Have you ever witnessed someone succeed without goals? Chances are zero to a minimum. How will we know we are successful if we don’t have a standard to measure it?
Every business operates to generate profit. That is a general goal to start with.
To reach that goal, you have to plan your steps and set SMART sales goals as stepping stones to reach your ultimate goal.
Successful businesses work on a blueprint of plans and strategies. They formulate sales quotas to support the achievement of the main goal. To ensure successful quota attainment, you need a foolproof strategy, and we are going to tell you how in this article.
But first, let us start with the basics.
A sales quota is a sales goal or sales target that is set to achieve within a specific period. These quotas are generally measured monthly, quarterly, half-yearly, or yearly. Setting a sales quota is essential to ensure that your business functions regarding sales are running well. Sales quotas are like mini-goals that you set that take you closer to achieving your main goal.
For example, you have an annual goal of earning a revenue of $60,000. You decided to set a sales quota for every month to achieve that goal. For an annual sale of $60,000, you must sell 50 units at $100 each month. Therefore to meet your sales quota in a month you have to sell 50 units or make a revenue of $5000.
A sales quota is not measured in terms of money or units sold. You can have different standards for measuring quota attainment about sales like a specific number of new customers, number of product demonstrations given, number of cold emails sent, etc.
Many businesses set their sales quota on arbitrary judgments, just for the sake of doing it. But that is not how it should be done. The objectives of a sales quota should be clearly defined for the sales team to achieve them.
If you are struggling with setting your sales quota standards, you should thank your stars for reading this article. We are going to spell out the ways you can set your sales quota in a few simple steps:
A sales quota is not only a monetary goal. It can also be activity-based, depending on your need and functions. There are 5 common types of sales quota strategies that you can start with. But first, you have to identify which one is the most appropriate for your business.
Let us have a look at them.
Volume-based quota is measured based on the number of units sold or the total revenue in a specific period.
As the name suggests, sales personnel should complete a set standard of activities to meet the quota. This can be fixing appointments with a certain number of prospects, sending a specific number of emails, or cold calling a predetermined number of people.
The net or gross profit that the activities of salespersons bring to the business is known as a profit-based quota. This is most suitable for businesses dealing with multiple or diverse market segments.
These quotas are designed to save costs per deal. This is a method used by industries that want to control their expenses.
This strategy comes in the combination of two or more types of sales quotas and is suitable for businesses dealing with multidisciplinary sales teams.
There are generally two approaches while implementing a sales quota- Top-down and bottom-up approaches.
The top-down approach is when the decision-makers fix quotas based on the company’s growth without considering the salesperson’s abilities. This approach can negatively affect the productivity of your business and cause salespeople to work in a stressful environment.
The most suitable approach would be a bottom-up approach where each of the sales reps’ records is analyzed, and quotas are set based on their previous performance and abilities.
The minimum standard of performance of your business is known as the baseline. For successful quota attainment, you have to identify and establish your baseline. Without a standard, you will be working only on arbitrary space, which can lead you and your sales team into a situation of chaos and confusion.
Ideally, you must have a baseline that should be realistic and attainable. You can easily establish your baseline by looking into your previous revenue records for reference. Divide your annual revenue by 12 to get the monthly identity of how much revenue your team should gather monthly.
Sales season and market influences can also be the reference point while establishing your baseline. Ensure that your baselines are founded depending on valid data and research.
After establishing your baseline, it is now time to calculate your sales quota. Remember to add a percentage growth in your baseline to fix the quota. For example, a 10% growth in your $50000 baseline will give you a sales quota of $55000 monthly.
Ensure that your sales quota figure is determined, keeping in mind the factors of market trends, seasonal variations, etc. Market influences have an unpredictable nature. You can take the help of various data analytics and forecasting to keep you updated.
Reviews are necessary to determine the progress or any setbacks your team might face. Working towards your goal continuously without looking back and reviewing your progress can be risky.
Reviews should be done in specific periods, weekly, monthly, or quarterly. The shorter the review period, the better, as it will help you take corrective measures immediately if you spot any drawbacks.
After going through all the steps, it is now time to communicate your goals and objectives to your team. Share what your expectations are from them and what they expect from you. Include them in you your planning process, you never know what ideas they have.
The process of quota attainment needs careful planning. Here are 10 solid tips to ensure that you hit every quota on your list.
Your team is the most wonderful part of your work. They understand your goals and help you achieve them. Similarly, you have to understand them, their strengths, and their areas of improvement.
As a business, you need a team to function. You cannot achieve all your goals by yourself, that is why you build a team of people who are most suitable for your organization. The sales quotas that you set should align with your salespersons’ strengths and abilities. In other words, they should be realistic and set after evaluating your team’s performance and abilities.
If you allot quotas per person, ensure to give them targets based on their strength and skills. Someone good at communicating and persuasion will be more likely to achieve their targets than someone new and learning. So set the targets accordingly.
Creating a sales playbook is a great way to identify your sales team’s strengths and weaknesses. Salesken can help your sales team to generate automated playbooks to document all the achievements and failures of your sales team. To know more, start your free demo now!
