotas this time around?