We know a Sales Executive who once found what he thought was the equivalent of the Glengarry leads on steroids. It was early February and he was in line to close the two biggest deals in company history. For him, it meant retiring annual quota with almost 11 months left in the year!
But it was not to be. The call came in from his CEO one week before the deals would close informing him that “we’ve decided to go in a new direction”. He was summarily terminated without cause over the phone by the CEO one week before the two deals would close.”
Yes, this is an extreme example of how a high pressure focus on one’s quota can sometimes blind us to what’s going on around you. It does however happen more often than most people realize. Corporate sales quotas are a way of life for most sales people and frequently it can lead to an uncomfortable life.
The fear of not making quota and the potential job loss that may accompany it is undoubtedly even more common.
I have to admit that at this point in my career I am not held to a quota. At the same time, having spent over 25 years in sales, I am in a position to empathize with both sales people and their clients who are both affected by the sales person’s quota. (It is also my good fortune that my job allows me to help both the sales person and the client to navigate this issue, which we will discuss at a later date)
Numerous studies have found that sales quotas can lead to a variety of problems for both client and sales person, including the following:
– Quotas can add significant pressure to the salesperson, which may affect his ability to sell with relaxed confidence and enthusiasm.
– Possible high turnover if talented sales people fail to meet quota.
– Potential for salespeople to get too aggressive with prospects. Salespeople motivated too heavily on sales volume may naturally become pushy and persistent, rather than helpful, with prospects.
What we are left with is the question of how to manage quotas in order to avoid running into these highly counterproductive issues. With regards to the technology sector, recent recommendations from Deloitte Consulting Groups, Michael Herman include the following:
– Shared quotas across multiple sales roles; Account Manager, Product Specialist, Channel Managers. Thus allowing for greater shared responsibilities and accountability.
– Effective quota setting in technology companies requires that sales be tracked at multiple levels (e.g., product, territory, and region). The primary example is the increased use of third party channel partners where tracking sales and giving credit where credit is due is becoming even more challenging.
– A recent trend in the high-tech sector is the increased use of subjective measures (e.g., MBOs) with longer time horizons for business development sales reps. These sales reps are engaged early on with customers to gain insight into demand trends earlier on in the product life cycle. The idea is to get their sales reps closer to end users to partner up the product life cycle chain, with the ultimate goal of seizing “design win rights” early on in the sales process. With design win rights, these high-tech companies can become market makers for new product functionality instead of followers.
We share Mr. Herman’s belief that these approaches can be highly successful and have experienced our own personal success with the first two examples. The third approach, while we have not seen this in action, seems almost intuitive in the way it engages the customer on a different level, early in the sales cycle. We just wonder are today’s technology sales leaders willing and able to try something new?