Eat the elephant one bite at a time - and plan the meal carefully
Almost everyone understands the value of a sales quota - it establishes objective goals, measures productivity fairly across the sales team, and puts clearly-defined accountability in place. But the downside of a quota is less apparent and more rarely discussed -namely, that the relationship between the quota and the rep’s day-to-day activities is very unclear. Sure, the sales rep who has a million-dollar annual quota knows that the total qualifying revenue of her closed deals must add up to a million dollars at the end of the year… But what does that tell her about how to spend Tuesday morning? A sales quota is the proverbial elephant that must be eaten … but few know how to carve up, portion out, prepare, and serve that elephant!
And this, in turn, is one of the chief reasons for the well-known year-end crunch. The sales rep realizes that he has a a third of the year left - and two-thirds of an elephant left to eat! Best case, he closes his number with a frantic and not particularly enjoyable sprint at the end of the year. To do so, he probably discounts more than he might otherwise, puts a sour taste in a few prospects’ mouths by rushing them, and may even close a highly questionable deal or two with assurances about the product roadmap that may not pan out. Worst case, he comes up short of his number, leaves commission dollars uncollected, misses out on a bonus or a Sales Club trip, and may even put his job in jeopardy.
Thus the importance of ‘eating the elephant one bite at a time’ - and carefully planning just how many bites that means over the 230 or so business days in the year. In order to do this kind of careful planning, of course, a rep has to be willing to and able to work through all of the business metrics that make up her year’s worth of closed business: Based on the average deal size over the last few quarters - and also taking into account the average deal size in her actual pipeline - how many deals are needed to fulfill her quota? Based on the average sales cycle length over the last few quarters, what pacing is going to be required? Based on this rep’s personal close rate, how many total Opportunities must she be working during the course of the year, and what ratio of inbound to outbound can produce those Opps? And based on the number of needed outbound Opps, how much prospecting does she need to do each week?
The beauty of this kind of math-based ‘backwards planning’ is that it applies to virtually any business. It doesn’t matter whether you’re closing million-dollar deals a few times a year on a five million dollar quota, or closing four-figure deals every week of the year on a half-million dollar quota - the process is the same. Regardless of the exact numbers or pacing involved, the goal of this kind of planning is two-fold: first, it gives the sales rep confidence that he knows exactly what he needs to do on a daily, weekly, monthly basis in order to meet or exceed his quota; and secondly, it greatly enhances his chances of doing so.