How to Set Quotas

Setting sales quotas is a very sensitive subject. Much time and attention should be given when determining quotas for various sales positions. Most companies do not give it the attention it deserves and end up changing quotas multiple times throughout the year. This wreaks havoc on the sales team and undermines credibility, trust, and performance - not to mention results.

Assuming a realistic company number has been set that is in sight and out of reach, setting quotas is a combination of reverse engineering and psychology. There are certain numbers that sound insurmountable for every business. There is a number where salespeople start out of the gate thinking it cannot be done. You do not want any segment of your team starting from a position of mental defeat. When you back into the numbers, take into account past performance of your high achievers. Do not use the collective average to determine quotas. Model the top 10% of the team and add an appropriate growth percentage based on industry trends and corporate strategy.

I have heard leaders say if they did that, 90% of their team would not hit quota. I agree – time to upgrade the team! Are you going to lower the bar and lower the expectation for the low performers or raise the bar and raise the expectation? (Side note: The reason most companies are not willing to do this is because they are not committed to increasing the skill set of their team through sales training and leadership development.) Are you just trying to not rock the boat or are you trying to build a world class organization based on excellence? Setting quotas at right levels is the best leverage corporate and sales leaders have to hold their teams accountable. Numbers do not play favorites; they are static and impersonal. They level the playing field. Appropriate the right consideration when setting individual quotas and you will be amazed at the revenue that can be generated.

How to Set Quotas

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