Is Quota Still an Effective Measure of Performance? w/ Rowan Tonkin [Episode 609]

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Rowan Tonkin, Marketing Apps Leader at Anaplan, joins me on this episode.

KEY TAKEAWAYS

  • Rowan says the single biggest challenge facing sales reps today is getting the attention from their prospects to get the meeting. We’re all distracted by millions of things every day.
  • We are contributing to the problem with barrages of approaches to our prospects. No one wants to be the first company to do less. The customer is overwhelmed.
  • Some organizations are unlocking all their content, and waiting for the contacts to approach them after consuming what interests them.
  • What’s the rationale for paying a commission, in this landscape? Commissions motivate the A-players. It results in behavior change. CSO Insights shows that the percentage of reps meeting quota is decreasing.
  • Rowan suggests this reflects the market. We have optimistic quota setters, which makes it harder to achieve them. Organizations should think about compensation in alignment with their quota setting.
  • According to a survey by The Alexander Group, the quota-setting process has been the number one problem in sales compensation plans for the last 13 years. There is a misalignment that needs to be corrected.
  • What strategy for compensation would help the middle salespeople improve their results by 2% to 5%? How should sales compensation be personalized? Technology is available to personalize compensation. Anaplan uses it.
  • To make an effective compensation plan: make it simple and easy to communicate; understand corporate goals and use quotas to meet the goals; and provide team and personal plan commission options. Don’t try this in Excel!
  • Rowan talks about missing quota, and why that might happen. Productivity is another measurement of profit. Assuming that leads are equitably distributed, conversion of leads is essential. Quotas don’t fill themselves.
  • Andy believes quotas are overthought. Whatever is the issue, quota attainment is much lower than it should be.