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.
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.
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?
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.
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…”