Opposites Attract: Tops Down Target Setting & Bottoms Up Quota Assignment

Blog post by Pam Dunn – Anaplan Solutions Consultant

Opposites attract, and in Sales Operations this couldn’t be more accurate. Tops down target setting and bottoms up quota alignment have been opposing partners for decades. However, as is the case with most opposites, the relationship between the two is an awkward one, and often the bane of a Sales organization’s existence. Why? The tools that most teams are using don’t afford companies with complete visibility or the ability to understand where gaps are between target setting and quota alignment.

What are the individual pieces that make this partnership such a confounding puzzle for sales operational teams to put together?

Tops Down Target Setting:

Senior level executives determine the new Sales Forecast for the year during the tops down target setting process. Most will try to understand how the company will support the sales targets, and collaborate with Operations to determine how to spread that number across the geographies and territories. They must determine whether there is growth potential in particular geographies based upon prior business in those regions, and then ensure that sufficient opportunities exist across the organization to support the sales target by recruiting supplemental manpower through outside companies.

For example, Acme Inc. had revenue of $7b in 2012. The CEO and COO decide that for the new year, the revenue will grow to $10b. The Worldwide VP of Sales now must determine how to allocate this target between geographies. Acme Inc. is expanding into South America and the Nordics, which accounts for the growth. So, he takes the $10b target and allocates that across his geographies: $5b in the Americas, $3b in South America, and $2b in the Nordics.

Bottoms Up Quota Assignment:

Based on the target setting, the Regional Vice Presidents of Sales receive the total target for their respective geographies or regions, and are tasked with allocating that across territories and sales reps. Working closely with Sales Operations and Finance, they determine how to spread the number across the existing territories. To do this, they must have clear visibility into prior business in those territories, what accounts are currently in the territories, and what is in the pipeline that has the potential to close. They also need to understand capacity. This entails determining the average contract value, and based on that, determining how many opportunities and accounts a sales rep needs to close in order to meet the target quota.

To go back to our example, if the average contract value is $500,000, then it would be difficult for a sales rep to make a $15m quota. In order to meet the “bigger picture” target, Acme Inc. must get more sales reps on board. Sales management also wants to work with the tops down target, but they often have room to adjust those numbers based on additional sales data. The whole team must be able to easily manage this process and communicate any adjustments or variance to the Execs.

Where trouble arises:

While this process is a necessary part of a successful enterprise, it gets increasingly difficult as more dimensions are added to the mix. The “top” and the “bottom” are often worlds apart. Executives set a target without accurate insight while granular, territory-level data gets lost in the bigger picture, and is almost always underutilized.

How Anaplan helps:

Imagine a dynamic, interactive map where you can view your tops down targets and then easily dive down to quota at a granular per rep or per deal detail. Anaplan marries your team’s objectives by providing accurate tops down and bottoms up modeling. Anaplan enables executives to get an accurate picture of the enterprise while territory managers can change their data on the fly, as it happens. Because of this, the expectations of the top meet the realities of the bottom. What does this mean for the enterprise? Quota assignment aligns to targets, all thanks to the the magnetism that Anaplan provides to makes the relationship work.

Tuesdays with our Solutions Consultants is updated the last Tuesday of every month on the Anaplan Blog. Interested in connecting with Pam to discuss workforce planning or just want to connect with her? Get in touch with her: @PDunn_AP or us: @anaplan and let’s talk!

About the Author: Pam Dunn is a Solution Consultant at Anaplan on the Pre-Sales Team. She has spent the last 5 years in the Sales Performance Management space with Merced Systems and Xactly Corporation. In those roles, she demonstrated how companies can streamline and automate SPM and Compensation processes. She has spent her Pre-Sales career in the Enterprise software space, working at companies like PeopleSoft, Coda Inc and MarketFirst. She is based in Boston, Massachusetts.