Sales Quotas & Forecasting

Quotas & ForecastingForecasting Forecasting is a prediction or calculation of a trend or event likely to occur in the future based on qualitative, quantitative and historical data as well as emergent but relevant factors.

Another important foundational aspect of accountAccount Account refers to a record of primary and background information about an individual or corporate customer, including contact data, preferred services, and transactions with your company. management—and sales itself—is the handling of quotas and forecasting.

The QuotaQuota Quota is a predefined benchmark indicating the amount of sales a selling unit such as a sales rep or a regional sales team should achieve within a given period, often used as a measure of success, performance and eligibility for commissions and other rewards. & Forecasting Challenge

  • Only 24% of salespeople exceeded their quota in 2019 (Sales Insights Lab)

  • Most companies do top-down quota setting without any meaningful collaboration or dataData Data is a set of quantitative and qualitative facts that can be used as reference or inputs for computations, analyses, descriptions, predictions, reasoning and planning. analysis

  • 57% of companies say that assigning quotas is a top challenge (Alexander Group)

  • Fewer than 20% of sales organizations have forecast accuracy of 75% or greater (Miller Heimann)

  • 40% of sales operationsSales Operations Sales Operations is a collection of aligned business processes, strategic implementations and other activities aimed at achieving organizational goals, specially in the areas of sales revenue, market coverage and growth. leaders identified seller subjectivity as their greatest challenge to forecast accuracy (Miller Heimann)

“If you make a sale, you can make a living. If you make an investment of time and good service in a customerCustomer Customer is an individual or an organization that purchases a product or signs up for a service offered by a business., you can make a fortune.”

Jim Rohn, Author & Motivational SpeakerJim Rohn, Author & Motivational Speaker

The TARGET!

Opportunity management, in each of its phases, should be totally aligned to the sales target for that sales period. Pipeliner is also unique in this regard in that the target for the current sales period is always in view, and therefore always in mind for the sales team and sales managerSales Manager Sales Manager is an executive who leads a sales unit, team or department by setting goals and meeting targets, formulating plans and policies, designating tasks, and developing salespeople..

Pipeliner CRM offers five different target views:
Unweighted Sales Target

Unweighted Sales Target

The combined value of everything in your pipelinePipeline Sales pipelineis a visual representation of the stage prospects are in the sales process..

Weighted Sales Target

Weighted Sales Target

This is where you can see the effectiveness of your sales processSales Process Sales Process is a series of strategic steps or a set of activities aimed at driving sales growth through the alignment of personnel, market insight, methodologies, relevant business units, and technology. as this target is based upon the weighting at each stage of the sales process.

Ranked Sales Target

Ranked Target

This is the subjective ranking of opportunities by the salesperson – a good indicator of how accurately salespeople can forecast their own deals.

Balanced Sales Target

Balanced Target

This is a combination of the Weighted and Balanced Targets and is often the most realistic number to use – particularly when you are operating a sales “War Room”.

Won sales target

Won Target

The business you have actually won.

War Room

The war room meeting is centered around the overall target for a sales period.  You need a visual tool like Pipeliner CRM to execute it efficiently and consistently. Here are some elements to use in your War Room meetings (for even more detail click here):

Target Views

For example, rep historically closes 10% of opportunities so their Unweighted Sales Target needs to be at least 10x the goal.
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&

Power Panel Filter

For example, you can exclude early-stage opportunities that are not likely to close during the time period you are looking at.
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&

The Archive

In the Archive which is unique to Pipeliner – you can view all lost opportunities with the same detail as active opportunities.
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&

Forecast Tool

Instantly see how much is in the pipeline against the forecasted amount, how much individual reps are forecasting, and what they have reached so far.
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Metrics in Sales Management ebook

Learn From The Past!

  • In order to accurately understand how much unweighted value you need to achieve a target, you need to look back at your history. What percentage of your target, overall, have you achieved in the past?

  • This is a typical lagging indicator—meaning an indicator that shows what we have previously achieved.

  • As you improve, you’ll need less unweighted opportunity value to reach your target, because you’ll be incrementally optimizing your conversionConversion Conversion is the process of turning a target consumer into a paying customer; or more generally, the point at which a user performs a specific action favorable to a marketer or a seller. rate.

Quotas vs. Forecasts

Sales Quotas vs. Forecasts

Simple Quota Considerations

The Individual › Quota should be calculated according to the experience & past performance of the individual salesperson as well as the potential their territory or target market has

The Benchmark › Sales yield is also important — the average annual sales revenueRevenue Revenue is the amount of money a business generates during a specific period such as a year or a quarter; also called sales. per full-time, fully trained, and effective sales representative. Here you use historical data to calculate the expected yield from reps with different tenures – for example, historically a first-year salesperson likely yields a small amount of revenue historically whereas a five-year veteran would be expected to deliver significantly more.

