In the commercial sales community, I keep hearing how only 40-45% of salespeople are actually achieving their quotas and targets. Frankly, I’ve been hearing these kinds of stats for so long that the fact that over half of the sales force at-large is missing the mark doesn’t even surprise me anymore. And the discussion around “why” this issue exists and persists hasn’t changed all that much over time, either.
Most often, pundits will opine at length about how abysmal quota attainment rates are likely the result of issues with:
- Poor Coaching — Without clear guidance and support from their managers, salespeople may struggle to prioritize efforts, focus their energy, manage their time, engage in follow-up, or address objections.
- Inadequate Training — Without continuous training and upskilling, sales teams may lack the specific product knowledge, evolved selling techniques, and relevant market insights that are critical to success.
- Weak Incentives — Without clear hard incentives and effective soft rewards, sales reps may struggle to figure out exactly what they’re expected to do in order to be rewarded, while feeling recognized and appreciated.
- Lame Lead Gen — Without a consistent flow of high-quality leads and a sufficient pipeline of solid opportunities to work, salespeople may end up spending a lot more time prospecting than closing.
- Bad Stretching — When “stretch goals” regularly require a ten foot ladder, reps can become discouraged and disgruntled, and in extreme cases, may even begin to suspect that it’s being done to avoid payouts.
Of course, any of these issues…by themselves or in combination…will certainly exacerbate or contribute to the problem. But from our perspective, these particular explanations are somewhat tangential to a much more fundamental root cause. It’s like we’re talking about bad frosting on a mud cake. Ok, yeah, bad frosting will make it even worse…but hello…the core issue is that the cake is made of mud!
The fundamental reason so many quotas miss the mark is that they aren’t very accurate to begin with. It’s as simple as that.
After all, most companies are setting sales quotas using some combination of internal rules-of-thumb, base-pay formulas, and past-performance multipliers. And using this approach, it’s no surprise that some quotas will end up being too high, some too low, and some just right.
Of course, nobody complains about the quotas that are set “too low” and those just get hidden and blended into the positive side of the attainment rate. But “too low” quotas are just as inaccurate as “too high” quotas; and sandbagging can be just as costly as missing.
So what can be done differently to improve quota-setting accuracy, reduce misses, eliminate sandbagging, and boost overall attainment rates?
Through our research, we’ve found that leading sales operations are doing the analytical legwork to accurately map their market potential and describe their untapped sales opportunities with high degree of actionable detail:
- Prospect Targeting — By modeling and profiling the best performing customers and using the most indicative demographic and firmographic attributes as filters on the broader prospect universe, leading teams have developed a much better understanding of their next best prospects and those prospects’ realistic sales value. These insights are then used to balance territories, align coverage, and set achievable acquisition quotas and targets. Sales reps and lead gen teams are then provided actionable contact lists and prospect profiles to guide their cultivation and discovery efforts.
- Account Expansion— By conducting whitespace analysis on their existing customer bases, leading teams are able to identify, quantify, and prioritize untapped opportunities to grow share-of-wallet and boost lifetime values. This mapping of untapped, organic growth potential is then used to adjust existing account coverage and set realistic farming quotas and goals. The prioritized, account-specific expansion opportunities are then surfaced to the assigned salespeople for immediate action and investigation; and to the sales managers for ongoing coaching, monitoring, and follow up.
When quotas are just based on rules-of-thumb, internal assumptions, or low resolution views of the marketplace, it’s almost axiomatic that they’re going to be inaccurate. In turn, it’s inevitable that these inaccuracies are then going to lead to missed targets, frustration, burnout, and even turnover.
Now, we can try to address the quota attainment issue by doing the things that everyone talks about, like doubling down on coaching, ramping up training, layering on some key bonuses, or yelling at talking to the marketing team about lead generation. Or…here’s an idea…we can just fix the real problem.
As leading groups have discovered, developing higher resolution views of the untapped opportunity in your market helps you set sales quotas that are much more accurate and attainable across the board.