Throughout this series, Xactly implementation partner OpenSymmetry has been tracking the story of Cox Automotive’s journey to create an unstoppable sales force, backed by a world-class sales operations organization. We tracked along as the Cox Automotive sales strategy team heard feedback from the ground, created a roadmap for change, gained buy-in, and revamped their sales data structures and feeds to get the full picture they needed to make sales compensation decisions. A few weeks ago, we unpacked Cox Automotive’s strategy for territory optimization. In the final part of our series, we’ll delve into Cox Automotive’s comp analytics and quota management strategy.
The need for finance and sales to be in sync is critical for any business. Expectations from shareholders are high and the finance and sales teams must agree on a fair quota that motivates the sales team to perform at their best for the corporate good as well as to bring them the best reward. However, at times there is a mismatch of expectations.
For the finance team, numbers speak for themselves—historical data, market data, and performance metrics that come from the research and market intelligence. But on the sales side, it’s often not so black and white in the midst of constantly changing sales environments, unexpected updates in the territory, and seasonal factors for customer buying decisions that may not happen until after the review period for quotas set by the finance team’s algorithms. When sales reps’ realities don’t match finance’s expectations, there is often tension and resentment.
Navigating these two worlds are the skillful members of the sales analytics and quota management teams. In a nutshell, they take sales data and numbers from finance, set appropriate sales quotas, and use feedback from the front lines to make necessary adjustments. Let’s take a closer look at the mediators who serve as the critical bridge, unifying corporate objectives with action on the front lines to form a partnership that drives the company’s bottom line.
The Courageous Quota Manager
Quota management is sometimes a thankless job, but an indispensable one for any company. Justin Ritchie, Senior Director of Sales Operations for Manheim, the largest subsidiary of Cox Automotive, explains: “We get the most questions about quota. It's the carrot.
When we think about making dreams come true, quota is really what drives that. Quota is the way people can take the vacations they talk about or make car payments or pay for their kid’s tuition. That’s why we’re passionate about this and care deeply about getting it right.” The quota manager is the conduit that keeps the sales team and corporate objectives aligned. According to Michael Bullock, Director of Sales Analytics at Manheim,
“We’re threading the needle and walking that line between what’s best for reps and best for the company."
It’s very hard to keep both sides happy, so what you should be shooting for is that even if they are not necessarily happy, everyone involved should be satisfied that they are being treated fairly. We need to move the carrot JUST far enough for every rep, every month. The sales comp analytics team’s main job is to solve for that.”
So how does Cox Automotive walk that fine line? Phillip Etefia, Senior Manager of Sales Strategy at Cox Automotive, says that for him it started with a ride-along to a car lot in Atlanta with one of Manheim’s sales reps.
Cox Automotive’s Sales Goal Setting Process
As Etefia first considered the quota management process, an insightful ride-along with a tenured sales rep provided a much clearer picture of the story from the field. During the ride-along, he learned how seasonality played such a large role within their industry as they walked through a very busy dealership to meet the used car manager.
The rep explained, “People just got their tax returns and they’re ready to buy a car with it. Happens every year. And with gas prices being so low, trucks are going to be hot!” Etefia was surprised by the rep’s ground-level view of the market, which illustrated how the quotas assigned to the field could seem like just a number that came from above without flexibility to accommodate constantly shifting on-the-ground realities.
As Etefia gained knowledge from individuals at each level of the sales quota process, he had to understand how each team fit into the entire journey of quota-setting. At Cox Automotive this journey of quota-setting process is as follows:
- The Research and Market Intelligence team provides data about wholesale auto demand in the upcoming year, based on variables including vehicle registrations, new car sales trends, and auto lease penetration. This helps size the market and opportunities for the future.
- The Finance team creates the annual budget for the operating locations and client segments based on the research and market intelligence data.
- The Sales Analytics team allocates the overall sales budget to create market level targets based on historical share. As Cox Automotive’s quota management team, they also create an index translating last year’s transactions onto this year’s calendar for each territory within a market. Following each quota-setting period, the Sales Analytics team would compare their payment curve for each role and compensation component, getting it down to a science by making appropriate modifications to the quota methodology to achieve the desired result of best-in-class.
- The Regional Sales Directors receive the sales market goals and make adjustments, based on their unique insights within each territory, before distributing them to each sales team member.
Bullock describes the quota manager’s job as leveling the playing field. “Regardless of the opportunity in your territory, we try to account for each rep doing the same amount of selling. Quota is the great equalizer.”
Respectfully Challenging Both Finance and Field
Quota managers need to build all quota-related communication on trust and partnership. Etefia says, “Regardless of the corporate expectations, the future is uncertain at the end of the day, but we need to gain buy-in from the sales team for them to trust that their quotas are based on science and insight.”
To build this kind of trust at Cox Automotive, Etefia and his team walk all the sales directors through their performance numbers and the assumptions that were baked into the market for the quarter, matching expectations to realities. Before these meetings sales directors have access to a territory and quota calendar showing the feedback period and impact periods of the quotas.
Throughout the conversation, Etefia builds credibility with the team by backing up all claims with charts, numbers, and a willingness to listen to new facts. He explains, “I want them to know that corporate is not just a group of robots trying to give unattainable quotas just to make more money.
In the end, I'm a human just like them, and I would get frustrated too if the numbers weren’t reasonable.” As the quota manager strives to align the expectations of field and finance, Etefia reveals that the key is to “respectfully challenge both teams.”
A sales rep might think their quota is too high, but actual numbers can help the quota manager respectfully dispute that perception by showing how last month’s quota was exceeded by 2%, for example. On the flipside, after interviewing an underperforming sales rep about new competition in their territory, the quota manager might share a report with finance to start a conversation about a previously set quota.
Leveraging historical numbers and on-the-ground information, quota managers need to make the best-educated guesses on expected sales team performance, then transfer that vision to those on both sides of the quota. According to Ritchie,
To be effective, quota managers need to be both a historian and a fortune teller, and always be in touch with the industry.
Etefia and his team provide the following tips for communicating quota:
- Be prepared to show how quotas are set without going too deep. Share from the market level why quotas are set a certain way, as well as why they are not set another way, with just enough information to provide satisfactory answers. Otherwise, too much information may cause more confusion and may not be relevant to the conversation.
- Have multiple iterations of sales goals. Especially in an environment with sales churn and new reps who need to understand goals partially into the sales period.
- Always back up expectations with numbers. What reps are looking for is analytics, not gut feelings.
What’s Next for Cox Automotive?
Cox Automotive is not finished with their journey to become an unstoppable sales force with a world-class sales performance management system in place. Plans for quota management automation are in the works, and their thirst for improvement still drives them.
As you followed along their journey from assessment to implementation, across multiple stages of the process, including territory management and quota management, consider where your company is in the spectrum. Hungry to hear more about how to start the journey yourself? Sign up here for a free 2-hour workshop with OpenSymmetry to roadmap your path to transform your organization’s approach to any of the topics covered in this series.