Pipeliner provides a tool that makes it easy to set quotas and manage forecasts:

  • Set up monthly, quarterly, and yearly quotas

  • Add in the various salespeople that will contribute to making the overall quota

  • Adjust quotas for each person based on experience, skill & business development potential

The overall quota, as well as the individual quotas, can be increased or decreased individually, or by applying a uniform percentage. With the Performance functionality, you can view and compare the performance of each salesperson.

  • Account management - solo pipeline from sales team
  • Sales team monthly forecast
Account management quota settings

Using this tool, management and salespeople can agree on realistic quotas based on real data and analyticsAnalytics Analytics is the active study of different types of data with the aim of discovering meaningful patterns and translating these into insight (such as historical analyses and forecasts), or action (such as those intended to improve business performance)..

Your business cannot operate on guesstimates so Pipeliner’s quota tool leverages underlying historical sales data to set quotas. Plus a simple review of closing and win rates will quickly tell the salesperson how much pipeline they need to generate in order to hit their quota.

Forecasting

Forecasting is the predictions salespeople make against quota attainment (you may require forecasts weekly, monthly, quarterly, etc, depending on your business).

Things to be aware of…

  • Lookout for over-optimistic forecasts and help the salesperson be more accurate and realistic by reviewing their pipeline opportunities in detail paying particular attention to ones they forecast that was lost.
  • Also, watch out for the “sandbaggers” — these are your salespeople who like to under-forecast and over-deliver — you need to make sure they understand that accurate forecasting is paramount for business planning.

The forecast should be constantly adjusted to the opportunities currently in the pipeline. If you find that you don’t have the opportunities in the pipeline needed to reach a quota, you need to take immediate action. That’s a challenge everyone in sales faces.

Sales forecasting
Sales forecasting tool

Pipeliner CRM Forecasting Tool

A line graph at the top of the tool, in real-time, shows the current sales forecasts out through time. Sales and company management can always view the most up-to-date and accurate forecast. The better the daily sales process, pipeline forecasting, and analytics, and the more these factors work together, the more accurate the forecasts will be.

In many public companies, there is almost zero tolerance for inaccurate forecasts, as investors won’t tolerate an even 5 percent variation from a forecast.

With our forecasting tool, we are providing small, medium & enterpriseEnterprise Enterprise (in the context of sales) is a relatively large organization typically composed of multiple levels, locations, and departments which need multi-layer software systems that support collaboration across a large corporate environment. businesses with the ability to forecast with confidence and higher levels of predictability.

“A sales quota might be the goal of an average salesperson but it’s the starting point for the high achiever.”

Mark HunterMark Hunter, The Sales Hunter

Additional Resources

3 Sales Forecasting Methods to Aid in Sales Operations Planning by Philip Piletic

3 Sales Forecasting Methods to Aid in Sales Operations Planning by Philip Piletic

If you were to ask a typical salesperson how much of a given productProduct Product refers to anything (an idea, item, service, process or information) that meets a need or a desire and is offered to a market, usually but not always at a price. they believe should be on hand at all times, they’re likely to respond with a number so high that the company’s bottom line couldn’t bear it. After all, it’s a salesperson’s job to move product, and you can’t sell what isn’t…

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Top 3 Reasons Sales Forecasts Don’t Match Results by Andy Rudin

Top 3 Reasons Sales Forecasts Don’t Match Results by Andy Rudin

Off the Cuff Interview Question: From your experience, what would you say are the 3 top reasons sales forecasts don’t match results?
First, we need to define what “match” means in the context of forecasting. If “match” means “equals,” we only need one reason: because it’s a forecast.

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A 12-Step Program to Exceed Quota by Tony Hughes
A 12-Step Program to Exceed Quota by Tony Hughes

Sales is broken, it’s sick. It’s time to kick the social crack pipe! Doug Davidoff recently posed the question, “To Sell or Not to Sell” in this ingenious post rebuking a CEO that’s eschewing ever hiring another salesperson??!! Anthony Iannarino’s takedown of this post was so classic I must lift this paragraph here to share with…

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What Is the Quickest Way to Achieve Sales Quota? by Colleen Stanley
What Is the Quickest Way to Achieve Sales Quota? by Colleen Stanley

Believe it or not, the achievement of a sales quota is simpler than you may think. Just look to a sales genius and one of the greatest innovators of our time, none other than Steve Jobs, and practice one of the principles that made him great: “People think focus means saying yes to the thing…

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