A sales quota is a target sales reps are set for a specific period. Sales quotas can be set in dollar figures or in the number of goods or services sold.
Sales quotas are typically time-sensitive — set to be reached monthly, quarterly, or yearly — and can be measured in dollar amounts or units sold, or even as specific as number of new customers, or through activities like product demonstration
Start setting Sales Quota
The process of setting sales Quota makes you succeed faster and more efficiently. It can fuel sales ambition and help sales member achieve tangible results. A Quota setting process will help you determine how to set goals that are specific, timely, and realistic.
Measure of Sales quota Progress
Time Spent Selling
There are few things more valuable than sales reps’ time, so it’s critical that time principles know how they’re using it.
Of all the activities and stages in sales process, which lead generation might be eating up sales reps’ schedules.
Since many reps struggle to find sales-ready leads who are interested in making a purchase, countless hours are wasted researching and contacting prospects who aren’t ready to buy.
Calculate the Cost
Cost of Sales is an important measure of productivity. To calculate this, consider all of the expenses relevant to sales force, including not only salaries and commissions but also related benefits and incentives. Then, total the revenue sales force generates.
Divide the total revenue sales team generates by the costs directly related to their efforts to obtain the cost of sales in ratio form. Measurement should include both hard and soft costs and help the team members determine ways to reduce and control costs.
Track Performance
Tracking performance helps you predict the future and determine where change is critical. If salespeople have generated 10 million on average over the last seven years, it’s reasonable to expect similar sales in the current year.
Performance measures facilitate the evaluation of changes in productivity and the setting of new targets, considering such factors as sales, contributions, and profits per member of sales team. Tracking performance also involves the establishment of key performance indicators, which are quantifiable factors critical for the success of own business.
Use CRM Software
A CRM application gives you insight into factors like customer attrition, conversion rates, sales calls and quotas as well as actual revenue versus budget data.
If track time spent selling, it’ll be able to uncover these bottlenecks and address the issues that are slowing down sales team. A CRM or sales automation software can help to track how much time sales team is spending at each stage.
This is critical for evaluating customer acquisition and retention rates and analyzing how, when, and why individuals transition from prospects to customer status. Likewise, CRM tools help to measure sales cycle length and the number or prospects and proposals it takes to close sales.
Attributes of a good sales quota plan
While following those steps is a good start to setting sales quotas for sales team, there are other things you need to take into consideration. The ideal sales quota embodies three key qualities.
Dynamic
If you keep reassigning the same quota to the same rep every single period, they won’t be inspired to grow. As reps gain experience, they can handle a more challenging quota.
There’s no doubt that reps can handle a heftier quota two years into their career than they can in the first month. Maybe they’re ready for a higher revenue goal, or it might be time to transition to focusing on bigger accounts. Recognize their growth and adapt their quota accordingly.
Challenging
Sales quotas need to challenge sales reps. They set the bar too low, reps will recognize this and potentially slack off.
Gain an understanding of sales reps abilities and create a quota that’ll push them to work their hardest. It’s best to aim for the upper bound of the reps abilities. They can recognize the challenge but also acknowledge that it’s possible.
Realistic
While throwing a challenge at reps should always be at top-of-mind when setting quotas, it’s also necessary to be realistic. Setting the bar as high as possible might seem like a good way to produce the best results possible, but it’s rarely a good idea.
Setting unrealistically high quotas is a good way to kill sales productivity, and therefore, profits. Reps realize when the quota they’re presented with is unattainable.
If reps do decide to tackle an unrealistic quota, their success rate will struggle. They might start to feel negative pressure to sell fast, resulting in them using extremely aggressive selling tactics that won’t come off as appealing to customers.
