A sales quota is a sales goal restricted for a given period, generally ranging from a month to a quarter. It’s set by the company leadership for a product line, a specific region, a sales team, or an individual rep.
Achieving sales quota generally means that salespeople receive some kind of financial reward on top of their usual commissions.
The difference between sales quotas and sales goals
Are sales quotas and sales goals the same thing? Not so fast. Sales quotas are often part of a series of actions set to help salespeople achieve a certain goal.
Then, they would calculate how many deals their salespeople need to close per quarter to contribute to that goal. The financial value of those deals would be the salesperson’s quota.
A salesperson’s quota is often directly tied to their compensation plan, including commission and bonuses.
Setting effective sales quotas
Sales quotas are tricky. If you set the bar too low for each sales rep, you risk not meeting overall company goals and rewarding weak performance. If you set the bar too high, you risk increasing employee turnover.
There’s simply too much at risk to rely on an arbitrary process for setting sales quotas.
Use more than basic CRM data
CRM data can be incredibly valuable when assessing quotas, but there are plenty of other data sources that can be combined with CRM to give a completely clear picture of sales situations.
Tracking buyer engagement and sales rep activities can help you assess how much of your reps’ historical quota attainment was due to outside factors vs. performance.
Flesh out quota expectations
Sales revenue is a good starting point for quotas, but that’s not all you should be relying on. Look closer at sales rep activity metrics such as number of calls made, emails sent and demos completed to really dig deep into the expectations for your sales reps.
Establish a baseline
Your company should have a minimum performance standard for sales reps, both in terms of quota and sales activities. How many sales calls and emails, at a minimum, do your sales reps need to send on a daily basis?
How many demos and follow-on demos does it take to close a deal? If your sales reps are doing all those activities but still aren’t hitting quota, the quota is probably too high.
Don’t punish your top performers
Your sales quotas should not be the same for all sales reps. If your quotas are geared for the “B” performers, your C performers won’t be able to keep up and your A performers will get short changed. Balance quotas so that top performing reps get the recognition and compensation they deserve.
Work backward
Instead of establishing quotas based entirely on what you think your reps are capable of, think of the desired end result. If your company has business growth goals, do some math to see how many deals reps will need to close.
If that number doesn’t match up with the quotas based on historical data, it’s time to revaluate your goals and how you’re planning on achieving them.
Communicate your reasoning
If you’re raising quotas, especially by a large margin, the worst thing you can do is drop it on your sales reps without a word of explanation.
By communicating why quotas had to be raised, you’ll avoid resentment and most likely get more buy-in from your sales reps.
Know your market
Realistically, how many buyers are actually going to be interested in your products or services? Do you have a niche product or one that has appeal for a wide variety of industries?
A solid understanding of your buyers and the market as a whole will help you establish realistic quotas.
Sales Quota Calculators
Yesware Quota Calculator
Yesware has calculators for top-down and bottom-up quota setting. Pick your poison, input the required data, and Yesware will give you a number.
Panalysis Sales or Conversion Target Calculator
This calculator is best for giving reps an idea of what their quota should be. It takes a broader approach asking for your annual revenue target, average monthly visitors/leads, monthly conversion/close rate, average deal size, and monthly growth goals.
You’ll likely want to do some tweaking for seasonality, territory and market opportunity, and rep ability.
Calculator Soup Profit Goal Calculator
Setting profit-based quotas? This calculator is for you. Enter your average monthly or quarterly sales, profits, variable costs, and fixed costs, to calculate your quota or goal amount.
SellX Sales Calculator
This customizable calculator allows reps to calculate the number of calls, connects, meetings, demos, proposals, and closed won deals they need to win every day, week, and month in order to hit their quota.
If you already have a quota defined for your reps, this can be helpful.
Conclusion
The only way to continually boost performance in your organization is to measure it and then act on your findings. And by choosing to track your sales team’s performance on a regular basis, you’ll identify strengths, weaknesses, uncover potential opportunities, and prevent potential risks.
Moreover, by analyzing this data you will be able to identify the problems your team faces and provide guidance to both high-performers and under-performers to drive revenue growth.
