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Quotas
Our CFO feels we should give out quotas that add to 20% more than our annual plan. Is that a good idea?
Distributing more quota then the annual operating plan is called over allocation. A little bit is okay and a lot is not.
What are best practices regarding quota setting?
To be fair, this is a topic worthy of a book rather than a blog post, but we cover a few of the key concepts here.
Quarterly or half-yearly quotas – when is it a good idea?
Done correctly, smaller measurement periods can contribute to improved quota accuracy, consistent deal flow throughout the year, a more motivated and productive sales force, and a better value for the sales compensation dollar.
How do we keep high producers motivated when their goals keep going up each quarter/year?
The problem occurs when stellar performance this year results in a very high quota next year (calculated as a percent increase over this year’s results), and so a significant risk that the new higher quota will not be attained next year.
How do we design the right plan for an unpredictable year?
So many sales compensation plans depend on goals or quotas. Regardless of the type of plan you have, some kind of productivity expectation is embedded in your plans. So in a year when “expected performance” is very difficult to establish accurately, how can you manage your plans with this in mind?
What is the ideal quota attainment distribution?
This is a topic on which sales leaders and finance people have strong opinions. While I’ll discuss some of the nuances around the topic below, my bottom line is that most people should achieve or exceed quota.
Can sales quotas hurt productivity? Stanford’s Graduate School of Business says so…
October 2009 – New research indicates that, “Eliminating sales quotas boosts company profits says Professor Harikesh Nair. In one case, the new sales compensation plan without quotas resulted in a 9% improvement in overall revenues…”
Are companies adjusting sales comp plans due to the slow economy?
From our experience, I would say that most companies are making some kind of adjustment due to the economy. If your expected total sales are down, you have several options that we’ve seen recently…
Are sales organizations utilizing more attainment thresholds in their sales compensation plan designs as the result of the current recession?
The logic for raising thresholds in this economy would be to protect profit. The logic for lowering them is that we are not nearly as confident in our quota setting accuracy in this economy…
How do you know what the right commission rate is for your industry and area of the country?
Answering this question is harder than it looks. The answer depends on the nature of the selling role, the level of maturity of the business, and the cost structure of the company.