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Sometimes setting your sales quotas may feel reminiscent of a certain children’s story with three bears and their family home. Unfortunately, a lot more hangs in the balance than choosing the right porridge. According to one study, 67% of sales reps don’t reach their quotas. That’s bad for team morale, and bad for the company.

So, what if you’re done playing the role of Goldilocks and would like to finally find the sales quota that’s “just right” for your team? Here are six strategies that you can use to establish sales quotas that are realistic for your team and as an individual.

  1. Determine the best type of base for your team.

When it comes to setting sales quotas, you’ll need to determine what your quota will be based on. Generally, the three most common bases for sales quotas are volume, profit, and activity.

A volume-based sales quota revolves around the number of products sold, or total revenue earned. This kind of goal is the easiest to set up and track, and because of this, is the most popular model for sales quotas. To create a profit-based sales quota, you’ll need to determine how much profit each salesperson earns for the company. This motivates team members to work harder at closing deals with a bigger profit margin for the company and helps them work more productively, thus saving time and costs.

Finally, more and more sales teams are switching to an activity-based sales quota. This takes the focus away from revenue and sales volume and focuses on the actions that your sales team members are taking to seal more deals.

  1. Draw quotas from what your sales team can do, not what you imagine they could do.

To make a goal realistic, it must be something your team can accomplish, but that is still challenging. To set realistic goals, you need to first understand what your sales team is accomplishing right now. For example, to set a revenue-based sales quota, you can use your CRM system to check what’s coming down the pipeline and see current sales forecasts.

That being said, you can’t base all of your sales quotas on past performance. Especially when setting quotas based on revenue and sales volume, you’ll need to have an up-to-date understanding of current market conditions. I’d recommend keeping tabs on the latest news in your industry on social media and online news outlets. Also, be informed of press releases from businesses that you’re trying to sell to. This will help you set goals that your sales team can actually reach, as two thirds of all salespeople miss their quotas each quarter.

  1. Segment realistic sales quotas by territory, team, or season.

According to one study, sales teams have 14% lower quota attainment when they’re given the same quota across similar roles as opposed to setting territory-specific quotas. What does this mean for you?

In order to set realistic sales quotas, those quotas must be segmented by important factors such as territory, team, or season. For example, let’s say half of your sales team focuses on selling your product to a territory with huge demand, while the other half sells to a territory with much less demand. Obviously, if you set one rigid sales quota for the whole team, everyone will end up frustrated. Instead, segment that sales quota based on the demand in each individual territory.

  1. Collaborate with your sales team when creating sales quotas.

Your whole sales team is going to be involved in reaching these sales quotas, so why not involve them in the creation stages?

Sit down with your sales team and talk about their personal and professional goals. This helps build trust between you and your team and will make any changes easier to swallow since the whole team had a part in creating them. When it’s time to make changes in your sales quotas, it’s important to be transparent. Let them know exactly how you calculated the sales quotas, and help them understand what this has to do with past performance and current market conditions. This will help reduce any negativity from the team and will open the door to communication in the future.

  1. Set sales quotas that are reasonable for everyone.

Each sales team is made up of generally three types of people: star performers, core performers, and those who tend to lag behind. While it’s obvious that not every individual will always hit their sales quotas, you also want to make sure that the whole team feels that they are capable of reaching that goal. It can be easy to watch star performers consistently hit sales quotas, and decide that the best move would be to increase the quota. However, you might end up doing more harm than good.

For a star performer who always hits the mark, constantly increasing their sales quota can feel more like a punishment for being good at their job. And for the rest of the team, these sales quotas will become even more unattainable. Instead, calculate sales quotas based on the performance of the entire team, not just your star performers.

  1. Prepare rewards that help build incentive for the whole team.

Incentives are common in the world of sales and often revolve around commissions. But did you know that 83% of companies pay their commissions inaccurately? Even if your company does pay commissions accurately, there is also the problem of commission caps. Most companies set a cap on their commissions because they think it’ll increase their bottom line. In theory, the less commission they have to pay to salespeople, the more profits the company takes in.

However, an interesting study found that when salespeople hit the ceiling for commissions, they were unmotivated to continue selling. When one company removed the cap on commissions, their sales team was pushed to keep selling, and the company saw a 9% increase in revenue. Removing the cap on what your sales team can earn will keep them motivated to sell while they’re already on a roll, which will ultimately bring in more revenue for your company.

Another way to reward your sales team is through actual prizes. Again, though, it’s important to make sure this is fair for the entire team. Otherwise, only star performers will win prizes and the rest of the team may give up trying. Having various prize winners has been proven to encourage the whole team to work harder in order to reach the goal. Once you’ve decided how you’ll reward your sales team, you’ll need to choose the timing of these incentives. Depending on the timing of your sales quotas, you could send out rewards every month or quarter.

There are many companies that are working to achieve sales goals that are “just right,” but finding the perfect balance isn’t a one-size-fits-all solution. By following these six strategies, sales teams of all sizes can develop quotas that make sense for businesses and individuals alike.