Calculating an appropriate, achievable and stimulating sales quota for your team can be a difficult process. By mobilizing yourself with the right information about the types of quotas available, you can set a quota that takes into consideration your specific goals and the unique characteristics of your team. Here are the four most common varieties of sales quotas:
Fixed Allocation Sales Quota
A fixed allocation quota is a flat target that is set for the entire sales team. This type of quota brings a sense of equality to the sales team, however it can become problematic if different reps are serving different territories with different sales potentials. Companies who have limited data or shorter sales cycles typically use this type of quota.
Historic Allocation Sales Quota
A historic allocation quota is used when sales representatives are given a target based on the previous year’s numbers. In general, this variety of quota is simplistic, however disputes may arise when top performers are attempting to not only maintain, but achieve higher numbers than they did the year before, which can result in unrealistic expectations.
Adjusted Value Sales Quota
An adjusted value quota is similar to historically allocated quota; however this method factors in elements such as the current market opportunity, competition or the sales reps individual experience. Not only does this type of quota allocation work for sales teams with varying skill levels, but it works for organizations that have accurate market statistics.
Bottom-Up and Top Down Sales Quota
This method reflects the potential of all accounts vs. how much they can sell, and combines this information with sales expectations. Although complex, this method of setting quotas is the most complete and is typically used by sales teams with a plethora of data and a strong performance standard.
When choosing a sale quota for your team, it is important to remember that the best solutions depend on the goals of your sales team and the depth of information available. Customize a quota that works best for you by combining the methods to accomplish your specific goals.
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