According to a recent Aberdeen report on sales performance effectiveness, only 55 percent of average and 15 percent of laggard companies reported hitting their targets. When compared to 84 percent of the best-in-class companies that met quota, there is clearly a large gap in sales performance.1
In a recent webinar, industry experts from Deloitte and McAfee revealed what’s going wrong for companies in sales performance effectiveness. The gap between best-in-class companies and average and laggard organizations can be attributed to inadequate sales planning.
This sales performance effectiveness webinar, How Smart is Your Sales Plan shows you how easy driver-based planning and budgeting can be and how Deloitte and McAfee transformed their budgeting and forecasting process.
In the webinar, Kevin Josephson, senior manager, sales force effectiveness at Deloitte Consulting, delivered valuable best practices around quotas and their impact on sales effectiveness. Read on for actionable insights from Kevin or check out the full webinar recording.
Why use quotas?
Typically, sales planning is an annual process used to set quotas. As a strategic planning tool, companies use quotas to translate corporate goals to objectives, drive sales performance management, and motivate the workforce. Quotas help you determine what you want to achieve.
Quotas are integral to the sales plan
The process of setting a sales plan is like charting your course on a map. Eventually you want to reach your destination, but you must consider how you’ll get there. The sales plan is not just a number that comes out at the end of year, but the actual process of thinking through:
- How are you going to meet your objectives?
- Where will your business come from?
- Do you have the right resources in place to make this happen?
- Are you under resourced and do you need to think about hiring?
Quotas help drive the sales force
Not surprisingly, quotas are the most effective when they motivate the sales force. A forecast is what we expect to happen but a quota is what we want to happen. For quotas to be effective, a sales person must believe it’s achievable; they know where the number comes from and they understand the path to success.
Quotas cannot be set in a vacuum
Quota management is extremely important to goal achievement, sales force effectiveness, and business results. The most important thing to remember is changes to sales strategy, resources deployment, and the execution of your business strategy can impact the success of quotas. They cannot be set in a vacuum for this reason.
Examples of change that may affect quotas, according to Deloitte’s sales effectiveness model:
- Changes to go-to-market strategy create new variables that need to be considered when setting quotas
- Augmented roles, sales responsibilities, and organizational structure require a reevaluation of how quotas are distributed
- Territory re-alignment, altered metrics, upgraded sales force, and improved productivity all require accurate quota setting to set achievable goals that align to business goals
Do not neglect a comprehensive quota management process
By neglecting to adopt a quota management process, many companies overlook a root cause of their sales effectiveness challenges. Here are a few issues that can arise when quotas are executed poorly:
- Quota calculations: Poor information may lead planners to believe that rep over-achievement is a result of under-set quotas and not strong performance
- Territory planning: poorly set quotas often result in performance below realistic expectations and available market potential left on the table
- Business analytics: Expected YOY growth projections applied as a means to setting quotas sets unrealistic sales numbers and misalignment with sales strategy
- Coverage model: overlapping and corrupted roles create a broken customer engagement model resulting in sales incentive overpayment and crediting issues
Build a smarter sales plan with improved quota management
By adopting advanced modeling and advanced analytics, you can precisely set quotas and gain a better understanding of your sales organization.
Feeling more confident about your sales effectiveness process? Go one step further and watch the webinar recording. You will learn to combine disparate data streams in real time to create data-driven sales plans and improve sales effectiveness by aligning all the moving parts of your process. This is the first step to becoming an adaptive and responsive enterprise.
- “Beyond the Quota” Best in class deployments of sales performance management; Aberdeen Group January 2014 Peter Ostrow.