Sales & Marketing: Chained to Quotas?
As I facilitate strategy and implementation sessions this time of year, I’m reminded of a common bad habit at many companies that limits their growth. It is the habit of setting quotas for producers across the company. It is not uncommon to see a significant increase in sales at my client companies that get rid of this practice that can often be an unnecessary governor on the potentials of the sales and even other teams with production responsibilities.
What do your quotas represent today? Do they represent what is excellent in sales achievement or what is the minimal expectation? And what does a focus on quotas do for sales achievement? In my experience, quotas do one thing excellently: foster mediocrity. In other words, quotas help teams to reach the “cream of the crap.”
You have probably heard of sandbagging, but unless you have worked in or around sales, and experienced first-hand mediocre management and quota systems, you have no idea how often it happens and how much it limits the potential for growth in a business. Most of your employees, but especially your sales team, has the desire to know that they are safe in their job. In their quest for security, they will quickly trade the potential for the team’s optimal growth in exchange for their own personal security. This is why they will do whatever it takes to fight an ever-rising quota, or to ensure that next year, quarter or month is “off to a good start” with pieces of business that are already “in the bag.”
On one occasion, I found that the number one sales producer had more than half of his next year’s sales quota sold before the end of December. Once we released him of the chains that the quotas and other “productivity enhancement” systems were causing him, he more than quadrupled sales.
This is another reason why the power of a greater purpose via an inspiring mission with meaning can be a powerful force in riveting a team’s focus on the greater good of their team as opposed to their individual desires.
Your job is to consider how you can build the sense of security that your team legitimately has in exchange for getting the most from them. Think about what you can justifiably promise, protect or deliver to your team that will enhance their sense of security.
Obviously, there are times when the fire must be lit underneath them, and jobs may be on the line, but plenty of well-published best practices suggest putting underperformers on a performance plan or getting outplacement for employees ill-suited to their role. Our focus here is on getting sales producers and others to focus on the highest potential production, thus implementing the optimal amount of innovation for greatly accelerated growth.
To do this, you must facilitate the creation of the “Third Number”—a stretch target in almost every area of the company. You do this by asking, “What is the highest potential target we might be able to deliver in regard to this objective? This might assume positive outcomes in the economy, suppliers, future innovations, and so on, but if all the stars were to align, what might we be capable of delivering?”
As you kick off the New Year, consider kicking the top off of the production targets of both your company and your producers.
Build plans that encourage innovation by raising the bar and aim toward what is possible vs. what is probable.