The CRO’s Guide to Quota Relief in a Crisis

The full impact of CoVid-19 is not yet known, but in some markets and regions, it may already be clear that customers are deferring or even canceling planned purchases.  Perhaps yours is one of them.  If so, is it realistic to continue to work to the same sales targets when a global pandemic was clearly NOT part of the planning scenarios modeled during the annual planning cycle?  Whether your fiscal year just began or you’re already past mid-year, it’s crucial that you actively manage this issue now to maintain a motivated and focused sales organization.

As you work through your organization’s response to CoVid-19, reach out to SBI’s Revenue Growth Help Desk, and an expert will get back to you within 24 hours.

Remember the Purpose of Quota Relief

 

First and foremost, the business rationale for providing quota relief is to preserve the incentive value (and behavioral impact) of the sales compensation plan when circumstances have unfolded threaten to undermine it.  Sales compensation plans take much more time and effort to design and administer than other variable compensation plans.  The reason you invested in managing a sales compensation plan is because the behaviors that it drives are crucial to meeting your sales objectives.  If circumstances have changed and what would have been an achievable quota is no longer realistic, than the quotas you set at the start of the year may now a demotivator.

Consequences of unachievable quotas include:

• Reduced morale: If circumstances mean that Sales reps no longer have a line of sight to achieving their sales bonus, their excitement goes with it. Since the foundation of a selling culture is a motivated and enthusiastic sales team, this affects more than just your sales reps.
• Loss of key sales talent: why would a talented rep stay the whole year if your competitors won’t make the same mistake?
• Incentive to give up on this year and work on next year: reps may believe that their time will be better spent building pipeline for next year rather than ‘leaning into the tape’ this year.

   

Don’t Wait for Perfect Information

 

The full implications of CoVid-19 on your market are not yet known, so it could be tempting to take a wait-and-see approach, and address quotas when the performance period is over.  If the objective were to simply insulate your sales rep’s compensation from extraordinary world events, that’s precisely the approach you might take.   However, this approach fails to mitigate the majority of the consequences of continuing to operate with outdated or unachievable sales quotas.  High performing reps will already have been poached by then, and the rest of your impacted sales organization still operated the rest of the year under unachievable quotas with drag on sales productivity to go with it.  Consequently, decisive action taken NOW with today’s available information beats fully informed efforts too late to move the needle every time.

If a Global Pandemic Isn’t Grounds for Quota Relief, What Is?

 

This is undoubtedly going through the minds of most, if not all, of your sales reps.  So, yes, while CoVid-19 would seem to tick every box for an extraordinary event outside of the control of your sales reps, the truth is that rarely would EVERY sales rep be impacted, and even rarer impacted to the same extent.  Consequently, the approach you take to determining drawing the line for a material impact to your sales organization will determine your success or failure in maintaining a productive, customer-oriented focus by your sales teams.

To that end, here are some guiding principles for evaluating targeting quota relief from CoVid-19 for your organization that will help get your sales teams back on track without creating your own internal problems in the process.  You likely already have the basic governance process in place for your sales compensation administration (e.g., a compensation committee with representation from multiple disciplines), so the focus here is on how this should look with CoVid-19:

1. Don’t attempt a one-size fits all approach: Make a logical determination on which sales roles and regions are likely impacted and calibrate your responses accordingly.   In particular, look for where your sales roles and/or territories are defined around Industry, Geography, or Product.  Several examples include:

• • Product/Industry focus: An industry sales team or product specialist team focused on the Travel and Leisure industry is experiencing a greater impact than sales teams selling focused on health care.
  • Geographical: A sales team in Italy, which is on a total lock-down from CoVid-19, is no doubt experiencing a greater impact than a sales team in the United Kingdom.
  • Hunter Reps: Sales reps focused on bringing on new logos are more susceptible to customers deferring or cancelling purchases than retention reps primarily tasked with renewals.

• What good looks like: CoVid-19 is impacting your sales org, but you identify the 4 countries and 1 product specialist role materially affected and take appropriate action quickly.
• What bad looks like: Your organization sees a real impact from CoVid-19. You know you need to take action to keep them motivated. Because it’s easier, you give every sales rep a 20% reduction in quota.  80% of your ‘Chairman’s Award’ reps at the end of the year are Renewal Reps.

   

2. Avoid analysis paralysis: Quickly utilize the available information and take action.  Don’t wait for ALL the answers…you’ll never get them.

• • As discussed earlier, you are taking action to impact behaviors happening NOW, not bonuses you’ll pay at the end of the year. Therefore, have a bias for action.
  • The longer the process drags out, the longer it can become a distraction in and of itself.

     

3. Don’t be afraid to course-correct as you go.

• • CoVid-19 was not a one-time event that happened; it’s an ongoing phenomenon that is still occurring.
  • Just as you can’t wait for the entire episode to play out before acting, you also cannot be a slave to the initial direction if facts on the ground change.

     

4. Don’t depend on a quota change request process. Proactively address issues with a clearly communicated criteria and rationale.

• • Every rep has a story about a difficult client, an extenuating circumstance that caused a customer to bolt for a competitor, etc. That’s not what quota relief is for.  Focusing instead on farther-reaching phenomena affecting segments of your sales organization rather than individual reps will help you filter out this noise.

     

It’s About Focus, Not Accuracy

 

Shouldn’t the goal be to have as ‘accurate’ a quota as possible?  If the compensation committee can always say ‘No,’ what’s the harm in frequent quota adjustment requests?

The answer lies in the opportunity cost of your sales rep’s mindshare, focus, and attention.  Everyone agrees you want to maximize the productive selling time reps have for driving incremental business with customers and prospects.  However, what happens if sales reps learn that the marginal 10% of their time they have control of is better spent internally talking down their quota instead?  A protracted and continual dialogue over quota is, by its nature, internally focused.  On the other hand, following the aforementioned guiding principles for targeting CoVid-19 quota relief will tip the scales and keep your sales organization focused on customers.

As you work through your organization’s response to CoVid-19, if you have a question about this topic or any other topic, feel free to reach out to SBI’s Revenue Growth Help Desk:

For more on quota relief and compensation plans during volatile market conditions, listen to this podcast.