Almost everyone has seen the movie The Christmas Story – it is a classic. Many of us may have experienced a Christmas morning where we dreamed of a particular present only to have received a sweater or worse underwear! Well, the feeling of receiving a sales quota by your team can be similar, hopeful and excited about what they will get and then wanting to exchange it for a smaller size!
The goal of this article series has been to pull back the curtain (much like Toto did in the movie) to show what is really behind the Great and Powerful Oz of Quotas and Targets and Comp- Oh My!
In part three of Quota’s and Targets and Comp – Oh My we look at the administration stage as the final step in pulling back the Wizards curtain in an effort toward transparency, understanding and trust.
We began by taking a deeper dive into how quota numbers are established. Often it is handed down from the CEO, but how that was established is still important for a salesperson to understand. Years ago, we laughingly thought that leadership just threw darts at a dart board. Obviously, it is much more involved and well thought out. Sharing this with manager levels and salespeople ensures that everyone sees the bigger picture and how it came to be. We looked at types of quotas such as sales volume, profitability and market share. We also looked at whether it should be annual, quarterly, capped/uncapped as well as effects such as seasonality and sales cycle.
Four additional characteristics of a good quota plan are:
1. Does this quota state exactly what the intended result is? (Is it easy to
understand)
2. Is the quota/goal realistically attainable? If a quota is to spur the sales force
to maximum effort, the goal must be realistically attainable. If it is too far out
of reach, the salespeople will lose their incentive.
3. Is the quota/goal fair? The workload imposed by quotas should be the same for all sales reps. However, this does not mean that quotas must be equal. Differences in potential, competition, and reps’ abilities do exist.
4. Can the intended result be measured?
Part two of the series focused on how to communicate the information. There were several “shots across the bow” at some of the “Lazy Leadership “habits that happen in this phase. The bottom line is that communication should have clarity, show fairness, equity and the details of the math should be shown. Leadership flexibility is a key consideration as well. Do managers have a voice to adjust as needed? Giving sales managers the authority to alter sales quotas after they are set helps control unforeseen scenarios and earns quota buy-in from your sales leaders. Well-executed quota relief can be crucial and thoughtfully given quota relief can even result in higher performance. This is key in showing the transparency leaders say they want to have.
Finally, we take a brief look at the administration.
The Administration
Simply put, accurate data supporting the sales versus quota must be just that…accurate. Also, it should be timely and easy to understand. There is an old school of thought that says,” if you didn’t have the goal would it change the behavior?” In other words, just go forward with the company plan of action and roadmap and you will be fine. This is valid if the goal doesn’t lag too far behind. For example, the middle of the quarter for a quarterly goal is too late to pivot or react if needed to achieve.
Leadership should continually evaluate progress on quota achievement to validate the forecasting or goal-setting process and adjust if necessary. Waiting until the measured period is over to adjust runs the risk of the sales team losing motivation mid-way through.
How to know if it is working?
There are several schools of thought on what percentage of the sales force should be able to achieve the quota based on the formula. As a rule, 75-80% is the threshold that most experts say today. If that is not attainable, the methodology needs to be revisited. Also, when shifts occur from one period of measure to another (one quarter no one is tracking well, and the next quarter 80% of the sales team is hitting the mark) the inconsistency can create distrust and disengagement. This can occur to a higher degree if an annual target or prize is part of the plan.
If the team is hitting its goals but the company is not hitting revenue- adjustments need to be made.
Also, if the company hits its goal but salespeople are not and do not earn a bonus or commission, they will disengage or leave, which lands you with even bigger problems.
How can front-line managers support their reps? Behave ethically. Sometimes unethical salespeople are the result of unethical signals sent by leadership or managers who turn a blind eye to bad practices. Sooner or later, it catches up to you both. You may have to give them a tough number that comes from above but assure them you will do everything possible to help them hit that goal and support them…then go back to senior leadership and demand input. They can also learn how to effectively handle territory disputes. The question isn’t if your reps will dispute the quotas/goals assigned to them, it’s how you can best handle the issues they might have with their territories. As a sales manager, you’re going to have reps that push back and say things like, “I haven’t gotten any deals there yet, can you give me some leeway with my quota?” Mastering disputes is just one aspect of proper sales territory management.
Let’s prepare the way - four critical steps to set your team up for success!
1. Schedule conferences with each salesperson.
2. Prepare a written summary of the goals agreed upon.
3. Group meeting to share objectives. (Everyone knows everyone’s goals up
front.)
4. Create a business plan for each person to complete. Quarterly, or semi-
annually are best. (More on this to follow)
Business Plans are the part the sales team must own in this whole process. Many business plans are some form of excel workbook. I have seen some with up to twenty different worksheets. Keep in mind if you are the creator of this document how much credible information will you receive? How much time will be entailed in completion (are they taking time out of the field?) Will you as a leader read it all and follow up on it? There were multiple times that I spent hours completing these and my manager never even took the time to walk through it with me. It became an “exercise”. The adage, “they will respect what you inspect,” seems to fit.
Make sure the data you are asking for in the business plan is relevant and demonstrates how they are going to reach their goal, roadblocks and what they need from you and the rest of the leadership team to be successful. If they are not giving you this ask why? Do they know how to find the data (especially if historical) Do they understand the question? If they are going through the motions to complete the check in the box, without any “meat” to it, there must be a reason why they are disengaging in this process and possibly in their job.
Then make sure you set frequent “check up’s” to ensure they are on track and there are no underlying concerns. The initial review will take time but may be hard to complete all at once on an ongoing basis. If so, take it in smaller bites over a couple of weeks.
I value this leadership quote by Brian Tracy,” These numbers are what you strive for, but you should be fluid in your approach to them. Motivate your team to reach them, but don’t make it the only way you reward them or acknowledge their performance or hard work. Employees sell better when they are not under large amounts of stress”
Creating simple to understand quota and compensation systems through the engagement of all who have a stake in the success and effective communication and transparency of these programs will lead to greater trust and ultimately greater success.
Komentar