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So most of us can probably agree that adding 10% to last year’s quota (despite impassioned pleas from some that “It’s sales 101!!”) isn’t always the most effective quota setting method, especially from a rep’s perspective. But setting quotas based on Historic information is the most common method.
Let’s look at two basic quota setting methodologies:
About a year ago, we met with a company whose sales organization struggled to meet quota, year after year. The president of the company, who had grown up in sales, could not understand why her salespeople struggled, or why they complained that quotas were too high.
Her quota setting process was simple: “You add 10% to last year’s quota. It’s Sales 101,” she said multiple times.
While adding to last year’s quota may seem sensible, and may be the only quota setting process she’d ever heard of, it’s really not a great idea.
We’re wrapping up our series on C-level participation in the sales comp process. The role of the C-level varies among companies for many reasons, but high performing sales teams using have at least one C-level executive asking good questions.
We suggested some questions dimensions last week, but your organization’s specific situation will determine the best questions.
Most C-level executives know good questions are more powerful than statements. Effective C-level executives ask the right questions about sales compensation, as well as sales effectiveness more broadly.
In order for sales compensation to work, the C-level goals of the company have to be incorporated. But at what point should the C-level get involved to communicate those goals?
As sales executives determine priorities for their sales compensation, they need to set their C-level goals. These will define the major priorities for the organization that will be converted to the sales compensation plan. Those priorities provide clarity for the behaviors the plan’s going to drive in the organization.