Wednesday, August 12, 2015
What Is the Difference Between Sales Goals & Quotas.. Technology & Telecom Tips for Sales
Sales is one of the driving functions behind organizations. Sales representatives and regional managers present products and services to customers and help close deals to generate company revenue. To create a successful sales strategy, management sets annual, quarterly and monthly goals and quotas to effectively monitor sales activities and achieve results. Establishing goals and quotas also helps senior management diagnose challenges facing certain regions and assist sales managers during the sales cycle.
Sales goals differ from sales quotas because goals relate to overall company objectives and long-term growth. Quotas point specifically to revenue achieved by a certain date. Sales goals can include expanding into new geographic regions, acquiring a certain amount of customers or building and implementing referral programs to retain and recruit clients. Moreover, reps can develop individual goals that deal with their territory or customer accounts. For example, sales teams may create a sales campaign to improve performance or set tactical goals including number of cold calls and prospects generated within a specific period of time.
By setting sales quotas, executives and directors communicate to salespeople the amount of products or services they expect to sell by a certain date or within a certain time frame. Some salespeople set their own sales quotas based on what they believe they can do, but usually managers and business owners set quotas. Typically, sales quotas are based on factors such as customer purchases, hiring, advertising revenue or company expansion. Sales executives and managers also look at past sales performance, the cumulative skills and experience of sales reps and as the state of marketplace. For example, sales reps may be assigned different quotas based on their seniority or individual performance in previous fiscal quarters. Related Reading: What Problem Does the Setting of Quotas Present to Both the Company & to the Sales Representative?
A benefit of setting sales quotas is that sales reps have a clear idea of the amount of revenue they need to achieve. It also provides them with a time frame on when they meet their quotas. This not only motivates sales teams, but also provides organizations with more control over sales activities. It also establishes performance standards and helps management rate and evaluate employee performance. Goals provide overall direction for sales employees and define individual tasks that contribute to larger company objectives. Setting goals also helps management plan and coordinate activities with other departments, such as marketing, when executing and measuring sales campaigns.
One of the primary goals for management is to set quotas that are achievable and are based on a combination of a variety of factors. SurePayroll president Michael Alter told Inc. magazine that “Since you can never win setting quotas, your first goal should be to try to minimize your downside, and set rules that drive the behavior of your sales reps to align with your larger goals.”
By Bridget Austin
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