Sales Compensation Blog

The chart below shows an example of the performance distribution curve for a successful sales organization, where about 70% of the sales team is making or exceeding quota. Attainment levels are distributed evenly along a bell curve, with just a few underperformers and overperformers.

 

 

 

 

 

 

 

 

 

In our most recent web seminar we asked our attendees if their reps were making quota. Most had a majority of reps below quota. Compared to the evenly distributed bell curve above, their performance distribution curves may look more like the one below, with just a few sales "superstars", and everyone else underperforming.

 

 

 

 

 

 

 

Sales reps want to win and judge themselves on achieving specific goals. So when they don't make quota, they become highly discouraged and unmotivated. So if your organization's attainment curve is similar to the one above, how do you turn a team of stragglers into a team of winners?

1. Evaluate the sales team skills. Do the reps have the proper skills and training to do the job? You may need to provide sales or product training for the reps.

2. Make sure the quota is realistic. Can most of the reps make it? Is the growth rate or recover rate realistic? Don't be optimistic when setting sales quotas. To keep your sales reps highly motivated, design a sales compensation plan so that at least 50% of your reps reach or exceed quota.

3. Review quota allocation. Did the company give the managers' one number and the reps a higher number? You should strive to fully allocate your quota. That means if the company has a $10m goal and 10 reps, the reps quota should be $1m each - not $1.3.

4. Evaluate your quotas and territories. The reps that are significantly over their quota may just be in a very rich territory and they may not be able to fully support the potential customer base - leaving sales on the table.

5. Look at your internal processes. Are they slowing down your reps? Are the reps spending valuable chasing paper within your organization when they should be making sales calls? Time to evaluate the process.

6. Analyze the lead generation engine. Determine if it's creating enough of the right types of leads. Is it matching the strategy that was used to create the quotas?

Whether your sales comp plan needs adjustment or other factors come into play, your efforts to create a team of winners, will (literally) pay off.

  

To learn more about motivating your team, join us for a free webinar on April 6,  "Create More Sales Superstars and Exceed Your Corporate Goals". 

 

It is critical that you align sales plans with corporate strategy.  That's easier said than done, but following these four steps will get you thinking in the right direction.

First, the organization needs to agree on the corporate strategy that will be delivered though sales.  Is the goal to increase revenue, further penetrate the market, increase profitability, improve retention, sell long term contracts?

Some of these goals are mutually exclusive and, unfortunately, you can't have it all.  You need to ensure that the strategy doesn't compete with itself. Also, look at the number of goals.  If you try to focus on too many of them, they get diluted and the company will not achieve any of its objectives.

Next, see if the corporate strategy differs from last year's.  If the strategy will remain unchanged, did the sales plan deliver the desired results in the previous year?  If it didn't, search for the disconnect and adjust your sales plan.  Analyzing your team's performance distribution may point to the source of your problem.  ( See our post on "Building A Performance Distribution Curve On Your Sales Team". )

Once the corporate and sales strategies are defined, determine how the various job roles support the strategy.  Defining job roles goes beyond a focus on revenue numbers.  A change in strategy may lead to adding job roles to focus on developing channel partner relationships or separating new sales from renewal sales.

Lastly, look at measures within the roles. Measures are things a rep carries a quota or goal for. It is imperative that these measures align to the sales strategy.  With its visual approach, Makana's alignment view helps the plan designer ensure that the measurements support the corporate strategy and that the plans are aligned along job roles.

Below are two graphs that show two different sales teams quota attainment distribution. The graph is an important piece of analysis you should do before you set your quotas for next year. The graphs show the distribution of performance. The y-axis is the percent of reps and the x-axis is the percent of attainment so you can easily see how many are producing for the company.

The first graph screams trouble but is often what we see. In this case most of the reps have not achieved their quota while a few are well over. Unless you have a completely new team who haven't been in the position for the whole year, the possible explanations all require attention. These kind of curves can occur for three reasons:

• Your quotas and territories are out of balance. Your few top performers have rich territories and do not need to work as hard as others to find business. If you can't rebalance the territories, the quotas should be individualized to reflect a realistic opportunity.

• Your team has the wrong skills. Reevaluate the skills needed for the job and either train the team or make organizational changes.

• Your quotas are overallocated. Many executives overallocate the quotas so they have a better chance of reaching the company goal. However, it is demotivating to the team if they aren't able to reach these artificially high quotas. You are better off hedging your bet by making sure at least 60% are overquota. They will cover for those who don't make it and the team overall will feel like winners.

 The second graph is what you want. A nice bell curve where most of the team is successful.