One of the reasons most organizations fail to achieve their sales quota is their unrealistic expectations. They set their quota without having a process or method of determining them. Goals and quotas cannot be set on arbitrary assumptions. You have to take into account various factors while setting them.
The process to set up a sales quota should be backed by data analytics regarding current and seasonal market trends, market volatility, etc. Though not always predictable, using intelligence tools can give you an idea about various market influences and changes.
Sales territories mean defining market territories or areas based on geographical, behavioral, demographical, or any other metrics that show similar patterns. These territories are generally defined on a map which helps your reps understand the market and customer patterns.
After mapping your sales territories, you can start assigning them to reps who are best suited. You can base your decision on the sales reps' expertise, experience, and strengths. This practice can simplify the process of quota attainment within the defined territory.
Training and coaching is an essential part of building your sales team. Your workforce is the most valuable asset for you. You must identify their need for coaching and provide them with the best training and resources for their development as sales professionals.
Training and coaching increase the awareness of reps, polishes their skills, and prepare them to handle situations to hit the quotas efficiently.
Coaching and training can seem expensive, but they are necessary investments that you have to make to ensure sufficiency.
Your consumer base is ever-evolving. As your business grows, so do your leads. This being said, never overlook the potential you have with your previous clients or prospects.
Never skip the process of a follow-up. This way you will be informed about the consumer’s current mindset about your business. Clients are mostly interested in the kind of new services you are offering. Don’t let the opportunity go. Try to engage them in other products or services that you are providing. A good sales pitch can do wonders.
Human beings need to be constantly motivated to work. Managing and retaining your workforce can be one of the most challenging tasks you have to do. Human mindsets tend to change frequently with the kind of environment they are in. Sometimes, they tend to lose focus and wander off in different directions.
The assurance of a reward can keep the reps focused on their goal. Because they know the accomplishment of goals will benefit them equally as the business. Organizations widely undertake this method of motivation through incentives.
Classify your team into 3 tiers - top performers, middle performers, and poor performers. This way, you will spot the strengths and areas of improvement and incentivize them accordingly.
Sales bottlenecks are limiting areas of your sales process that can negatively affect your progression. Bottlenecks occur due to a lack of capacity, resources, or other factors responsible for making a successful sales pitch.
You can lose a good sales prospect because of bottlenecks. Identifying your bottlenecks will help you fix and modify your sales function for maximum impact.
Some of the common examples of sales bottlenecks are-
Your entire success of sales depends on what the customer wants. Therefore, it is essential to understand your customer’s needs, behavior and patterns. Many sales tools are available to track and create your customer’s persona based on their behavior patterns.
It will help you understand your target customers and strategize your actions accordingly. Once you figure out how to satisfy your customer’s needs and demands, you can increase sales engagement using AI-augmented tools.
KPIs or Key Performance Indicators play a vital role in assessing the progress of your team members. This will tell you what is working and what is not in your sales process.
KPIs help you to understand how well you and your team are progressing towards attaining quota. KPIs should be set around measurable metrics. Organizations worldwide use intelligence tools to set and track KPIs. You should try doing the same if you are not already using one.
A successful business thrives on its workforce. Your team is the backbone of your entire business function. They are people with knowledge, stories, skills, and experiences that make their own set of resources.
Their resources can bring you amazing returns if you know how to utilize them properly. It is not only you who can motivate them, it can be a vice-versa situation.
Interview them, ask them and interact with them. Ask top performers of the team to share their strategy for a good sales pitch. This is a good practice to let your team members know that they are valued and appreciated.
You have learned all the steps to set the sales quota, and got ideas and tips on effectively strategizing your sales function for quota attainment. Everything now seems good to go.
But wait. How do you track your sales quotes? How do you know if you are progressing in the correct direction of quota attainment?
Don’t worry. We have you covered on these too.
Sales reps have a specific time to achieve the quotas. You and your team cannot afford to lose time in low-impact activities. You have to know for sure that your activities are aligned with quota attainment. This process can get stressful and messy if you don’t use the correct tools to measure metrics and set KPIs.
As a sales manager, you are loaded with so many responsibilities that it is impossible to keep track of activities manually. Sales tools like CRM can help you streamline your data in a cohesive manner supporting your sales team to work efficiently.
The data that you get from various tools help you to identify gaps and understand the efficiency of your sales function. Including KPIs and metrics to measure your progress can be a smart way to plan your sales function and track your progress toward quota attainment.
Every business has a goal. Sales quotas are formulated to ensure that you reach your desired goal. If your business doesn’t operate on sales quotas, you should include them immediately. Because without them, you don’t know if you are progressing in the right way.
Also, make sure to plan your sales function and set your achievable quotas. It is okay to have big dreams, but we should know our capacities and capabilities before setting goals.
The final sales results cannot be manipulated or improved, but you can improve and plan your activities, leading to quota achievement.
Success belongs to those who have a mindset for it. Good luck!
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