Although sales quotas can be daunting to anyone who isn’t a top performer, they’re necessary for measuring success, growing your organization, and motivating your sales team.
For best results, we recommend having your sales coaches empower sellers to set their own quotas, so long as they align ith overall business goals. Doing things this way will maintain motivation over the long term and build more commitment from your sales representatives.
What is a sales quota?
A sales quota is a clear, measurable goal that sellers must achieve within a set time frame. Sales quotas are most commonly based on the number of deals closed, total sales won, or sales activities (e.g. meetings) completed. Sales managers or coaches typically set sales quotas in collaboration with individual sellers so that personal and team goals can be met.
Sales Quotas vs Sales Goals
What’s the difference between sales quotas and sales goals?
Sales quotas are measurable targets that sellers are required to meet within a specific time frame (e.g., weekly, monthly, quarterly). In contrast, sales goals are general objectives that guide long-term growth, sales strategy, and performance.
For example, a sales goal might be earning enough off of commissions to buy a house, while a sales quota would be the number of deals closed per month to reach the total commission goal.
The 5 Types of Sales Quotas
The core value of any significant sales quota is that it should be a target that impacts the organization’s bottom line. Sales management can use various quota types but should ensure they are essential to overall success. You could also consider using a combination of these quotas to ensure performance is tracked across multiple areas of improvement.
Revenue Quotas
Revenue quotas are the most common type of sales quotas, where a seller is responsible for earning the organization a set amount of total revenue.
Setting revenue quotas is often done by taking the average team performance, adding room for growth, and breaking down the total revenue figure into individual quotas for each team member.
Revenue Quota Example: A B2B SaaS company sets a total revenue quota of $10,000 for December for each sales representative. Robert, the company's top performer, has an average deal size of $3,000. That means he needs a minimum of 4 closed deals to meet the revenue quota. On the other hand, Jillian has an average deal size of $2,000. She will need to make 5 sales to meet the monthly revenue quota.
Activity Quotas
Activity quotas hold sellers accountable for completing specific tasks like completing sales calls or sending follow-up emails.
Activity Quota Example: An insurance agency has set a daily sales call quota of 15 for each agent. They have 2 sources of leads: leads given to them by referral through a partnership and a list of people who enter their seasonal raffle that they promote via social media and at conferences. The average close rate on both lead sources is 30%, meaning sales representatives can make roughly 4.5 deals per day if they meet the activity quota of 15 sales calls per day.
With savvy sales platforms like Instantly, hitting activity quotas is simple. We have a built-in CRM, email automation, and analytics you can view at a glance. Follow-up emails are instrumental to sales success, and our software can automate the entire scheduling process for you.
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Sales Volume Quotas
If the total number of deals closed is vital to your organization, you’ll want to set sales volume quotas with your sales team.
Unlike revenue quotas, sales volume quotas focus attention on conversions as the main KPI rather than a dollar figure. For many sales representatives, this is a more effective quota to set because not everyone is motivated solely by sales commissions.
Sales Volume Quota Example: A roofing company has set a sales volume quota of 5 closed deals per month. Dominick works in the sales team calling people that have previously shown interest in roofing services. He closes on 3 roof repair contracts per month and 2 roof installations per month. Megan works in a different sales team, focusing on warm leads coming from the contact form of the company website. She books 12 free roofing inspections per month, of which 5 become paying customers. Although they have different sales funnels, Dominick and Megan have met their sales volume quota by closing 5 deals per month.
Cost-Based Quotas
Cost-based quotas hone in on the total resources it takes to close a sales deal rather than focusing on revenue, activity, or sales volume.
Cost-Based Quota Example: A mechanic shop’s sales management instructs its sellers to spend a maximum of 25 minutes per sales call. Time is money, so management is trying to increase sales volume by setting cost-based quotas to save time. Janelle has to take inquiry information and set up a follow-up call with pricing for clients in 25 minutes so that she has time to work on the next service inquiry.
Sales Forecast Quotas
Forecast quotas are most commonly set as monthly or quarterly goals where the previous performance of a sales representative or a team is considered in future projections. This type of quota often considers performance improving over time, as sales training programs show compounding effects.
Sales Forecast Quota Example: An electronics store earned $250,000 in the 3rd quarter of the year. They want to increase their sales by 20% in the upcoming quarter, so they set a sales forecast quota of $300,000.
Crush Your Quotas with Ease
No matter which type of sales quota you set for your team, regularly monitoring performance is important for your organization’s bottom line.
Tracking results in software like Instantly’s AI-powered CRM allows you to stay on top of both your short-term and long-term goals.
