Sales Quotas: Define 5 Ways

Setting realistic sales quotas are important to the success of your sales compensation plan. But, how do you determine the right quota amount ?

Ask yourself the following questions to formulate quotas that work.

1) What was the amount of your new account sales in the past 12 months?

2) How many properly qualified opportunities can a salesperson manage at one time?

3) What is the length of the average sales cycle?

4) What is the average close ratio?

5) How much is the average sales transaction?

Once a realistic quota is determined, set stretch goals and a commission plan that rewards your sales team for going the extra mile.

Setting realistic sales quotas are important to the success of your sales compensation plan. But, how do you determine the right quota amount ?

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Comment by Jason Monastra on January 18, 2010 at 11:30pm: Those are excellent questions to ask yourself but to determine the sales quota, one would need to determine a great deal more specific information. A few things to consider, not the quota as a company relative mark but an individual mark? Would you require the same from a new sales person as one with an established book of business and 10 yrs experience?

When looking at your business, you would need to identify the current state of your company. Is the company growing, is the business expanding or contracting its service offering, what is the overall company goal and where does this person fit into the sales strategy? One might consider the economic environment, the impact on the business model to both scale down and up the quota.

But I think the focus is specific to the professional, not a pre-determined quota. Develop a plan to determine the expectations of the person being held responsible with business development. Taking into the above and numerous other factors can assist in developing the right goal for the person, matching that to the company objective and showing a true earned value of the efforts.