Tag Archives: Motivation

Sales Models: Transitioning From Sales Stars to a Sales Machine

Joe Clarkson interviewed Mark Flavin and Donya Rose recently on the fascinating topic of picking a selling model, choosing between “Sales Stars” or a “Sales Machine.” As the tag line says, it’s a choice between autonomous sales superstars vs. team-oriented process-driven sellers.

There’s no one perfect answer for every business, but there are better and worse answers depending on the nature of the sale, the market position of the company, and the coverage model.

Click through for a good read on a perennial challenge.

Adjusting quotas mid-year. . . Should we? And if so, how?

The problem

Sometimes our sales people lose business due to factors outside their control (e.g., customer bankruptcy, mergers, incompatibility of our offering with their requirements). Do we reduce quotas when this happens? 

Why do you have a sales incentive plan?

The first thing to keep in mind is that the sales compensation plan, and the quotas, are in place to do something very important:

Provide motivation and focus for sales people so that they deliver more and better results than they would have without a sales incentive.

Of course this needs to happen at the right cost of compensation for the business, and with fairness among sales people in mind, and in a way that helps attract and retain key talent, and without encumbering the company with excessive risk or administrative burden, and. . . But it’s good at these moments to go back and remember the main objective of our efforts with sales compensation, as this will help us find the right answer in tricky situations.

How much “lost” quota before an adjustment

So, with the goal in mind, it’s usually best to adjust the quota if it appears that failing to do so would undermine the motivational value of the plan. Usually this happens when a meaningful chunk of the sales person’s quota is “lost” due to forces beyond their control.

How much is “meaningful” depends on the degree of accuracy in the quotas.

  • If the role is primarily new account development, then you’d expect substantial variability in quota attainments (say, 80% of people end the year between 50% & 150% of quota). In this case, you might adjust the quota if as much as 30% is “lost.”
  • However, if the role is primarily account management and quotas are therefore more accurate (say, 80% of people end the year between 80% & 120% of quota), you might have a threshold in the plan of 75% of quota, and so might need to adjust the quota for “lost” business of only 10% of quota.
How much to adjust

The lost business should free up some sales capacity, allowing the sales person to pursue other opportunities. So clearly 100% of the lost business would be too much to adjust out of the quota. Something between 30% and 70% of the lost amount would probably be reasonable as an adjustment, depending on the length of the sales cycle and the degree of penetration of the assigned accounts/territory.

Managing the adjustment process

Businesses that make a regular habit of adjustments will find they receive more and more requests for adjustments unless they have an adjustments policy and process.

An adjustment policy should cover:

  1. What the criteria are for considering an adjustment (e.g., at least 25% of the annual quota is no longer attainable due to circumstances outside the control of the sales person)
  2. What the process is for requesting an adjustment (e.g., submit a request to your manager, who will then need to approve it and forward it on to the sales compensation committee for review at the quarterly meeting)
  3. Likely adjustment outcomes (e.g., the sales compensation committee may approve a quota adjustment of up to 50% of the lost business if they feel it is warranted).
What do other companies do?

WorldatWork, along with Better Sales Comp, completed a Quota Practices Survey in 2012. Click through to find answers to questions about prevalent practices.

How do we ensure our sales comp plans help us retain top performers and help us weed out the under-performers?

The best and highest use of a sales incentive plan is to provide the motivation and focus to make your almost-there sales people “get there” and to help your best performers produce even more. It’s nearly impossible to design a plan that does this well and is also effective at weeding out the underperformers. Let the plans do what they do best and pull your solid folks along to higher levels of contribution, and use your performance management process to send a clear message to the underperformers – quickly.