Salespeople are naturally goal-oriented high achievers. After they crush their quota one year, they can't wait to do it again -- only this time faster and better.
Many sales teams take advantage of this competitive drive by raising quotas by a certain percentage each year. However, most are careful to keep the new targets within a reasonable threshold. After all, the negative repercussions of setting stretch goals that are too far out of reach have been well documented.
But what if the issue isn't being too ambitious -- it's being too timid? New research from Steve W. Martin reveals that best-in-class sales organizations were more likely to aggressively raise quotas year-over-year than average- or low-performing teams.
"Seventy-five percent of high-performing sales organizations raised 2014 annual quotas more than 10% over 2013 quotas," Martin wrote in an HBR.org article. And a full 40% of those top teams increased quotas by a quarter or more.
On the other hand, 65% of low-performing organizations and 48% of average teams either kept quota the same or decreased it.
While this data could prompt a review of quota-setting processes, it also contains an interesting chicken-and-egg problem. Does holding salespeople to a higher level of accountability (which top-performing teams are more apt to do, according to the data) and aggressively raising quotas help them achieve better results? Or are these reps achieving more because top-performing sales organizations naturally contain more people that hit or exceed quota, thus prompting a significant raise of the quota bar?
While there's no clear answer, it's worthwhile to note that top-performing sales teams jettison reps who aren't working out faster than their average- or low-performing peer organizations. According to the study, 18% of top sales organizations fire low achievers after a single quarter, as compared to just 2% of average sales teams.
Do high goals make high performers? Or do high performers make high results? Let me know what you think in the comments.