How many of you want to hit your number? Sounds like a no-brainer. Did you know that HOW you assign quota impacts your success? Note, I did not say HOW MUCH quota you assign? There is a difference. There are many approaches on how to assign quota. One approach is to make everyone’s even, “spread the peanut butter.” Some will look at historical data and add a growth percentage to the territory. Another approach is to pick states or accounts and build a territory from that. Unfortunately, all of these are incorrect. There is a better approach. When taking the corporate number and building quotas, you should focus on two goals:
- Match the quota to the territory potential. (A territory can be a list of accounts or a geography)
- Match the quota to the skills of your sales reps
Your focus should be on getting both accomplished before rolling out to your team. Don’t jump the gun or put little effort into setting quotas. Unrealistic quotas are the biggest cause of employee turnover.
Pitfalls to Avoid
Take a look at these pitfalls and see if any apply to you?
- Giving everyone the same quota since they have the same job title
- Assuming each territory should carry the same quota
- Not ramping the quota when a new hire starts
- Have role based quotas without looking at territory potential
- Allowing the team to tell you the “potential” based on their gut feel
- Not having a communication plan on how quotas were established
- Allowing your “A” players to work saturated territories with little potential
- Assigning quota equally across your sales organization
Sequencing is Key
Most leaders don’t understand the proper sequencing of a quota program. Many will use the approaches above. Set them too high and you will have low morale. Set them too low and you will overpay and increase costs. Spend the time now and reap the rewards later. Our research shows the cost of replacing a rep costs 7 times their salary. Don’t fall into the trap of high rep turnover due to unachievable quotas. The following two areas should be finalized before quota planning begins:
- Talent Assessment- Understand who on your team is an A, B and C player. Build a scorecard and then stack rank your sales team against the scorecard. This gives you the foundation of where your top, middle and bottom performers sit.
- Territory Design- The goal is to align your best reps to territories with the highest potential. This can be both new logo and existing business. You need to understand what the potential of each territory is. Once that is determined, you then assign the correct resource to cover it. A mistake would be to put a new rep in a high potential territory. They probably aren’t ready yet. On the flipside, don’t have your top rep work a saturated territory.
If you try to assign quotas without looking at these first, you will fail. Why? Because you are doing them out of sequence. When setting a quota, you want to set your team up for success. Take the time to assess your sales talent. Don’t wait until the year-end performance process with HR. You need to continually be measuring your individual reps’ performance. If you have gaps, work to fill them immediately. Remember that you want to match the quota given to the skill of your sales rep. Look at the territories across your organization. Rate them from highest to lowest and then match to the most qualified sales rep. If you see a problem in mid-year, make the adjustment then.
Assigning quota correctly is key to hitting your number. Take the time to understand your talent and territories in sequence. Work with your finance and sales operations leaders. Make this an agile process that can change quarterly if needed. Put the best players on the field in the right position to be successful.