Quota attainment depends on two parties, you, the sales manager setting the quota and your sales people, executing your plan to reach quota. This article, we will be looking what you as a manager can do to improve quota attainment. It is always surprising how many sales managers, year over year fall into the following five traps and keep wondering why sales quota attainment does not improve. (c.f. research by CSO Insights)
- Applying the percentage of overall revenue growth set by the company to your area of responsibility (e.g. territory)
Overall company revenue growth is the average of all the individual sales growth each territory can achieve. By falling into this first trap, you actually pretend that the growth potential of all territories is equal. Instead, you have to identify the real growth opportunities in your territory; an approach also recommended in the book “Granularity of Growth” by P. Viguerie, S. Smit and Mehrdad Baghai. Yes this adds a bottom up component to the planning process. There is however no way around this if you want to come up with realistic attainable goal in turbulent times.
- Spreading the same percentage of growth planned for your territory on each individual contributor’s quota.
The compensation plan might be the biggest hurdle to avoid this trap. However individual contributors cannot choose their territories. Seen from this angle, it does not seem very fair to neglect the fact that also here not all territories covered by the individuals have the same growth potential. Individuals assigned to weaker territories are therefore automatically put at a disadvantage. Yes I know that SARBOX rules require that the totality of planed sales growth must be assigned to sales people. However nowhere it is said that this has to be done by simply assigning the same percentage growth to all individuals. Yes it adds a bottom up component also on this level. Some managers fear the discussions that go with it. This fear is often linked to a lack of trust between sales manager and individual contributor.
- Assigning a second sales person to an existing territory and hoping to double the revenue from this territory.
Maybe in a business segment which is in the “Tornado” phase (see Geoffrey Moor’s book “Inside the Tornado”) the saying might be true that growth depends on the feet on the street. But it is equally true that sales territories are also prone to the law of diminished return. This is language financial people understand. Yet, when it comes to sales territories, this seems to be an unacceptable concept.
- Assigning the same quota to rookies and experienced individuals.
Falling into this trap, might undermine your performance as a manager because you risk a high churn rate especially among your new hires. They might be so demotivated that they will leave you within a year. They are not necessary bad hires, but you bear the costs as if you had hired the wrong person for the job. These costs are much higher than just the pure replacement costs and can create a significant increase to your selling costs.
- Add a safety margin on top of what is really required to make goal.
It is a common management practice to put safety margins (e.g. ask for shorter deadlines so that you have some slack if delays occur). Doing this with quotas has almost always the contrary effect. The quotas might seem too unrealistic and therefore demotivating in the eyes of individual contributors and they will gauge their efforts to try to protect their current incomes. If this threshold happens to be below the revenue contribution you really need from the individual, you actually have inadvertently put your goal that you must make in jeopardy. If you try to counteract this trend with a more aggressive compensation plan, you just will push more of your people out of the door. So your performance is doubly at risk; first for not making your number and secondly by having a too high churn rates.
The above traps might seem outright trivial. However, as already mentioned, it can be seen it over and over again that with the pressure on the financials in the name of shareholder value, these basic facts get thrown overboard. Writing about these traps might therefore be a useful reminder to all managers whose fiscal year coincides with the calendar year.