Sales Quotas vs Sales Goals: Understanding the Difference and Maximizing Their Impact

Intro

As a business you want to keep generating profit and driving more sales revenue as you offer your customers the best experience to solve their pains with your products, right? Well, having the best strategy to hit those goals is critical for the success of any business.

In this article, we will shine a light on sales quotas and sales goals. You will get to know what they are and their difference and how you can maximize each of them, keep attracting customers converting them to grow your business, generate more revenue and profit, and keep attract

What are Sales Quotas?

These are the goals that the sales team or individuals must hit within a given time as part of the breakdown of the larger business goals. For example, if a business wants to get a profit of $120,000 that goal can be divided into 12 small sales quotas of $10,000 per month. The sales quotas can be in forms like:

• The number of sales sold within a week or month
• New customer conversions within the given time
• The deals closed

![Hubspot

Source: Hubspot

What are Sales Goals

These are the plans and objectives a company has to meet to increase the success of the business and drive more profits and revenue. Here are some sales goals examples.

Source: Zendesk

Sales Quotas vs Sales Goals: What’s Their Difference

Sales goals align with brand objectives for the long-term success and growth of the business. They highlight the brand vision within a time frame. These can include expanding the brand in a new location and increasing the customer base and the profits and revenue the brand will generate in a given time gap.

However, the sales quotas are the short-term goals that individuals and the sales team have as they work to attain the set financial target in a given time frame. Here is an example of sales quotas and sales goals:

A business wants to expand and attract and get new customers to hit a target of $600,000 in sales per year. The management and executive give the sales team a quota of $50,000 in sales per month. If there are five members of the sales team, each member is supposed to make a total sale of $10,000.

However, the numbers can change based on the performance of individual salespersons and some can have more allocations for sales with higher incentives. Despite that, the sales team should hit their set quota per month. Other activities that can go along this include:

• Running paid ads to promote the brand to target customers
• Writing content to build trust with potential customers
• Engaging customers on social media

How to Effectively Set up Your Sales Quotas

• Evaluate the business resources at hand. For the sales team to work effectively, they need the right resources. It will make the process of marketing and getting leads to convert and make a purchase easy. As a business, ensure your sales team has all the resources they need.
• Choose the right sales quota strategy. From the different sales quotas, get the one that best suits your plans for the brand marketing.
• Decide how to set the sales quota (bottom-up or top-down)

Source: Salesmate

As shown above, the top-down, the company sets the quotas for the given time gap and then shares the quotas with the number of sales reps they have at the company. On the other hand, the bottom-up first considers the potential of the sales rep based on past performance and the potential of your sales rep.

First, consider the number of deals your sales rep closed, the revenue generated, and the time gap they did. If you have a sales goal of $20000 and have five sales teams give the first top three performers $5000 sales quotas and the other two $2500 each

• Set your baseline. You need to know the basic performance of your sales reps. Know the minimum sales your team needs to make to ensure your brand survives in the market. You can take the last year's revenue of your brand and divide it by 12 to get the average monthly revenue. Then once your baseline is set you can calculate the sales quota you want to hit.
• Set the quota review period. A review period is essential to help time the results you get from the sales quotas in the given time frame you set. However, ensure you set a realistic time to review the quotas.
• Inform the sales team of performance expectations. Get all the sales teams on the same page and share the expectations you have that you want them to perform to ensure they hit the set quotas within the allocated time.

Why are Sales Quotas Important

• Improve business conversions in a given timeline. Having sales quotas breaks down the large sales goals of a brand and makes it easy to attain the milestones toward the larger goals for the business.
• Motivate the sales team to hit business goals. A salesperson will be motivated more with sales quotas as they will get incentives once they hit the quotas within the given time.
• Visualize the sales plan. Sales quotas help reps visualize the brand goals and help actualize them. Gives a brand a working strategy to attain its business goals.

