{"id":957,"date":"2015-10-29T12:12:43","date_gmt":"2015-10-29T20:12:43","guid":{"rendered":"http:\/\/bobbacon.net\/blog\/?p=957"},"modified":"2022-02-02T19:34:58","modified_gmt":"2022-02-03T03:34:58","slug":"how-to-convert-your-regional-targets-into-better-rep-quotas","status":"publish","type":"post","link":"https:\/\/bobbacon.net\/blog\/archives\/957","title":{"rendered":"How to Convert Your Regional Targets into Better Rep Quotas"},"content":{"rendered":"

\"keep-calm-and-achieve-your-goals\"<\/a>Let\u2019s assume for a minute that your Board of Directors and executive leadership have agreed on a strategy for the coming year. This strategy usually includes specific strategic goals (e.g. revenue targets). Let\u2019s further assume that your Finance organization has converted these revenue targets into the bookings required to achieve those targets. For those of you on a calendar-fiscal this is the time of year when you are faced with the prospect of setting sales quotas across your organization based on global\u00a0and regional\u00a0bookings targets. Having done this a few times I have constructed a flexible model you can download and use to create rep level quotas that have better\u00a0credibility\u00a0throughout sales and sales management.<\/p>\n

So what makes this model so special? \u00a0Why should Sales Operations or Finance professionals take the time to explore this model instead of just \u201cdoing the math\u201d themselves? \u00a0This model is designed to be distributed to every sales manager, allowing them to customize quotas based on their experience, assumptions uniquely relevant to their territory and their hiring plan.\u00a0\u00a0It gives the sales manager a sense of control since they can customize the quotas of the individuals on their team while retaining the integrity their team target.\u00a0 In one situation we received more street quota from the regional managers than we asked for, by nearly a million dollars!\u00a0 The model definitely helps to get buy-in from your regional managers regarding their ability to make quota.<\/p>\n

Once sales leadership has finalized their\u00a0discrete\u00a0quotas then\u00a0Sales Ops or Finance\u00a0can roll up the numbers\u00a0into a global master file and determine the quotas for those\u00a0players on team numbers.<\/p>\n

The model as presented here\u00a0covers two product families and includes provisions for reps to be responsible for selling either or both of them. This two product scenario is intended to address the sales force of a newly acquired software company when, in order to meet the sales goals of your combined companies, you need to retain their sales team focused on what they know how to sell but you also want your existing team to carry some quota for the new product.\u00a0 This is a fairly common occurrence in the\u00a0software industry.<\/p>\n

\"Quota<\/a>The section of the model on the left is to capture those average values that will drive the\u00a0starting quotas for reps focused on product A or B,\u00a0or a blended quota for both products. The numbers in blue font are editable while the red font are calculations.\u00a0 To complete this section\u00a0the sales manager\u00a0needs to estimate how many deals will close and the Average Contract Value(ACV) by reps focused on either product line A or B or both. If you organization doesn\u2019t have multiple product families then simply set product B to zero.<\/p>\n

Also on the left side (not shown above) is a place to enter the expected quarterly ramp for each product family.\u00a0 This\u00a0is a combination of\u00a0a seasonality adjustment (e.g. summer in western Europe or September in the US federal space) as\u00a0well as a market penetration ramp.<\/p>\n

\"\"<\/a>The right side of the model is comprised of multiple\u00a0columns of\u00a0variables\u00a0that affect their\u00a0quotas (one row per discrete sales rep).\u00a0 The\u00a0starting values in columns O through AN are initially based on the data entered in the left section of the model but there are additional\u00a0“levers”\u00a0that allow the sales manager to customize the quotas on an individual basis.\u00a0 The customized quotas are rolled up, discounted for over-assignment,\u00a0and compared with the original regional\u00a0target in real time so the effect of any customizations can immediately be determined.\u00a0 The sales leader can\u00a0customize each\u00a0rep’s quota\u00a0based on the following parameters.<\/p>\n

