5 best practices to set up effective sales quotas
As CEO of a technology company and founder of an MSP sales training academy, I’m always looking for smart ways to set quotas.
Quotas aren’t sexy. Yet, they’re the essential yardstick by which most sales professionals are measured.
By definition, a quota is an individual sales target figure assigned to a sales unit. Put into practice, it’s a tangible tool to keep your sales team focused on company goals. To keep things on track, you need to stay on top of ‘real-time’ goal progress, activities, and call volume. All can be early indicators of failure or success and are useful data for coaching your team. Consider having quotas for measurement in these key areas:
1. Hardware profits
These are traditionally low-margin products. Make sure you’re not giving away what little profit there may be.
2. Labor profits
Product installation and maintenance for your customers come at a high cost to your business. Setting quotas in this category will discourage sales reps from offering unnecessary discounts.
3. Contract amounts/agreements
New business is a must for your growth, so set goals for sales reps to bring in a certain amount each month.
Your success depends on happy customers who keep coming back for more, so set goals—and reward sales reps—for client renewals of contracts with your company.
5. Proactive sales activities
Every sales rep should consistently be on top of activities that move the needle in your organization, including prospect visits, follow-up calls and emails, quotes, and thank you notes. Communicate the importance of this easy-to-meet quota to your sales team.
In recent years, traditional thinking about sales quotas has been questioned, including whether sales figures might actually go up if quotas were removed. Until solid evidence to the contrary is available, I’ll continue to believe (and teach) that quotas are a best practice method for fairly compensating and motivating your sales team to succeed.