Are your sales reps on track to meet their quota in 2009? Compare how others are doing.

Today I received a call from Jim Dickie, Partner of CSO Insights who shared a few interesting and fresh data points about how sales organizations across the nation adapted to the recession. They say hindsight is 20/20. Take a look at these surprising numbers and try to find the logic behind this wild and crazy way of managing under adverse circumstances.

Let's raise the sales quota!

86% of companies surveyed in December 2008 said that they were raising sales quotas for their reps in 2009.

Comment: For anyone reading the news in the last quarter of 2008, it was evident that the U.S. economy was headed into a deepening recession. What were these sales managers thinking? That the economy would recover in a few months? That their company would not be affected by the downturn? That their salespeople would turn into superstars? The fact is that the majority of sales organizations engaged in wishful thinking, allowing their sales organization to operate on a fantasy instead of facing reality.

Let's cut or freeze the lead generation budget!

67% of the firms surveyed said in December 2008 that they were freezing, or reducing their lead generation investments for 2009.

Comment: Every sales manager knows that in a recession it takes 25% to 35% more leads to allow for the growing number of prospects who disappear from the pipeline. Why would sales organizations cut or freeze lead generation efforts? The smart thing to do would be to adapt to the new economic realities and increase lead generation budgets by 25% - 35%. It seems that only 1/3 of the companies surveyed took advantage of the opportunities while 2/3 of the companies failed to adapt.

Over half of our salespeople will miss their quota in 2009!

Today, CSO Insights completed their 2009 Compensation Management Survey. Here is fresh data from the yet to be published report: Only 52.4% of sales reps at the companies surveyed are on track to make quota this year. As a point of comparison, that number was 61.1% in 2007.

Comment: Jim Dickie quipped: “Cutting your way to success does not seem to be working.” We live in crazy times, but that should not lead us to stop thinking and acting rationally.

Questions: How will your company adjust to the unstable and unpredictable market in 2010? Will you raise the sales quota? Will you cut, or increase your lead generation budget? Is there a silver bullet strategy that you’d like to share? Please leave your comment below.

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Comments

[legitimate paid surveys]

Missing a quota on a business is a big problem, so more people try to get more sales out of quota. But still if it doesn't work, more people lose jobs.

[make money from home]

We do have quota on our business, I think the information from comments and your article is helpful or gave me idea. I was not able to reach my quota, most of the time. your article entices me. Thanks for sharing.

[Austin SEO]

Ofcourse, my goal is to reach the 2010 goal for my business. Some might be able to reach them due to recession. But then, in a year, we can do lots of possibilities to increase the sales. Social media. Have a marketing strategy for lead generation.

[Christian Maurer]

I was alreted to this post only now, by a recent tweet of yours.

I think you put you finger on a very soar point.

A few months back I wrote a post asking : Sales Quota attainment, whose performance is measured? The post is illustrated with a sketch from your fabulous book "The Sunny side of selling".
Proof is here: http://ultimatesalesexecresource.blogspot.com/2008/10/sales-quota-attainment-whos-performance.html

[Brian Maggs]

The goal of any successful sales team is to have 80% of the team make plan. Raising quotas in the face of a tough economy opens the door to your best people leaving for a better offer from the competitor. The 20% will always stay.

By contrast, this is an excellent time to trade out the non performers by poaching the best reps from your competitors. Offering balanced, achieveable quotas for all reps and executive level sales training to improve the skill base of the team is where the extra production can come from in a tough economy.

More "quality" feet on the street is the only way to increse the number of opportunites and education is the most effective way to improve the close rate for the overall team.

[Brian]

To me, it looks like raising the quotas is a brilliant idea. Let's look at a couple Sales Management facts - quotas always go up. Sales People that don't make their quotas always blame the economy or the clients with no budget. Good sales people almost always make their number or get really close to it and comp plans change every year based on products & services that need a "push".

Thus, using the information from the survey. The delta of people NOT making their newly INCREASED quotas is only 8.7% in the worst economy since the Great Depression. If we raise quotas 10% (just like we do every other year for reason mentioned below)... we make plan - brilliant.

I'd argue 2 things - first, look at any other year and the delta of sales people not making quota - it is likely about the same. Athough, I do not have the facts only anecdotal experience that is usually the amount we are going into Q3.

Second, the reason quotas always go up is that sales management has to front load for the sales people who we keep on board (just one more year, or those who are new and building up their pipe) that are always at the bottom quartile - the top producers always cover them - ALWAYS. Raising the quota ensures that we as a team make the overall number - bad economy or good - while we carry some of the dead weight.

C'mon guys - this conversation is the same every year when we approach year end. It is also the same conversation every year with the new comp plan.

The saless people that always hit the spiffs and the multipliers - NEVER complain about plans (they spend their time figuring out ways to game them) and they NEVER complain about the quotas because great sales people are sand bagged on the other side no matter what the plan.

[Michael Kreppein]

"86% raising sales quotas" is a potentially misleading statistic. If the company cuts the sales team then they'd naturally raise the quotas of the remaining salespeople. So while individual rep quotas go up, we don't know if the total quota went down.

[Justin]

Well, I don't know about our lead budget by my quota went up by 17% this year. The reason was we have a new product to sell. But I am not sure that the planning was correct... Of 30 field reps I will be surprised if more than 15 hit their annual number. However I am confident I will be one of them even though I am slightly behind.

p.s.- Follow you on twitter, read the blog, and subscribe to the Mag. Keep up the great work.