We know them, love them or hate them: sales quotas. They are actually intended to stimulate growth and provide motivation – after all, if they are fulfilled, the company’s economic success and the employees’ bonus beckon. In reality, however, they are often the exact opposite: demotivating and obstructive. About 65% of all salespeople miss their quota.
But how can you better set up your quotas, achieve your goals, and make your salespeople happier at the same time?
Problems of simple quota setting
Sales is hard enough. No company wants to stand in its own way and block unnecessarily. But this easily happens when quotas and incentives are set incorrectly. If, for example, the target achievement is taken from the previous year and increased by X % across the board, this can have fatal consequences:
- Many people, including your sales team if applicable, don’t perform much more than they need to. Once the quota is reached, people sit back – often regardless of what else might have been possible.
- A blanket adjusted quota that seems unattainable for sales demotivates, making it less likely that sales goals will actually be met.
- If the previous achievement of the quota is based on unique or special circumstances and remains a target, it is difficult to achieve again. Top employees fall into a motivation slump because the quota cannot be met.
- Employees may even try not to exceed their quota too much in order to be successful again next year.
The problem of Excel file versions and manual reporting
To counteract these four problems, quotas should not be set solely on historical data, but on actual occurrences and expected changes in the market. Of course, no company wants to set quotas based on individual opinions or “gut feelings.” Data-driven decision making is necessary. This requires the combination of two sources: Market/customer/seller and product data as well as the professional assessment of their experts in sales and field service.
Without a tool that can easily merge and display this data, a lot of manual effort in “Excel hell” is required here. Manual reporting and nice graphs are unfortunately not enough for good, target-oriented sales planning. It must be possible to analyze data in detail, play with numbers, create drafts, compare and share them with experts and finally discuss them. Who still wants to send Excel files (SalesQuotas2022_Final_FINAL_v3) by e-mail to colleagues in 2022?
If you find yourself in the text and maybe thought “oops” a time or two: The tool you are looking for and need is Anaplan.
How to create goal-oriented and realistic quotas
- The historical sales performance of individuals must be considered, as well as the number of leads, the Total Addressable Market, the company’s growth goals, and other factors.
- Most employees will be overwhelmed by an expected 200% increase in performance. Instead, specific goals such as increased number of touchpoints, higher conversion rate, etc. should be targeted and benchmarked – that is, what your employees can actively influence.
- Ultimately, the quota is made up of factors that can be tracked and influenced by the employee (e.g. number of first contacts per quarter, number of conversions in the respective product groups, etc.).
More time for sales, higher motivation and better collaboration
Imagine they are using a modern cloud-based tool. It bundles their data, they can access everything from everywhere and connect the most diverse information. Create simple “what if” analyses in minutes and share them with your employees with a single click.
Now only one thing is missing: The involvement of the sales people in a transparent and meaningful process. Even companies that create excellent quotas face challenges. Because if employees do not understand the creation of the quotas or even doubt the process and the targets, this is not very promising.
Therefore, the motto here is to actively involve the sales staff in the process – because if everyone participates in the decision-making, this reduces frustration and a negative attitude afterwards. Provide your team with the ability to self-analyze their markets and evaluate opportunities via great dashboards. Then, when you transparently demonstrate how their input is used (and valued) to create the final quotas, you achieve greater buy-in and a collaborative will to achieve the goal.
Quite apart from the fact that cooperation within the team is promoted and the employees are more motivated, the manual effort required for the preparation of reports and quotas is also reduced. What could be better than actually having more time for sales?
Would you like to delve deeper into the topic? We have developed a digital white paper on Connected Planning.
Our sales forecasting self-test, exciting numbers/data/facts and other exciting use cases are waiting for you: https://hub.connectedplanning.de/
“Bad quotas” damage the company and demotivate employees. “Good odds” are characterized by a solid foundation of lots (and healthy) data, transparent processes, and collaborative tools for real-time data analysis and scenario modeling.
In our view, Anaplan delivers the best way to make data-driven decisions for your business, focus on what really matters, and improve your employees’ day-to-day work.
If you want to learn more or have any questions, contact us quickly and easily by phone or here via the contact form.