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Donna's blog on coaching, leadership, and life

Do sales quotas generate incentive? It depends.

Sales quotas are part of the fabric of sales-driven and goal-oriented organizations. But do quotas aligned with financial gain always provide incentive? Not if they’re unrealistic under current or shifting circumstances in the marketplace or within an organization.

As an example, a few weeks ago I had a conversation with a friend of mine who is in sales. He’s finding himself frustrated with his quota and the current expectations of his job because they’re next to impossible to reach considering the increasing competition and the internal service obstacles that are affecting his ability to acquire new customers. Interestingly, even though he is selling less, he maintains his ranking as top salesperson, while his colleagues continue to trail behind him. He’s feeling demotivated.

It was this conversation that prompted me to think about how often an organization does or doesn’t revisit sales quotas to ensure they’re doing their job—which is to increase revenue and keep salespeople driven towards the goal. I wrote the following brief article on the subject for a column that I contribute to on a regular basis. Thought I’d share it here . . .

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Time to Revisit Your Sales Quotas?
By Donna Rawady
Originally published in Rochester Democrat & Chronicle, April 14, 2015

Sales quotas are established as a strategy to reach revenue/business goals and as compensation-based incentive for salespeople. If your organization is sales-driven, and most are, sales quotas are guaranteed to generate feelings of accomplishment, recognition, and/or angst and frustration for your sales professionals. Sales quotas and related compensation are carefully established, communicated, appreciated, and often volatile and argued over.

For those of us in sales, our tendency may be to center our accomplishments on closed business, yet our true success depends on our being centered on our daily and weekly activity, versus the end-of-the-month high or dread. It’s consistent and daily activity that will carry us to the end goal—small consistent steps focused on making connections, identifying prospects and their needs, genuinely serving others, writing effective proposals, sharing applicable knowledge, and well-representing our organizations.

In many organizations salespeople are required to meet their sales quota for a specific run of months or years in order to retain their employment. In other organizations, sales quotas are set only to see a small set of super-salespeople reach them, while others maintain at 70 or 80% of quota. We value and understand that there’s a need for those dependable individuals who consistently deliver at 80%. Yet, by retaining them, we need to take responsibility for dropping the overall team requirement to 20% shy of the so-called “quota”.

If you’re interested in exploring the effectiveness of your current sales quotas, here are a few questions that may help:
– What percentage of your salespeople are actually meeting quota regularly?
– Take a look at your top performer. How often is she/he hitting quota?
– When’s the last time you interviewed your salespeople about how they view the feasibility of consistently meeting quota?
– Are there requirements established and/or consistent coaching provided around daily or weekly activity?

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