1 Leading Indicator to Determine if You Will Make Quota This Year

June 27, 2012 at 7:00 AM

The mid-way point is upon us. When the clock strikes midnight on June 30th, Q2 will be in the books and we officially begin the home stretch. Seems like the perfect opportunity to conduct a mid-year performance review of your sales compensation plan and quota attainment to determine if you are on your way to making the number. 

Make QuotaAt the end of Q1, I wrote an article on how to assess your year-to-date performance through the first 90 days. In that post, I provided guidance on how to rank your performers (low, medium, high) and what level of action you should take based on the assessment. In today’s post, I’ve updated the tool for you to assess your sales compensation and quota attainment by rep (or team) for the first half of the year. To start, (Download the Mid-Year Sales Compensation Assessment Dashboard Tool Here) populate the top half of the document to understand your team’s performance and relative compensation payouts. This is important for three reasons:

  1. Defining Current State - Where is your team in relation to quota YTD
  2. Sales Compensation - The YTD financial implications of payouts relative to performance
  3. Budget - Sales compensation payouts relative to budgets

When you’ve completed the initial financial assessment, I’ve added a Mid-Year Progress Report so you can evaluate if you made progress with your team from Q1 to Q2. The progress report is simple: How many reps were in the low, medium and high categories in relation to variance to quota in Q1 and how many are in those categories at the conclusion of Q2?

Mid-year Compensation Assessment

The Leading Indicator

In terms of interpreting the Mid-Year Progress Report in the tool, this is a single leading indicator you can use to determine if you will make your quota this year. Here’s how to use your results:

  • Low: If you have more people in this category through Q2 than you did in Q1, congratulations. This is where you want the team headed. You might have used some of the action items recommended in the earlier post. If you did, I’d like to hear what you did in the comments section. If this number is declining, there is cause for concern. The obvious reason is that you have fewer reps close to meeting or exceeding quota. The more critical reason is that most companies backload their annual quotas. If you are slipping behind now, it’s going to be very difficult to catch up.  
  • Medium: This category is an interesting one. If the number has increased here, it may be coming from either the ‘low’ or the ‘high’ categories. Moving ‘highs’ to ‘mediums’ means your coaching and management has resulted in a beneficial improvement to the sales team. If you have people slipping from ‘low’ to ‘medium,’ reference the notes above on why you should take this leading indicator seriously.
  • High: A no-brainer. This number has to be declining or your year is in serious jeopardy. Get laser focused on what’s happening here and why. Don’t be fooled by the elephant hunters telling you that big deal is coming either. Know where your bread is buttered and get the team back on track. There is no greater leading indicator than this category ballooning after two quarters.

The leading indicator of your year-end can be determined by the progress your team made from Q1 to Q2. If the enclosed assessment has you going in the right direction, keep your head down and continue making the investments in your team that have gotten you results. If you are moving towards the other end of the spectrum, it’s not too late to focus on the fundamentals.

Where to Focus

We like to use a term at SBI called ‘flipping the funnel.’ Start by focusing on your installed base to determine if you can cross or up-sell anyone. Then, get laser focused on late-stage sales opportunities. Are there any in there you can get over the hump sooner rather than later to get the team working on the middle of the sales opportunity funnel. Lastly, what’s coming in the door from your lead development team? Make sure you are following your sales process activities and sticking to the fundamentals. Don’t let the team panic and start taking short cuts.

Conduct a Mid-Year Sales Compensation Performance Assessment Now!

 

What coaching and feedback have you used with your teams to ensure the leading indicators of your sales compensation payouts and quota attainment are moving in the right direction for the second half of the year?

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Topics: Compensation Planning, Quota Setting, Sales Compensation Planning, Sales Leader, Sales Compensation

Posted by Ryan Tognazzini

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