Whether your company has a top-down approach or bottom-up approach, as long as you can track the progress, you’ll be able to crush your quota
Your company may have different approaches to assigning quota to the sales team but are you able to accurately track your progress?
Are you using some online tool to calculate your progress but still struggling to achieve your targets on time?
Firstly, let's discuss various sales quotas and why they are important for a company to grow and incentivize their sales reps!
Quota is normally in line with the company’s revenue goals. If a central team decides the sales quota, then it's more likely that your company is adopting a top-down approach. Top-down approach has its advantages and disadvantages! In this approach, sales quota is usually set by the company executives based on the company's growth targets combined with the market trends. It may also be a reflection of the investor expectations that company executives are trying to fulfil. The downside though is that the sales teams sometimes feel pressured to achieve over-ambitious goals (if that's the case).
"Flyte can help sales leaders with deep insights into client conversations. This can be helpful in making crucial decisions such as setting revenue goals and sales quotas"
Most companies adopt a bottom-up approach as they rely on the sales team’s expertise and market sense to make a judgement. However, sales leaders need to further validate the bottom-up numbers by understanding client’s sentiments and competitive landscape by analyzing sales conversations, where by the way, Flyte can help sales leaders with deep insights into client conversations. This can be helpful in making crucial decisions such as setting revenue goals and sales quotas. That's why, the management and sales leaders need to understand the baseline for a year that takes into account the growth expectations for a company and sales team's capacity to achieve certain goals. There can be multiple factors such as regional impact or market conditions or seasonality etc that play a key role in setting the yearly targets.
For top-down approach: Since company executives decide the quota in this case, sales team should be able to calculate how many leads they need to generate to achieve their assigned quota
Let's assume initial variables to begin with:
To track your progress, here is a simple calculation:
Now new deals got you $40K of revenue but you still need $10K of additional revenue to achieve your quota. So either you explore new opportunities or you can look into your existing deals to see if there is any upselling/cross-selling opportunity. This would depend on the sales cycle, type of product, client needs, pricing etc. You may need to strategically pick those existing deals that have potential upselling/cross-selling opportunities. Let’s calculate how many of those deals are needed to get to the quota:
Et Voila! there you have it!
For bottom-up approach: Since sales teams provide input in this approach, salespeople feel encouraged and incentivized to participate in goal setting. Let’s discuss the variables and how to track your progress in this case
Let's assume another set of variables:
Let’s calculate how individual rep needs to perform:
With an average of 4 new deals in the pipeline, one rep is able to make $40K (4*10K) of revenue. If we consider that a similar amount of upselling/cross-selling can be achieved by each rep (as stated in top-down approach), then a sales rep will be able to achieve $50K ($40K + $10K) in monthly revenue.
Looking for an automated model that can help you track your quota?
Feel fill out the form “Request a demo today” through this link and we'd be happy to share a detailed excel version!
Keywords: Sales, Quota, Track, Revenue, MRR, Growth, Deal, Sales Reps
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