Source: Convin

• Build great customer relationships. Sales teams engage with customers, know their pain points, and get them to convert and purchase from a brand. Within the given period, the team keeps building relationships with customers as they show them the value of the products or services to get them to convert.
• Bring accountability to the sales teams. Since each sales rep is given a quota to attain and a time gap, they will be more accountable for hitting the target and also get a chance to receive the incentives.
• Help hit set goals. Once a brand sets its goals, the sales quotas make it easy to attain those goals as the target is divided into shorter time gaps. For example, if a brand has a target of $900,000 per month it can break it down into monthly revenue of $75,000 and if they have 15 sales reps it can give each $5000 sales quota

Why are Sales Goals Important

• Measure brand progress and success
• Understand brand expectations

Examples of Sales Goals

• Increase annual revenue
• Increase profit margins
• Reduce sales cycle
• Retain more customers

Types of Sales Goals

• Sales team goals
• Annual goals
• Individual sales goals
• Individual activity goals
• Stretch goals

How to Set Sales Goals

• Choose the type of goal. You need to choose the type of goal you want to accomplish first. For example, you can choose between annual business goals or stretch goals
• Ensure you set SMART goals. It is essential to have this in mind when choosing a goal

S for specific. Be clear on what you want to attain for your business. It will be hard to hit your goals if they’re unclear and well presented.

M for measureable. Your goals should be easy to measure so you can know the progress of your brand growth. For example, don’t say you want to increase your social media followers. Have something like we want to have 5000 more social media followers by the end of the year.

A for attainable. Despite the first two, if you’re goals are not attainable you will not hit them. Using the above example, You can’t say you want to improve your social media followers by 10M within a year because you can’t attain that number in a year.

R for relevant. Your goals should be tied to the impact your brand will have on the growth and serving customers better.

T for time-bound. Have a time limit for every goal you set. For instance, say we want to close 5 more customers by the end of the month.

• Give the team the resources they need. To make the process of actualization of your goal, your marketing and sales team should have all the resources they need. For example, provide data about your customers and give them access to tools like quote generators to hasten their process.
• Identify the incentives to motivate sales teams. To get the sales teams to work effectively and attain the goals, you need to motivate them. Provide great incentives to the sales team
• Clarify the goals with the sales team. Once the goals are set, the management and executive should clarify the goals to the marketing and sales team. It gives them a clear picture of the goals to attain, and why they need to attain the goals.

Sales Quota Agreement

To help meet the set quotas, the sales team drafts a sales quota agreement to ensure smooth working and maintain transparency in the process. Creating a contract or agreement highlights how the different sales and marketing departments will work together to attain the set quotas in the given time. See the example below.

Source: Hubspot

Types of Sales Quotas

Source: Salesmate

• Profit quota. This focuses on the profit gained from the sale of products within a given time gap. You can get this by (_ total revenue - (cost of goods and acquisition cost_) Sales reps are motivated to make high-ticket sales to faster hit the sales quotas. For example, Peter and Andrew are both sales reps for a laptop shop. Peter’s customers are rich, he just needs to sell five laptops to hit his sales quota. However, Andrew needs to sell 10 laptops to hit the target for the sales quota.
• Activity quota. This is done by SDRs and BDRs. They’re supposed to carry out activities like phone calls, setting meetings with potential customers, running email follow-ups for marketing campaigns, etc Here is an example: James, a sales rep has a two-month sales quota and to hit it he needs to make 125 phone calls, send 200 email campaigns, have 5 virtual meetings, and send 20 demos to target customers.
• Volume quota. It considers the units sold by the sales teams in a given time. Ann, a phone sales rep has a two-month quota. To hit the quota she has to sell at least 15 phones. If she hits the target she gets an incentive of $200 for each phone she sells above the set quota.
• Combination quota. This company has two or more different sales quotas to help salespeople attain a set quota. For example, Regina a sales rep can combine the profit and volume quotas. She can sell 5 fashion clothes for ladies for $2000 each to hit the sales quotas for the two months.
• Forecast quota. These are based on the historical customer data and performance and revenue attained. The sales teams are given quotas based on the history of customer purchases for a given region. For example, Abigael made a revenue of $15000 so the management can set a 30% increase based on the last performance and her sales quota comes to $15000 plus the 30% which is $4500 to become $19500

How to Maximize Your Sales Goals and Quotas

• Shorten sales cycle
• Get the data from sales activity
• Know what’s working
• Improve customer relations more
• Do cross-selling and up-selling
• Invest in employee training
• Have a great customer support system
• Ask for referrals from past customers
• Deliver more value to the customer
• Motivate sales team
• Ensure marketing and sales departments work effectively in harmony.

Conclusion

Growing your brand revenue and sales needs a strategy that’s working. Having great sales goals and breaking them into attainable sales quotas is essential for the success of any brand. Use the tips from the article to guide you in setting your sales goals and using a working strategy by setting workable sales quotas to hit the goals and grow your brand sales and revenue.