Sales Quota – Is It Time To Change In This Crisis?
The full impact of Covid-19 is not yet known. In some markets and industries, it is clear that customers are deferring or canceling planned purchases. In other cases, companies are booming. Maybe that’s your company. Nonetheless, it’s safe to say things are different now. You may be asking yourself, with the amount of change in the marketplace, should you change territories and goals to keep your team engaged and motivated? Or change them because your business has changed?
How’s Your Sales Team Feeling?
Chances are your salespeople are stressed out. Stress, at its best, is uncomfortable. At its worst, stress is downright agonizing. What that means is your salespeople care. So, if you decide to reassign territories or change quotas, it’s going to cause stress for your team.
Your team likely knows change has to happen with everything that is going on in the world; it’s virtually inevitable. But it would help if you did not change things based on a gut feeling. It would be best if you looked at specific metrics to make sure that your new goals align with the behaviors you are trying to drive.
The Department of Labor said some 20 million people lost their jobs in April, as the unemployment rate shot up to 14.7% from just 4.4% in March. You may have had to reduce team members, which could mean loss of territories.
If you had to reassign accounts or restructure territories as the result of cost-cutting moves, then the goals and plans of your team must also change. Considerations in the restructuring process include:
1) Ensuring that you are clear with the team about which accounts/territories belong to which salespeople, what to do with accounts and opportunities that are mid-process, and how to do hand-offs when necessary. These changes are typically left a little vague, which leads to conflict between salespeople and possible customer satisfaction issues.
2) Trying to make territories as equal as possible for your team. No matter what you do, someone on the team will feel it’s not fair, so be prepared to show the data you utilized when reassigning.
3) Setting the expectation that these assignments are not permanent. When the crisis is over or reduced, you will most likely bring more salespeople on, and accounts will be reassigned again. It’s far better to address this now vs. having to wrestle away accounts and territories later.
Set goals tied to sales volume, profit, or specific sales activities/leading indicators. There are three different types of sales goals you could set:
- Volume-based sale quota – for more transactional sales with shorter sales cycles.
- Profit-based sales quota – for transactional sales where salespeople have control over margin.
- Activity-based sales quota – companies with longer sales cycles.
Get the team focused on goals around meetings, demos, qualified opportunities, etc. Set weekly and monthly goals and adjust as needed based on the data you are receiving.
It’s essential to keep the sales goals actionable and attainable based on the new data trends and shorter goal timeline, especially with all the changes that are going on with this crisis. It’s crucial to pick the correct type of goals for your team right now as well.
Setting Your Team Goal
Last year you sat down with your CEO, and you hashed out this year’s goals. They wanted 15% growth to which you agreed, but then COVID-19 happened. Now things are different. Numbers are not what they should be, and your team lost a member or two. It’s time to change that goal based on key pieces of information. The best way to set an attainable, yet ambitious goal is to analyze the data you do have. The new purpose or goals should be set for 30, 60, but not greater than 90 days out, until we understand what is the new norm. The idea is to get the sales team focused on a few critical things over a short period so they can execute.
Sales Leaders and Owners/CEOs should work together to review things such as:
- Customer cancels/reductions – try to build a forecast as best you can to determine what revenue can be protected and what will most likely go away.
- New business – not all markets took a hit. Evaluate which markets still have opportunity and reset realistic goals for what the team can land.
Work together to come up with numbers that the Sales Leader feels are achievable and which the Owner/CEO feels satisfies the business requirements. The goals should be reset using data and numbers, not just gut feel.
New Sales Plans
Tactical planning outlines the short-term steps and actions that should be taken to achieve the goals described above versus strategic planning, which outlines the long-term, broad goals that a business or individual wants to make. Help your salespeople create plans that help them achieve their monthly goals including activity level, who to call on, how many opportunities per week they need to generate, etc. By allowing salespeople to track small wins, they stay motivated instead of getting overwhelmed by big, overreaching goals that could’ve have changed because of this crisis. It’s much more motivating for a salesperson to think, “Awesome, I’ve achieved the goal for this week” than “I’ve only achieved so much of my original $1,000,000 goal.”
Watching Key Metrics
Look at leading indicators that allow you to get a good grip on your business and your modified direction. If you look at results only, you won’t have a pulse of what is happening right now. Look at your leading indicators like calls, emails, demos, webinar attendees, close rate, retention and sales velocity.
Sales velocity is a measurement of how quickly leads are moving through your pipeline and how much value new customers provide over a given period. You need to analyze all of these metrics and determine what trends you see. Trends you’ll want to keep an eye out for are:
- Which industries are succeeding?
- Which industries are hurting?
- Are you retaining old business?
- How many new meetings or opportunities are being generated?
Knowing these trends will allow you to determine what types of customers your sales team should be going after. They will also help you calculate the impact of the crisis on your company, sales plan, quota, revenue loss, pipeline and forecast.
Have your salespeople regularly examine the content of their pipeline, focus on opportunities with the highest chance for success, and set weekly goals to maximize their sales efficiency and hit their new sales goals.