(4 votes, average: 4.25 out of 5)
Loading ...Yesterday, CSO Insights released a summary of the results of their 16th annual Sales Performance Optimization study. The survey of 2,800 companies revealed that the number of reps making quota in 2009 dropped to 51.8% from 58.8% in 2008. This caused plan attainment to drop to 77.9% from 85.9%… And this is after 86% of the firms surveyed increased quotas for 2009.
This year, 85% of the firms surveyed have raised their sales rep quotas again.
Without seeing the entire survey, it’s hard to come up with good conclusions, but this seems to indicate that many companies failed to adjust their quotas mid-year. I am convinced that the 8% of the sales reps not achieving their quotas because of the economy was not the most motivating experience.
The press release concludes by saying: “higher quotas need to be accompanied by increased investments in sales in 2010 or we may be looking at even worse sales performance numbers next year”.
hmmm…
What I have observed is not a great deal of re-goaling, but more on the territory change side. If you had 100 sales people with 1 million each, but expected revenue to fall to 80 million, quota was kept the same, (or raised) but headcount was reduced to 80 and territories re-aligned. I can only support that from anecdotal information.
It would be interesting to do a poll to see how many companies expect/want their sales people to make quota. What is the expected distribution curve?
I agree with Dave that many sales organizations dealt with the downturn by culling their sales teams, enlarging territories, and doing what they could to keep their “keepers” productive, earning and worth their keep to the company.
The general inclination in the face of uncertainty is to set quotas at the highest reasonably believable level, then reserve the right to do “something” about the under-earning if quotas turn out to be too high. The “something” is all too often a SPIFF to add comp and create a selling frenzy at year-end (or quarter-end).
So many of our comp plans are goal/quota-based, and we have expectations about what our performance distributions should do. In the face of uncertainty, we should expect less accuracy in the quotas resulting in wider performance distributions. Because of this, comp designers must pay careful attention to affordability across the full range of likey levels of quota attainment. And careful attention to pay levels and flight risks must also be maintained to ensure good awareness of the effects of these compensation fluctuations on retention of key talent.
It’s a tricky moment in compensation management - with some good puzzles and myriad wrong answers…