Our research shows sales reps are more productive when they know their sales quota, yet only 34% of companies communicate quotas ahead of the fiscal year. Learn how to set quotas early.
While sales organizations design compensation plans and new sales initiatives before each fiscal year, many organizations wait until after the year begins to share their sales quotas. In fact, only 34% of companies communicate quotas beforehand, according to our 2023 survey of sales organizations on quota-setting practices. This makes it much harder on sales representatives to plan ahead or set personal goals.
Our research also shows that sales reps and their managers are the most motivated and positive at the beginning of the year, with more than a quarter (27%) of companies saying their employees are more motivated during the first month than any other period.
“Some argue that communicating quotas at the start of the year may demotivate reps if they think the quotas are too high,” says Joseph DiMisa, Korn Ferry’s senior client partner and global salesforce effectiveness and rewards advisory leader. Yet, when we asked what message a company sends when it delays quota communication, the results were startling. More than half of reps (41%) equate late quotas with internal incompetence or think the company has something to hide (16%). “That’s not an ideal way to start a sales cycle,” adds DiMisa.
We also see that sales reps are more productive when they know their quota. Almost half (43%) said giving reps their quotas before the start of the year significantly improves productivity because it helps with setting strong goals.
How to set sales quotas earlier
Sales organizations should follow four steps to set sales quotas earlier, giving their reps and managers more time to prepare for the year ahead.
1 Establish ownership
Designate an individual or group as the owner of the quota-setting process. According to DiMisa, “Assigning responsibility for setting and adjusting quotas enables consistency in management and establishes accountability.” He suggests that quota setting should reside in sales operations, but finance or sales can also lead the effort.
2 Start early
Start setting quotas when you begin the sales compensation process. It’s common for sales compensation design to start in the eighth or ninth month of the fiscal year, and this is a great time to start the quota process too. “This way, the quota and compensation team can discuss and develop a strategy together.” DiMisa notes.