6 Key Ways to Effectively Manage Sales Quotas
Sales quota management is concerned with establishing fair and accurate quotas (and territories). It is an important organizational activity, playing a large part in keeping or losing reps, reducing or increasing overhead, and eliminating or facilitating errors.
Really, you can’t have a discussion about one without digging into the other. Any conversation about sales territories is destined to veer towards a conversation about sales quota management, and vice versa. And there are a lot of conversations, as one of the first questions a sales rep will ask when he or she gets their sales compensation plan is “what’s my quota?” and the second question is likely, “what’s my territory?”
Key activities like forecasting accurately, empowering management, providing quota relief, and more all ensure the success of your strategic approach.
Tips for Sales Quota Management:
1. Forecast and Plan Accurately
Traditionally, sales quota setting has been an immensely manual, spreadsheet-based process that takes up precious time for both sales leaders and administrators. The process is further complicated by a lack of data visibility, which hampers sales managements’ ability to make strategic decisions.
With visibility into metrics such as historic performance, quota planning with Xactly Quota™ & Territories allows managers to easily distribute and set quotas while still maintaining visibility into the overall status of the quota planning process. Read more about sales territory planning.
2. Give Managers Power to Alter Sales Quotas
Give sales managers the authority to alter sales quotas after they are set – this helps to control for problems, and earns quota buy-in from your sales leaders. Quota relief can be crucial, and thoughtfully given quota relief can even result in greater achievement. It’s helpful to consider the current climate of the market you are selling to. Let’s say there was a major natural disaster in a rep’s territory. It’s likely that this disaster has legitimately affected their ability to close deals; this is a specific circumstance where relief should be contemplated.
3. Do Your Territory Homework
Territories shouldn’t be set until you do some thorough research. Sales people should be rewarded for their efforts, not the area in which they sell. It’s critical to get competitive data about your territories; if you’re unable to do the homework yourself, try using a service like Dun and Bradstreet data.
4. Learn to Handle Territory Disputes
The question isn’t if your reps will dispute the territories you assign them – it’s how you can best handle the issues they might have with their territories. As a sales manager, you’re going to have reps that push back and say things like, “I haven’t gotten any deals there yet, can you give me some leeway with my quota?” Mastering this piece is just one aspect of proper sales territory management.
5. Complete Frequent Check-Ups
Just like you, your sales organization needs frequent check-ups to make sure the department is healthy and free from underlying concerns. To perform such a check-up, examine your sales data. A low percentage of team members meeting quota or numbers that lag behind your revenue forecast are both red flags.
If you do find problems in your monthly quota audits, there are solutions. Make sure you’re not giving the same percent increase to everyone; it could possibly end up costing you. Without equitable and accurate quotas, your sales compensation plan may drive away your best sales people or uselessly increase your cost of sales. One way to gain more visibility into the success of your incentive compensation is to automate the process so you won’t have to worry about these kinds of transparency problems.
6. Provide Quota Relief When Necessary
In order to keep sales reps motivated, you must pay attention to setting fair and accurate quotas and territories. Doing this can motivate your team and help you meet your goals. Good data and an automated incentive compensation system can help your sales organization to run like a well-oiled machine.
We know it can be challenging to effectively manage sales quotas. Hopefully these six keys got you thinking about some of the many ways you can consider and fine-tune your own incentive compensation program.
Best Practices for Territory Design and Management
Handling sales territories can be a difficult endeavor for any business leader. Learn what it takes to effectively research, set, and manage territories as well as the best ways to handle sales rep pushback and how to foster a supportive team environment.