Unrealistic Sales Quotas
Posted: Tue Dec 17, 2024 5:56 am
While you may or may not tie activities to a formal quota of your own, it's helpful for reps to have a roadmap that shows them roughly how many calls, emails, and demos they need to complete to meet their quota.
Your sales quota should take into account a rep's base salary, average number of available leads, target number of activities (i.e. 15 calls/day and 20 follow-up emails/day), target incentive pay, target total compensation, and any additional bonuses available.
Many things can work against your ability to set finance directors email lists a realistic sales quota and your rep's ability to meet it.
If you set your quota without taking into account seasonality or historical rep performance, you're setting your team up for failure.
Likewise, don't adjust the quota based on an unexpected renewal or above-average offer. Increasing rep quotas because of a great month can demoralize high-performing reps and stunt growth.
Before you raise quotas, make sure you have at least three months of data to support the decision—and that it’s not just coming from one rep and their specific territory.
If you have a rep or territory that consistently beats their number, identify what is driving their success and consider adjusting their quota instead of changing everyone else’s.
Stress from unrealistic sales quotas
The quickest way to see your sales team burn out is by setting unrealistic quotas. As a sales manager, it’s your job to know your team’s limits and make that argument to your executives when they push for a more top-down approach to quotas.
The average SDR tenure has seen a 50% decline from an average of 2.5 years in 2010 to 1.5 years in 2018. Sales is already a volatile profession. Retain top-level employees by making sure their quotas are realistic and they have the support to meet and exceed their goals regularly.
Commission Caps
Commission caps limit the amount of commission a salesperson can earn. When a rep hits their commission cap, they no longer receive financial rewards for closing more deals. This disincentivizes reps to push the limits and close more deals.
SaaStr founder and sales professional Jason Lemkin says there’s no good reason to cap commission: “At least, not until you’re at $20-$30 million ARR or more, and maybe much higher.”
He continues, “If you cap this too early, you’re limiting your revenue per lead.”
Set Your Sales Quotas Like a Pro
In the final scene of Glengarry Glen Ross, the salespeople disperse, facing the various consequences of their actions from the night before. But one salesperson returns to the office. Why? To make his regular sales calls.
Your sales quota should take into account a rep's base salary, average number of available leads, target number of activities (i.e. 15 calls/day and 20 follow-up emails/day), target incentive pay, target total compensation, and any additional bonuses available.
Many things can work against your ability to set finance directors email lists a realistic sales quota and your rep's ability to meet it.
If you set your quota without taking into account seasonality or historical rep performance, you're setting your team up for failure.
Likewise, don't adjust the quota based on an unexpected renewal or above-average offer. Increasing rep quotas because of a great month can demoralize high-performing reps and stunt growth.
Before you raise quotas, make sure you have at least three months of data to support the decision—and that it’s not just coming from one rep and their specific territory.
If you have a rep or territory that consistently beats their number, identify what is driving their success and consider adjusting their quota instead of changing everyone else’s.
Stress from unrealistic sales quotas
The quickest way to see your sales team burn out is by setting unrealistic quotas. As a sales manager, it’s your job to know your team’s limits and make that argument to your executives when they push for a more top-down approach to quotas.
The average SDR tenure has seen a 50% decline from an average of 2.5 years in 2010 to 1.5 years in 2018. Sales is already a volatile profession. Retain top-level employees by making sure their quotas are realistic and they have the support to meet and exceed their goals regularly.
Commission Caps
Commission caps limit the amount of commission a salesperson can earn. When a rep hits their commission cap, they no longer receive financial rewards for closing more deals. This disincentivizes reps to push the limits and close more deals.
SaaStr founder and sales professional Jason Lemkin says there’s no good reason to cap commission: “At least, not until you’re at $20-$30 million ARR or more, and maybe much higher.”
He continues, “If you cap this too early, you’re limiting your revenue per lead.”
Set Your Sales Quotas Like a Pro
In the final scene of Glengarry Glen Ross, the salespeople disperse, facing the various consequences of their actions from the night before. But one salesperson returns to the office. Why? To make his regular sales calls.