Closing deals and making the number is the goal of any salesperson or sales leader. There is complete alignment here, and anyone in sales has selected a career where they are willing to be held accountable to their results. In fact, in most cases, 50% of their compensation is tied to hitting these goals!
So as a sales leader, do you really need to “manage” quotas?
Quota attainment, or closing deals, is a lagging indicator. It’s the result of what happened (i.e., sales performance) before that point. Just like a sports team winning a game is the result of executing what they practiced.
Your Sales Team’s Time
Think about a salesperson’s time. According to CSO Insights, only 37% of a salesperson’s time is actually spent “selling” – meaning directly interacting with a client or a prospect to create or advance a deal. But that’s still not the act of closing deals. The actual “close” is only a fraction of where a salesperson spends their time.
Every company is different, but here is a typical flow of activities that happen day-to-day for a salesperson:
- Prospecting – via email, phone, LinkedIn, etc.
- Conversations – some interaction with a prospect
- Meaningful conversations – a quality discussion with the right contact
- Creating opportunities – creating a qualified opportunity
- Advancing opportunities – advancing existing opportunities
- Closing – final steps of negotiating and winning business
- Onboarding – ensuring the client is successful
By no means is this an exhaustive list of what a salesperson does, but it’s a good view of the many steps within the sales process and how a salesperson spends their time. There are seven items on this list, but just one of them is “closing.” If that’s the case, why do salespeople and managers spend so much of their energy managing around closing? What about everything else on that list? How do you define “good” for those other activities? How do you know if you are on track or behind?
Sales Quota Management
Here’s some commentary you’ll hear from sales managers and salespeople if they manage around quotas:
- Sales manager: “What’s closing this month?”
- Sales manager: “What’s preventing that deal from happening now?”
- Sales manager: “How can we make that deal happen faster?”
- Salesperson: “I’ve been so focused on closing, I haven’t had much time to do any prospecting.”
- Salesperson to manager: “I’m struggling to hit my numbers. What do you suggest I work on?” Manager to salesperson: “You gotta’ start hammering the phones and make things happen.”
- New salesperson: “I know it will take a few months before I start closing deals, so in the meantime how do I know if I’m doing well and on track?”
Sales Performance Management
On the other hand, if sales leaders manage around sales performance, here’s the commentary you’ll hear:
- “How is our conversation-to-win rate looking?”
- “Mark is making a lot of calls, but he’s way behind his peers on having meaningful conversations with VP-level prospects. Let’s fix that, as his win rate would go way up.”
- “We’re behind on meaningful conversations this week, so let’s run a spiff to pick that up and get us back on track to hit next month’s sales target.”
- “We have $987,500 in stage 3 of the sales process, and we know that moving to stage 5 increases our win rate from 27% to 65%. What can we do to move those along?”
- “John is closing 3x what Carl is, but the only difference is that John is much better at prospecting. Let’s have Carl shadow John for a few days to see how he’s creating opportunities.”
- “Our new class of sales hires are off to a fast start – in the first 3 weeks they’ve had 37 meaningful conversations, created 10 opportunities and advanced 7 to stage 4 or later. This is 2-weeks ahead of pace for our typical sales onboarding class.”
The modern sales organization needs a KPI orientation to sales – to stop only managing around quota, and to manage around sales performance, or the behaviors and activities that will result in the outcome everyone wants– crushing the number.