    \n
  1. What product(s) the reps will sell (Product A, Product B or a blend of both).<\/li>\n
  2. What quarter the rep starts working\u00a0(0=already working; 1-4 for their starting quarter and 5 if the row is not used and is to be left blank.<\/li>\n
  3. Adjustments (+\/-)\u00a0by product line to the annual quota to account for inequitable territories.<\/li>\n
  4. The expected\u00a0performance\u00a0of the individual (as a percent of quota)\u00a0for the year overall.\u00a0 This variable allows the sales manager to see the effect\u00a0on his regional target\u00a0by a rep hitting more or less than 100% of quota.\u00a0 This should be reset to 100% before quotas are finalized.<\/li>\n
  5. Estimated attrition\u00a0quarter (1-4) that\u00a0a rep may leave the company.\u00a0 Again, this should be reset to 5 (no attrition) before quotas are finalized.<\/li>\n<\/ol>\n

    As you\u00a0can see the value in this model is less about setting quarterly quotas that roll up to exceed the regional target and more about the sales leader having\u00a0a sense of control\u00a0to build the quotas from the ground up and test them using multiple scenarios which makes for better informed quota decisions.<\/strong><\/p>\n

    A\u00a0few additional points. There may be more than one sales role included in the model but all must be what are commonly known as discrete quota carriers; that is, the sum of their quotas covers all of the bookings that roll up to the sales leaders quota. Additional rows of individual quotas can be added by the \u201cfill down\u201d functionality in Excel as long as you adjust the sum formula at the top of the rows. Finally, only the blue shaded cells should be edited by the sales manager.\u00a0 Click here<\/a> or on\u00a0any image\u00a0in this post\u00a0to download the Excel model and\u00a0see the color legend in the upper left corner.<\/p>\n

    I have done my best to test this model but I can\u2019t guarantee its accuracy under all conditions. If it\u2019s anything like my last commission model<\/a> which had thousands of downloads\u00a0I know you will contact me with any corrections or suggestions to improve it and I will update it accordingly. \u00a0As always your comments are welcome!<\/p>\n

    Cheers!<\/p>\n

    Bob Bacon<\/p>\n

    *** UPDATE ***\u00a0\u00a0\u00a0 An improved model is available for download\u00a0from this article<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

    Let\u2019s assume for a minute that your Board of Directors and executive leadership have agreed on a strategy for the coming year. This strategy usually includes specific strategic goals (e.g. revenue targets). Let\u2019s further assume that your Finance organization has … Continue reading →<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_s2mail":"no","footnotes":""},"categories":[23,4],"tags":[100,103,11,93,29,12],"class_list":["post-957","post","type-post","status-publish","format-standard","hentry","category-sales_compensation","category-sales_ops","tag-capacity-plan","tag-capacity-planning","tag-commissions","tag-quotas","tag-sales-compensation","tag-variable-comp"],"_links":{"self":[{"href":"https:\/\/bobbacon.net\/blog\/wp-json\/wp\/v2\/posts\/957","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bobbacon.net\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bobbacon.net\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bobbacon.net\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/bobbacon.net\/blog\/wp-json\/wp\/v2\/comments?post=957"}],"version-history":[{"count":38,"href":"https:\/\/bobbacon.net\/blog\/wp-json\/wp\/v2\/posts\/957\/revisions"}],"predecessor-version":[{"id":1401,"href":"https:\/\/bobbacon.net\/blog\/wp-json\/wp\/v2\/posts\/957\/revisions\/1401"}],"wp:attachment":[{"href":"https:\/\/bobbacon.net\/blog\/wp-json\/wp\/v2\/media?parent=957"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bobbacon.net\/blog\/wp-json\/wp\/v2\/categories?post=957"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bobbacon.net\/blog\/wp-json\/wp\/v2\/tags?post=957"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}