Why Quotas Aren't the Most Important Number for Startup Sales Teams
I’ll never forget the first time I was assigned a sales quota. I was six months into a sales role at Google in which I on-boarded and managed the accounts of social networks running AdSense ads. Our key metric was customer satisfaction and retention. After a few months, I was starting to get into a groove. And then, our team was assigned a new manager who put the team on a quota, sending me into a tailspin.
I was daunted by the quota. I asked myself if I might ever be able to hit the number and doubted that I could. I fell into a crisis of confidence. How would I add $X of additional revenue this year?
I remembered my quota trauma while reading an article by Jason Jordan, a sales management training consultant, who wrote about the three kinds metrics that matter for sales teams: Business Results, Sales Metrics and Sales Activities.
Business Results are the revenue growth figures for a company at the highest level. Sales Objectives are the goals of each sales team: acquiring brand-name customers, growing customer accounts or hitting a quota. Sales Activities are outbound sales calls, writing account plans and qualifying leads.
Jordan makes a great point in his post, that the only type of metric sales teams can effect are the tactical Sales Activities. Unfortunately, most sales teams only measure Sales Metrics, so it’s challenging to diagnose why salespeople miss quota.
He argues sales managers should focus their sales teams on Sales Activities and measure those leading indicators in addition to Sales Metrics which are lagging indicators of success. In my interpretation, that means sales managers ought to set a quota, and in addition, outline a general plan (total number of calls, target sales sizes, conversion rates) for how to accomplish that quota. This enables the sales team to understand how they are tracking towards the Sales Metrics and allows them to diagnose where the sales funnels might be under or over-performing.
I’m sure the most successful sales teams have instrumented the Sales Activity metrics Jordan talks about, because it’s a very logical thing to do: dig deeper into the sales process to understand how to improve it. But I wish I had read Jordan’s post all those years ago.