👋 Hey %FIRSTNAME%,

Setting quotas is a make-or-break factor for your sales team’s success, yet many companies lower or raise SDR quotas without considering the consequences.

The cold hard truth: changes to your team’s quota can undermine their performance.

Let’s see how. 

👉 Setting quotas too HIGH

Companies are prone to setting high quotas after the COVID-19 pandemic for several reasons:

🔹Catching up on lost revenue: Many businesses suffered significant revenue losses due to closures, reduced consumer spending, and supply chain disruptions.

🔹Increased competition: Sales leaders have to maintain or increase market share and revenue to avoid losing ground to their competitors.

🔹Investor expectations: Publicly traded companies face pressure from investors to demonstrate growth and profitability.

We understand you want to bring in the big bucks for the company.

BUT

Setting unrealistic quotas for your SDRs isn't the way to go.

In the survey we conducted with 260 reps, we asked if they considered seeking a new employer in the past six months — and 49.6% of them answered yes.

Dissatisfaction with compensation almost doubles the turnover rate:

84% of those unhappy with their comp considered new jobs.

Missing out on commissions + Feeling like a failure each month = Looking for alternative employment.

We posted a LinkedIn poll on SalesRoads’ business page to see if high quotas either motivate or lead to churn. 

The end result wasn’t surprising.

See the full post here.

You know how painful it is to onboard a new rep, right?

If you want to avoid that headache and retain your SDRs, set attainable quotas that allow them to succeed and achieve their full potential.

👉 Setting quotas too LOW

Conversely, many companies had to lower SDR quotas to fight decreased demand, financial constraints, and employee burnout.

It sounds like a good solution to hold onto SDRs, but the long-term consequences will make you pause:

🔸Reduced revenue: Lowering quotas leads to a decrease in sales, which in turn results in less revenue for the company.

🔸Demotivated sales team: SDRs feel they have little incentive to put in extra effort, causing a decline in overall sales performance.

🔸Stunted growth: Acquiring fewer new customers hinders your company's long-term expansion plans.

Tips You Can Use Today

Several quota-setting methodologies exist to help you set healthy goals, such as historical-based, productivity-based, hybrid, or market-based.

The right approach depends on your organization's specific goals, products or services, and sales team structure.

We asked David Kreiger how SalesRoads sets quotas for their SDRs and what methodologies they use.

🔹 Factor 1: Target Prospects

First, we identify the prospects our SDRs need to book appointments with, looking at their level on a VPC suite (director, manager), their function (IT, HR, sales), and benchmark metrics to estimate the number of calls or touches it’ll take to get that prospect on the phone.

🔹 Factor 2: The Value Prop

We consider the value proposition of the product or service our SDRs will represent to predict how many conversations we’ll need to secure a qualified meeting.

🔹 Factor 3: Historical Data

Last, we run an algorithm based on historical data to estimate the number of expected touches, conversations, and SDR conversion rate to set a quota.

We monitor and iterate quotas over the first month or two to ensure it's achievable and to keep the SDR motivated.

ICYMI (in case you missed it)

On the first episode of The RevOps Show,  Doug Davidoff and Jess Cardenas cover the approaches companies employ to set goals for their teams and explore alternative methods for sales motivation that aren't solely based on quotas.

Here are some of the key takeaways you'll learn from listening to this episode:

🔸Sales quotas can motivate or demotivate sales reps. Too high quotas = burnout and frustration; too low quotas = limited growth and potential.

🔸Quotas should be set based on data-driven insights and realistic expectations instead of random numbers.

🔸It’s important for the sales, marketing, and other teams to work together to establish effective sales quotas.

Extra, Extra, Read All About It!

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