You Have Your Sales Quota. Now Blow through It!

by Mike Leeds

First, let’s define it.

“Quota” and “goal” — two words often used interchangeably in the sales world defining different levels of results. Please consider the following definitions when setting sales revenue numbers for 2019.

“Quota” (budget or objective) defines the minimum sales expectation for the year. Reaching a quota could result in maintaining employment status and meeting established compensation levels. Most managers have their own team quotas and then spread those numbers among the members of their sales team. Self-employed and independent sales professionals should also set personal quotas for the year. These numbers can be used to track progress, gauge profitability, celebrate success and forecast future months.

“Goal” is defined as an aspirational number greater than the actual quota. Reaching a goal may result in increased compensation and recognition levels, and a greater sense of personal accomplishment. For example, a sales representative who has a quota for 2019 of $1,000,000 in new revenue may want to consider a goal of $1,200,000 for the year. If a $100,000-per-month target is attained, the quota will be exceeded by October, leaving two months to accomplish the personal goal.

If you just aim for your quota and you miss, you may find yourself below the minimum expectation. By aiming for your goal, you’re looking beyond the minimum expectation. If you happen to fall just short of your goal, you should still hit your quota.

Second, let’s execute it.

Below, are two simple methods to consider “chunking down” an annual sales quota/goal (target) number to a monthly number to ensure short-term success and create a sense of urgency.

The Monthly Technique: Divide your annual sales target number equally into 12 months. For example, a $1,000,000 annual sales target for 2019 translates into a sales target of $83,334 per month. This methodology lets you focus on more manageable short-term targets.

The Current-over-Prior Technique: This accounts for any seasonal impacts a business experiences by directly comparing a month in the current year with the same month of the previous year. For example, last January’s sales results were $128,000, which calculates to 16 percent of 2018 total sales. For 2019, we would assign January’s sales target at 16 percent of this year’s $1,000,000 annual target, equating to $160,000. This methodology is then repeated for each month going forward.

Using either of the above techniques, you can apply a target revenue shortfall from any month to the next month in the year to stay on track. For example, April’s target is missed by $20,000, so May’s target should be increased by $20,000. Additionally, you can “over assign” a higher revenue number to the monthly sales targets to cover vacations and holidays. For example, increase all monthly targets by 7 percent to account for the short sales month of December. These actions enhance your chances of exceeding your sales quota and maximizing your sales commission earnings potential.