Setting Effective Quotas to Motivate the Front Line
by: Mark Donnolo
The Speed of Quotas
It was spring break, sunny and warm. I had thoughts of the ocean on my mind as I cruised down I-95 to Florida. I was looking forward to a week off with nothing to do except sit on the beach, read, and enjoy myself. About an hour from the beach, something in the rearview mirror caught my attention. Bright. Blue. Flashing. My heart began beating faster and I got a cold feeling down my back. I think it was a neural reaction from my teenage years. A police cruiser was coming up behind me, fast. “Act normal,” I thought. “He must be chasing someone ahead.” I carefully moved from the left lane to the middle lane. The cruiser also moved from the left lane to the middle lane. “What? Come on!” I looked down at my speedometer. “I couldn’t be going that fast.” I glanced at the digital calendar on the dashboard and realized that it was the 30th of the month.
The policeman who pulled me over wasn’t selling anything, but I got the feeling he had a quota to meet, and I was part of it.
Having been in sales for a long time and being just a little Type A, I immediately wondered whether police officers have quotas for moving violations. I decided not to ask this one as I handed over my license and registration; it could only make things worse. So, when I returned home from vacation – never exceeding the speed limit – I paid the fine and then sought out a few retired officers and carefully asked them the question. (I promised to keep them anonymous as they were seemingly bound by a fraternal order of silence.) Turns out, they were as goal motivated as most sales managers. “Well… I’ll just say that tickets were the precinct’s only form of income we could control,” one told me. Another’s comment sounded exactly like something a sales manager would say: “I’d challenge my guys at the end of the month to see if they could write more new citations than me. They had a hard time doing it.” Interestingly, hearing them talk about traffic violation quotas was a lot like hearing sales leaders talk about sales quotas. How do we set it so that it’s achievable? Is it reasonable to expect everyone on the team to make their quota? What data should we use to help us come up with the number?
When it comes down to it, we’re all in sales.
In my 30 years of working with sales leaders, one of the biggest problems I see year after year in company after company is setting effective quotas. According to our research at SalesGlobe, 61% of companies say that setting and managing effective quotas is one of their top three sales effectiveness challenges. Ineffective quota setting can impact the company’s ability to hit its business plan. Quota challenges can affect the ability of the sales organization to reach its goals and target compensation, lead to higher turnover, hinder the company’s ability to attract top talent, and lower the sales organization’s motivation.
Quota setting and management is a topic that is often discussed everywhere from boardrooms to the front line to, well, the blue line.
Sales leadership knows it has to give the sales organization a goal each year that it might not be able to reach. Sales leadership has to bridge the gap between what the company wants and what reps can accomplish. And frontline sales reps often end up with quotas they think are unfair, ridiculous, and jeopardize their ability to make a living. Each year, the tension and dysfunction continue.
Despite the size of the challenge, few organizations understand how to set quotas that reflect real market opportunity and sales capacity with enough transparency that motivates the reps. For many organizations, setting effective quotas is an elusive challenge because they try to solve the quota problem with the same time-worn approaches or avoid the problem altogether, pushing it to next year. The sales organization continues to shoulder the burden of mis-allocated numbers that impact the sales team and the company. Rather than battling with who gets the number, solving the quota problem requires new thinking to break down the challenge into its components and apply a problem-solving approach that engages the organization.
That’s why I wrote a book called Quotas! Design Thinking to Solve Your Biggest Sales Challenge (ATD Press). It would be easy to write down everything we have learned about quotas from every organization we’ve worked with, but it is far more valuable to lay out an approach to solving the quota problem that any organization can apply. The book addresses challenges that impact every company in nearly every country. It is for the C-suite, sales leadership, sales operations, and front line sales. It addresses sales leaders’ needs to set effective quotas as well as sales representatives’ needs to get a fair quota for themselves – and it looks at quotas in a new light, beginning with understanding your quota challenge, the story behind it, and applying Design Thinking to solve it.
It seems like everywhere we look we see quotas. They’re applied not just to sales and traffic stops but to production workers and recreational fisherman. If you think about it, you are most likely expected to meet a quota in some aspect of your life – if not at work, then in your personal life. And you may very well be in a position to set quotas for others.
In my book, we talk specifically about sales quotas. But the problem-solving methodology can be applied to a broad range of activities around quota setting. Whether you are a police commissioner, a wildlife official, or a sales manager, you need a proven methodology for setting realistic quotas that are achievable, workable, and rational.
In the book, I introduce Sales Design thinking, a problem-solving methodology adapted from the engineering and design world’s time-tested process of design thinking. Sales Design Thinking consists of five phases: Articulate the Problem Statement, Redefine the Challenge Question by Understanding the Story, Think Horizontally and Combine Parallels. Develop Vertically, and Manage Change.
Regardless of your industry, you can begin the Sales Design Thinking process the same way – by understanding the story and then leveraging analytics to complete the narrative and sharpen your Challenge Question. Next, you break your Challenge Question down into its components and begin thinking about a range of solutions. At first, this approach may seem unnatural. But if you stick with it, you’ll find it can lead to ideas unlike any you’ve had before.
Oh, and one more thing: Regardless of the time of month, always obey the speed limit. After all, you don’t want to help a law enforcement officer make his or her quota.
Pre-order Mark’s book Quotas! Design Thinking to Solve Your Biggest Sales Challenges! It will be available October 15, 2019 from ATD Press, on Amazon, and at Barnes and Noble.
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