When running a startup business, you need to have some form of metrics to see whether you are succeeding in your efforts. The sales quota is one of the most popular of these metrics. But how do you use it exactly? And how can you effectively meet the quota you have set? Let’s take a closer look.
How Sales Quotas Work
At its most basic, the sales quota is the specific number of sales that individual agents or your whole team must meet at a given period. Note that you don’t measure these just in terms of monetary value. The quota can also be in other forms like the number of units sold or the actual number of customers serviced. It is also time-sensitive and typically resets after the specified period.
Sales Quota Vs. Sales Goal vs. Sales Target
One thing to note here is that sales quotas and sales goals are not the same thing. The sales goal is the larger target that your startup business hopes to achieve. For example, you might be looking at a goal of increasing sales by 20% at the end of the year. Meanwhile, the sales quota is just one of the series of actions that you need to accomplish the goal.
You might also mistake the sales quota for another metric, the sales target. There is some overlap between the two. But their main difference is that the sales target is exclusively for teams. It serves as a bridge between sales goals and the sales quotas you will set for each agent, helping you create a more attainable goal for them.
The Importance Of Sales Quotas
Beyond giving you a definite means of measuring the effectiveness of your sales strategies, quotas also play other essential roles in sales management. These include:
- Monitoring and regulating selling expenses
- Revealing possible bottlenecks in the sales pipeline
- Highlighting successful reps and effective selling techniques
- Ensuring that compensation plans for sales agents are fair
These different functions will help you determine what kind of sales quota to set up for your agents. You can also decide how that specific quota will tie up with your larger sales goals and how you will achieve it.
Setting Your Sales Quotas Right
As mentioned, the first step in achieving your startup business sales quota is choosing the right one to use. There are five types that you can choose.
- Activity quota: This type of quota has agents accomplishing a set number of activities, such as making a certain number of calls.
- Volume quota: Sales reps are required to close a set number of qualified leads regardless of the size of the deals.
- Revenue quota: The revenue quota requires the team to reach a gross revenue figure, regardless of the number of deals needed to reach it.
- Profit quota: This type is similar to the revenue quota but focuses on the net profits after subtracting the overall cost of selling.
- Forecast quota: In this type of quota, you set the target figures based on the historical performance of the team and individual agents.
Depending on the type of sales goals you have, you can use multiple types of quotas. Additionally, you can create a combination metric that would better match your needs.
Specifying Your Quotas
Once you have selected the sales quota type to use, you can set the figures that your team and individual agents need to accomplish. There are two methods that you can set up these quotas. You choose the approach based on which would match your sales goals.
Top-Down Approach
In the top-down approach, you set the quota for sales agents based on the current revenue needs of the startup business. This approach involves looking into the various quantitative trends in the market and the revenues needed to reach the business’ targeted growth. From there, the sales team has the responsibility to meet the quotas for the company to get the desired revenues.
Bottom-Up Approach
This approach goes the other way. Here, sales managers set the quotas based on the agents’ past performances. You then extrapolate the target revenues from these sales quotas. This approach will let you set a more realistic goal for both the agents and the company. The strategy also helps keep agent morale high.
A Few Important Pointers
Whichever of the above approaches you choose, the quotas you set need to be feasible based on the company’s current sales activities. This will help your agents buy into the targets you have set for them.
It is also essential that your agents have a say on these sales quotas. After all, they are the ones who will be pursuing them. They will be able to tell you which of the figures are attainable based on their first-hand experience. Get the inputs of other departments involved as well, like finance and marketing, to refine your figures better.
Lastly, the sales quotas that you set should help reinforce positive behaviors. Your agents should not be forced to cut corners just to achieve their quotas. Instead, these should be built based on proven strategies to help agents pursue them more effectively.
Helping You Reach Your Startup Business Sales Quotas
When you outsource to Virtua Solutions, you will primarily be getting us to help reach your larger sales goals. But we can also help your team better define and meet sales quotas.
For starters, we can help you scale your current sales team faster. With that, you lessen the burden on your internal sales agents by assigning a smaller quota. We also provide a certain amount of flexibility, letting you expand or contract your team as the goals change. In turn, this also gives you greater flexibility in creating your quotas to match these changes.
Increasing Your Startup Business Team’s Capabilities
Beyond being a force multiplier, we can also help boost your sales team’s capabilities. As part of our effort to help clients, we have invested in various sales enhancement tools. We make these tools accessible to your team, giving agents more resources.
And our largest contribution to helping your agents achieve their sales quotas is our expertise. Our team of agents has years of experience with different industries. This allows us to develop better strategies that fit your business needs. We then share this knowledge with your agents through various means. One is by directly teaching them through regular interactions. We also help you craft a training program they can participate in.
Achieve Your Startup Business Sales Quotas With Virtua Solutions
When properly crafted and implemented, sales quotas become more than just a means of reaching your startup business revenue targets. They also become a powerful tool for improving and enhancing your sales agents’ performance. And we are always ready to help you in that endeavor. Sign up with us today and reach your business goals faster.