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Customer Experience Technology
January 29, 2016
Three Areas to Consider to Set Up Your Sales Reps for Success
At the start of every fiscal year, we hear sales reps say things like, "My list of accounts is bad and my quota is set too high. How the heck am I supposed to hit my number? Why was my quota increased by 20% this year?"" Reps are usually furious and managers feel helpless because they have no idea how the sales reps' quotas and territories were allocated. Furthermore, senior management feels frustrated because they feel like no matter what they do, they are unable to move the needle much. Sound familiar?
More than 50% of companies reported correct goal/quota setting as the number one challenge facing the sales compensation program in the 2007 to 2010 results of the Alexander Group's annual Sales Compensation Trends Survey. In 2015, that number rose to 59%. So why is that that we see a majority of sales organizations slap on 10 or 20 percent increase on ALL quotas regardless of how each sales rep performed the year prior? Or according to the market potential? Or other value driven insight?
And what about the sales compensation team? They have to figure out how to design compensation plans to drive desired results. They are dealt with the arduous task of aligning corporate goals to sales execution. So why is it that 48% of incentive plans do not achieve desired results? Why is it that many sales organizations are missing the mark? Could it be because they don't have the data and insight needed to make key decisions?
Let's start with focusing on the three main areas every organization should think of when it comes to planning:
- Territories: How are territories defined? Are they based on geography, customer, industry, product, etc.? How do you determine which sales rep is assigned to each territory? What is the company's overall go-to market strategy?
- Quotas: How are quotas allocated? Is it just an all across-the-board increase by a certain percentage handed down from senior management? Or are we using data-driven insight to assign quotas equitably per rep? What parameters should we be taking into consideration? What if we were able to assess prior years' data such as closed revenue and layer that on top of market potential or other data?
- Compensation Plans: How are compensation plans structured? Are we aligning corporate goals to sales execution? Are we motivating our reps and driving desired behaviors? Are our salespeople on track to hitting their numbers based on the territories, quotas, and comp plans they've been assigned to?
These are the types of questions we should be thinking about when considering how to set up ALL of our sales reps for success. You need to be using data-driven insight in order to make decisions and know what impact it will have on the organization. It's one thing to make a decision and move forward with it, but it's another to actually know what impact those decisions are going to have on results.
That's where using a Sales Performance Management (SPM) solution comes into play. Sales Performance Management software helps companies plan and execute on those key decisions of sales planning and execution. The right SPM offering will have tools and analytics to help optimize territories and to equitably allocate quota to help you plan and understand the impact of your decisions on the entire organization. So when the next planning cycle comes around, sales managers will have conversations about account planning with their sales teams, rather than negotiating account coverage and expected sales targets.