Risks in sales – Your Quota
Risk: Your quota.
Your quota is your signed commitment to deliver a specified amount of sales revenue over a specified period of time. You have no vote in setting this quota, nor do you have much flexibility in negotiating the amount. It is assigned to you by your sales management, and you alone are 100% accountable to achieve your quota. In most cases, very little analysis goes into computing quota numbers—they can be arbitrary at best, wild guesses at worst. It’s rare that a sales rep gets their assigned accounts or territory where any intelligent thought is done in advance before finalizing the sales rep’s quota. A sales VP is given an amount of revenue that their team must generate… then the quotas flow downstream – to sales directors, then sales managers, then finally to individual salespeople (or sometimes a team of salespeople). Little review of accounts are done, or potential opportunities that could close, or the timeframe when deals could close or the win rate needed to accomplish quota. It’s usually just a simple calculation: Sales manager’s revenue needed divided by number of salespeople and BAM, you have the salesperson’s individual quota.
In effect, you are betting against the house (your company) that you will achieve or exceed the quota you were assigned. You are placing a large wager that you will hit your number, and it can be a big gamble; and never forget that you bear the entire risk. Meanwhile, given your territory and accounts, you do not know the odds for achieving a slam dunk: are they very possible or nearly impossible? That’s really anyone’s guess. It’s the risk you take in the world of a salesperson.
I’m DJ Sebastian, and we’ll continue our discussion on the risks of a sales career in the next briefing.