When you hear the phrase “Show Me the Money” you will hopefully recall the movie,” Jerry Maguire,” and the scene between Tom Cruise and Cuba Gooding. The context of this scene is that Cuba Gooding’s character doesn’t want to hear promises, he wants to see the offer, the money. In this continuation of “Quota’s and Target’s and Comp – Oh My,” we translate “Show Me the Money” to “Show Me the Math!” The focus is now that you have the quota. How and what you communicate to the sales team is as critical as the number.
We continue the conversation on Quotas, Targets and Comp to provide leadership an opportunity to be more transparent and not the wizard hiding behind the curtain of the great and powerful Oz! The recent phrase “Quiet Quitting” comes to mind. While this term is new, the phenomenon is as old as time. We will look at how to address that in this section too.
The first part discussed “The Number” and differing thoughts and strategies on how to determine that. We discussed the Five Components of Quota Setting – Organizational Goals, Historical Performance, Market Potential, Sales Talent, and Sales Cycle. I purposefully leave some “white space” for the reader to fill in for themselves or do additional research as I never professed to have all the answers.
Now that you have the quotas, how you communicate them will be key. Now, we discuss the pitfalls or what can be “Lazy Leadership” if this step is not well thought out and executed.
The Communication (and Lazy Leadership)
How you communicate goals is just as important as how you set them. Clarity, simplicity, and timeliness are key components. Companies that set good quotas establish a sound process to allocate the overall quota down to the salesperson level. Here is when things often go “south” in the rollout.
Lazy Leadership #1 -Distribution.
This is one of my favorites. When sales quotas are emailed out to managers and reps with little or no explanation. Better yet, when a sales compensation program is emailed to the sales team with no regard for the sales managers to understand. This shows a total lack of disregard for middle managers who get the bullets from the field and no respect for the sales team assuming they will just “get it,” or won’t question it. The rollout of quotas should be to all levels of managers first, in an open and honest forum where it is safe to question and the questions that may come from the sales team can be anticipated.
Lazy Leadership #2 – Telling the team.
The how and when in communicating the sales quota is critical. Too often it is late and there is this secrecy surrounding the process or the math. Or worse, the explanation is blunt and minimal, like what a manager said to me many years ago, “It’s supposed to be unrealistic – it’s your sales quota!”
Sales quota should be issued within two weeks of the time period starting (i.e., the New Year or the new quarter.) anything less is unacceptable. The excuse often given for the delay is that the “data isn’t all in.” What data? Why is it delayed and how can that be changed? One company I worked for didn’t distribute quarterly quotas until mid-quarter! This makes it very hard to pivot or adjust the sales plan to achieve the goal but worse, it creates distrust. In this age of technology and instant data, there is no reason for this lengthy delay. Leadership needs to examine system upgrades or changes to improve. Sales teams need to have some level of understanding and keep focused on the key steps that will continue to drive sales.
Lazy Leadership #3 – Clarity!
Any parent today of a child in K-6 has likely had to deal with the “New Math” I am not sure who the genius is that developed this. It reminds me of some past quota and compensation programs that were so complex they figured they would just baffle you with the bull. Then you couldn’t challenge it. The bottom line is – just like in math class, old or new, leadership- you absolutely must show your work! The math must be transparent. Educating your company members and sales teams on the numbers of the company – costs, revenues, profitability – build trust and “buy in” that will come back tenfold. Again, this can be a teaching opportunity for the sales team to understand some of the inner workings of the company and create a higher level of ownership and team.
Lazy Leadership #4 - Fair and Equitable.
Here is a challenging scenario looking at a large swing in quota size between two sales territories in a large geographic area. One territory has a quota of $311K and another has a quota of $762K utilizing a rolling four-quarter approach to determining quota. These are both recurring revenues, repeat and new sales type business. Theoretically, the larger volume has a broader base of recurring revenue and could be larger due to an overperforming territory, more tenured salesperson, or market conditions. The smaller may also be smaller due to turnover, low tenure, and market conditions. Yet, the smaller volume has a greater opportunity to achieve as smaller percent increases can result in goal achievement more easily and the larger territory must carry more of the “load”. So, is this fair?
Maybe, but when the explanation to the salesperson is “we have always done it this way” or “we researched it and there really aren’t any better methods out there” that is a problem. If the reason given is that if the smaller territory has a higher quota, they will likely not be able to achieve and therefore not earn a bonus and possibly leave…you have a much bigger problem to solve. Possibly the larger territory has grown to the point that it needs to be split into two for more realistic goals and just as important customer service.
If there is consistently a wide gap between quotas across your team (some much higher and others much lower) this can result in a toxic culture of “sure they hit the number, look how low it is”.
Fairness and accuracy are key. Fairness ensures that no territory is unfairly penalized based simply on its makeup (size, number of accounts, or targets.) Accuracy ensures the goals are set as close to the actual result as possible (with a reasonable stretch goal.)
When I refer to these as lazy leadership, I am asking the leadership team to not take the easy out. These are teaching opportunities to engage our sales teams and build trust and ownership in the company.
Quiet Quitting
As stated earlier, quiet quitting is not a new phenomenon. The term has been defined and redefined. This author, again, believes that it has everything to do with the culture. Culture generally starts from the top down but can also have a grassroots start too. It is important to understand who is quiet quitting and why. That requires conversation and trust.
Quiet quitting for some may be mentally checking out from work. For others, it may become about not accepting additional work without additional pay. The definition may vary from person to person depending on their job. We will focus on salespeople and quiet quitting.
Quiet quitting for salespeople can be career and financial suicide. Saddled with the responsibility of carrying a quota and relying on commissions or bonuses, salespeople can risk everything by quiet quitting.
So why do salespeople quietly quit? Doing just “what is required” and not going that extra mile may be a mindset of a person. It can also be a result of unsustainable goals, the quota itself, the rollout process, lack of leadership, or not feeling heard.
One instance of this can be where quotas are seen as unachievable. Doing just enough to keep your job. One example of a quiet quitting opportunity is the rolling four-quarter type quota. It is perilous as they can be doing it to reduce the individual quota over time.
What are other reasons quota is not being achieved? Poor forecasting, market conditions change and the big one right now is supply chain issues are just a few areas to consider. Sometimes the goal levied by leadership is done so without knowledge of potential supply chain issues. Sales teams often don’t have the knowledge or reference to understand this and they “blame” leadership for bad math. Teach them!!! When Covid hit and the supply chain affected us all on a business and personal level, we lead a workshop on “Let’s Make Some Cupcakes” (with some of the ingredients/materials not available.) This workshop went a long way in building trust and the sales team gaining insight into the company and the world of manufacturing.
Salespeople are often remote, and it is far easier to feel less involved, and less a part of the bigger picture. This is a time for leadership to engage through positivity, attitude and action. It can be about balance and meeting goals.
Finally, the next segment will cover how to manage The Administration of quotas and targets.
