Goal-setting is a crucial part of any business. Most certainly so as this is the only way for businesses to check and see their progress. Without goals, then it’s going to be hard for businesses to measure their profit potential and potential growth.
Two key goals or metrics for any business is sales quota and key performance indicators or KPIs. These refer to the definite set of targets or goals set by management. These can either be quarterly, semi-annually or annually. When a sales quota or KPI is in place, it keeps the team or sales representatives motivated to work hard and develop strategies so that these will be met.
In fact, some strive to go beyond the minimum sales quota set, as some companies or businesses can be generous with their bonuses or commissions when this happens. Click here first, to get a brief background on what KPIs are, if you need a refresher for better understanding. Overall, a sales quota or KPI is for the betterment of the business. It’s important to have it, for the following reasons:
It Ensures That Compensation Plans Like Commissions Are Fair And Effective
Compensation plans or commissions aren’t foreign in a business organization. Many offer these to their employees as a motivational guard for them to achieve more. But, no two plans are identical, as these would depend on your company.
For instance, some businesses or companies can give bonuses based on sales made beyond the quota. Commissions can also be given for every certain number of sales. You can learn more about these differences on salesfocusadvisory.com.
Commission can be great for your business, as it encourages your employees to do more. While this is essentially an added expense on top of their salary, you can think of it as an investment for greater returns. The potential profits that you earn when your employees strive to sell more than the minimum truly end up being worth it.
Most importantly, the sales quota can serve as the floor, or the minimum goal for every sales representative to achieve. This sets a fair basis for setting commissions. Each employee is equal, given that they only start to receive bonuses once they go beyond this set amount.
That said, giving out commissions to your employees result in good returns for your business. Some of its advantages are:
- It can motivate your employees to do more than the minimum that’s required of them;
- It enables your business to manage the payroll better, as the employees are given bonuses only for the sales that they’ve made;
- It results in increased sales, thereby increasing profits as well.
It Enables The Sales Team To Work With More Clarity
To eliminate any potential problems arising in the business, it’s important to set that element of clarity. This means that everyone aboard your team is on the same page as to what you need to achieve.
There’s no room for confusion when everyone knows that they need to make a certain number of sales for this month. Otherwise, there’ll always be that question as to expectations and what they should do for your business.
Also, with a sales quota, it’s easier for your entire sales team to set possible strategies that’ll enable them to meet those goals. This takes away any confusion as to what strategies will work well, and what wouldn’t. Everyone knows precisely what needs to be done, so their ability to go beyond the sales quota is heightened.
It Reveals Bottlenecks In The Sales Pipeline
Bottlenecks in the sales pipeline refer to the problem areas. These have to be identified, or else when these problems are left to prosper, they’re going to lead to more serious problems affecting your sales figure.
Remember that your KPI or sales quota refers to the metric that your team has to achieve. If your members aren’t able to achieve the KPIs regularly, then there could be problem areas in your sales pipeline that have never been addressed.
As you sit down with your team and strategize, work your way backwards. This means starting with the KPI then finding any problem area that occurs for a majority or every member of the sales team. Perhaps there aren’t enough tools for your team to achieve the KPIs you’ve set? Or perhaps even the KPIs are too high?
When these are identified, you can find ways to revise your KPIs so that they become more attainable for your team.
It Challenges Your Team
The sales department is one of the departments in your business organization whereby it’s not just enough to follow through a definite set of steps or routine every single day.
You need to give an allowance or leeway for your team to think outside the box. This means challenging themselves with new methods for them to achieve the metrics that you’ve set.
Otherwise, if the procedures are too routinary, then your sales team may not be able to do more. With a KPI in place, the team is challenged to think of other ways to achieve the goal.
Who knows, they’ve got other means of achieving the goals you’ve set, without necessarily conforming to your procedures from A to Z. When your team has this kind of freedom, they can move according to what they feel will bring them good results.
It Enables You To Highlight Successful Reps
How can you determine which sales representatives are successful and which ones among them aren’t? It’s through the sales quota. Those successful ones are those that can regularly go beyond the sales quota that you’ve set. So, to encourage new members of your team or those that haven’t met the quota, you can now highlight the successful sales representatives.
This means that you can talk about them during your periodic reviews and ask about the strategies they’ve done to achieve the sales quota regularly. This gives new hires a model to follow, so that they too, can achieve the same level of success.
When you come to think of it, a sales quota or a KPI truly is a metric for success. It’s so hard to measure progress when you don’t have a means by which to determine the minimum standards or goals that everyone in the team must achieve.
More so, employees will have the propensity to do more, when these sales quotas are given, as it also works as their personal goals. If you haven’t established these yet for your business, it’s high time that you do. It’s not too late to start, now that the year is about to open its second quarter.