“How did they come up with this?” We hear.

 

quota setting impossible resized 600

 

At SBI, our findings indicate that over 65% of Sales Goals are driven by Executive and Corparate expectations.  Relying solely on these top down goals can lead to disastrous outcomes. To avoid this, every CSO should keep the Board, CEO, and CFO level-set with real world data.  Otherwise, Pie-In-the-Sky quotas become the norm.  Download our Quota Metrics Tool to see best in class Quota Setting Guidelines.

 

Sales quota metrics

 

 

Consider one catastrophic scenario we witnessed:

 

Jeff was the newly appointed CSO at a rapidly growing Software firm.  One month already into the new year, the CEO gave him his number.  Jeff thought it was a joke. 

 

“How’d you come up with this?”  He asked. 

 

“We looked at a report from one of the leading thinkers in the industry,” the CEO coolly replied, “this market is expected to grow 50% in the next 3 years.”

 

“Well, given the problems we’ve experienced with our current product, I’m not sure we have the momentum to hit it”.

 

“My hands are tied,” the CEO responded, “if you want to shift some of the Q1 quota to Q2 or Q3, I can do that”.  Jeff didn’t want to seem like a complainer 3 months into his new job.

 

Once Jeff passed down the unrealistic number, defections started immediately.  By the end of the 2nd quarter, 66% of “A” players had left for competitors.  The CEO pulled back on expectations, but it was too late.  The sales force, devoid of all-stars, scrapped their way to 62% of the goal.  Jeff moved on “to spend more time with his family”. 

 

For the CSO, quota is the most important conversation of the year.  However, it’s usually a one way street.  It doesn’t have to be. 

 

A smart CSO arms himself with data to show the company’s current reality.  He tracks bottom up stats:  Territory Potential, Product Maturity, Territory Vacancy Rate, etc.  Both headwinds and tailwinds are outlined.  Throughout the year, the CSO shares this data with executives.  This “pre-wiring” will help set expectations for the new year. It also prevents the “why didn’t you tell us this before?” argument. 

 

Finally, prior to the quota conversation, the CSO schedules a meeting with the CEO to clarify expectations.  Here’s where we want to focus our efforts.  This is where we found the highest market potential.  Here’s our biggest threat.  The goal is to create a realistic, but not dire, image for executives.

 

Then comes the end of the year quota discussion. Reiterate all of the year’s findings.  Highlight key opportunities where you can deliver.  Be prepared with data to back up your conclusions and flaws in executive thinking. Also, be ready to ask for additional resources if specific goals stretch reality.  If you want to see this type of growth, I’m going to need…

 

As CSO, you are responsible for the reality check.  After all, sales is the division is where rubber meets road.  If executives are managing from the clouds, you must bring them back to the ground floor.  Other departments may nod their heads on lofty expectations, but you’re responsible for delivering on them. If you meekly accept an unrealistic number, you’ve already lost.  Download our top down, bottoms up metric sheet here to see how top organizations adjust quota.  Give your sales force a chance to achieve their goals.

 

ABOUT THE AUTHOR

Drew Zarges

Helps small business owners overcome their biggest sales and marketing challenges to accelerate revenue growth.
Learn more about Drew Zarges >

Prior to joining SBI in 2011, Drew worked in the intermediary investment sales world. During that time, he worked his way up the ladder from client service representative to leading and coaching his former company’s sales team on the west coast. At SBI, Drew has served some of the company’s most prestigious accounts as a consultant. For these clients, he successfully executed everything from sales process and lead generation projects to highly technical account segmentation work. He now serves as the General Manager of SBI OnDemand, a unit dedicated to applying the firm’s battle tested concepts and projects to the small business community.

Read full bio >