[Video] Why False Sales Quotas Won’t Work

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A lot of sales teams think about quotas as some kind of ideal that each rep should aspire to.

This is totally wrong.

Quotas aren’t a goal, they’re a business calculation. Budgets, hiring, and board presentations depend on these numbers being accurate. This means that quotas are a necessity, and I make it very clear to the SDRs I train that missing quota isn’t an option.

And I get it — this sounds intimidating. It’s all part of a delicate balance sales leaders must establish. How can I make sure my team hits their targets but also stay motivated?

More importantly: How can I make sure my team loves what they do and where they’re working?

The Myth of the False Quota

One strategy that sales leaders have deployed for many years (with varying levels of success) is the false quota.

In practice, this essentially means, “Let’s tell our sales reps they need to hit these (very high) numbers, even though we actually only need them to hit these (lower) numbers.”

There are three very-flawed reasons why they think this is a good idea.

1. If you shoot for the stars, you’ll land on the clouds. There’s something comforting about building a buffer zone into your projections.

2. Stress is one hell of a motivating factor. It works in all aspects of life to make us do the necessary things we wouldn’t otherwise be able to.

I haven’t thought about this term paper all semester, but it’s due tomorrow so I’ll pull an all-nighter. My legs are sore from hiking all day, but running fast is the only way this mountain lion won’t eat me alive. Etc.

3. It saves the company money. Unfortunately, most teams and departments have to think about staying under budget more frequently than they’d like. Many commission structures are set up so that overachieving on quota is paid at a much higher rate. In order to avoid paying out this extra amount. Sales leaders will set their reps’ individual numbers artificially high.

Debunking the Myth

The three reasons given above are understandable on a surface-level. However, they’re the fastest answers to complex questions.

Sales is a numbers game, but there’s a strong human element to success. Finishing your daily cold calling list is super-important to making quota, but staying motivated and being a functional team-player are also vital.

Reason one displays a lack of trust in your sales reps and a lack of confidence in your sales training and process. Transparency surrounding numbers will dissolve the trust-gap between management and employees. When everyone feels they’re on the same team, working toward the same goal, they’ll be encouraged to put in the extra hours needed to succeed.

If your team is still unable to achieve quota, you have to reexamine the individual inputs of their workflows, find what’s wrong, and work it into their training. Individual issues can be solved with personalized attention. You’re busy, I know, but really listening to your sales reps’ concerns in weekly (and ad-hoc) meetings can help put underperforming reps back on track.

Reason two ignores the main reason people get into sales: THEY WANT TO SUCCEED! The threat of repeatedly missing quota (and potentially being replaced) does not create productive salespeople. It fosters fear and contributes to a toxic environment where attrition rates soar.

You know what is a great motivator for sales pros? MONEY. Give them accurate numbers and pay them more when they overachieve.

New business is a paramount metric, particularly at venture-funded tech startups. Giving your reps their hard-earned money is a small but important investment, and it will grow your customer base faster.

This is the better long-term play. Guaranteed.

Reason three. I’m lucky to be working at a fast-scaling, hyper-growth SaaS company. Securing a realistic budget isn’t my most immediate concern. However, this is a luxury I know not all sales leaders have.

By creating accurate budgets you let your sales team hit quota (without also giving your CFO a heart attack). You’ll have enough money to pay out what’s due and build excitement amongst your sales reps.

Like I said before, paying your sales reps a fair amount is much more desirable than hiring and training a new team after your current one either falls short or quits due to stress.

Published on September 10, 2019.