Aligning Quota with Business Goals
/A client asks, “As we start the New Year, I know the quotas I want to set for my salespeople. What I don’t know is how to motivate my sales force to help me achieve some of my other business goals for the year. What can I do?”
The key to achieving your business goals is to tie those goals directly to your salespeople’s quotas where possible.
Let’s say a salesperson’s annual quota is set at $1.2 million and you have five major products or services in your line. If your salesperson can achieve their quota selling any combination of the five products or services, they will probably concentrate on the one or two that are the easiest to sell to your client base. It’s what’s referred to as selling the “low hanging fruit” and may do little to help you attain your overall business goals.
If, however, you assign a subset of the $1.2 million dollars to each product, the sales quota can be in greater alignment with your business goals. Quota is typically not assigned evenly across the products because prices, profitability, and demand are usually different for each one. As an example, quota could be allocated as follows:
| Product | Quota |
| A | $500,000 |
| B | $200,000 |
| C | $50,000 |
| D | $300,000 |
| E | $150,000 |
| Total | $1,200,000 |
Structuring the compensation plan this way allows for greater flexibility. If product E is the most difficult to sell but is also the most profitable, you can offer a higher commission on it. The more generous commission structure will provide the motivation the sales force needs!!
A compensation plan of this type needs to be fully explained to your salespeople. Prepare a formal presentation to discuss why you assigned each product the numbers that you did, and how achievement of the goals will contribute to the company’s success. Let them know that you will provide additional product and sales training to ensure they are as successful as they can be. Encourage questions. Create a fun sales contest to get things jump started.
By structuring your quotas in this manner, you are using the compensation plan to help you communicate and achieve company goals.
Best wishes for the New Year!
Though my clients come from many different industries, the challenges they face are similar. In "Sales Management Tips," I regularly answer questions that have been posed to me by my clients. I hope the answers will help you to solve some of the sales dilemmas you face in your own sales organizations. If you would like to ask a question, please contact me. The identity and affiliation of those submitting questions will be kept confidential.
