3 Smart Ways to Set Sales Quotas for Next Year
00:13 Michael Alter: As we're getting to the end of the year and looking towards 2013, people are always thinking about "how do I set my sales quotas for the year, how do I incent my sales team?" I have a couple of rules of thumb that I would live by which I think are very helpful as you're doing that planning. It's important to make sure that whatever incentives you put in place, you align your sales team's incentives with your incentives and the incentives of the business. Whether that's revenue, whether that's gross profit, whether that's net profit, whatever that is, make sure you're paying for that. Because the number one way to mess up sales quotas is to pay your sales team for things that don't pay you.
00:48 Alter: Second thing is, depending on the nature of your business, I found it's very useful, especially in a growing business to set my quotas quarterly. I'm really not that smart to predict a whole year, but I'm reasonably good at predicting a quarter. So, giving yourself the flexibility to change them is important. And finally, make sure that when you set those quotas, you have to demand year-over-year growth from your sales teams. You don't want to reward your top rep because they sold more than everybody else, but they sold less than they did the year before. That drives the wrong culture. The number one thing is to make sure you're rewarding people for sales, but also sales growth year-over-year.
MICHAEL ALTER | Columnist | President of SurePayroll
Michael Alter is president of SurePayroll, America?s leading online payroll service. He received an MBA from the Harvard Business School and holds a bachelor's degree in economics from Northwestern University.