The Fear of Lowering Quotas...But it Works

It’s that time of year. Finance departments have prepared the targets for the next plan period. So, what do sales leaders do when these targets reach their desks? They divide it up amongst their team of sellers to ensure their aggregated number is covered, sometimes even with a buffer (sshhh). That is natural. If we, as sales leaders, have numbers we’re motivated to hit, and we also motivate our entire team (and with a buffer), we’ll surely all hit our targets, right?

Wrong. There is a threshold where a target or goal can be considered too far to reach, which impacts our team’s motivation to hit it. If I said I’d give you $1M if you can run 40 yards in 4.3 seconds, only professional athletes would consider that mildly motivating because it is within their realm of possibility (although pro athletes may not be as motivated by $1M as you or me…).

Set Attainable Sales Quotas

However, if I calibrated that target to something within reach, but still demanding – for example 5.5 or 6.5 seconds, what happens? Assuming you consider that within your realm of possibility, now how motivated would you be to try to hit that target? Lowering a quota may not initially feel like the right thing to do, but done properly – it can help get your sellers into the right mindset.

Why does that make such a difference? Psychological distance. This is the perceptive distance between you and your target, and it impacts your personal motivation. In their study of this concept, Yaacov Trope of New York University and Nira Liberman of Tela Aviv University highlight that this is an individual perception based on four factors, unique to you.

  1. Experiential distance is your perceptive difference between your imagination and what you’ve experienced.
  2. Social distance is your perceptive difference between your relationship to other people.
  3. Temporal distance is your perceived difference between now and your future.
  4. Spatial distance is your perception of a physical or measurable separation.

These four factors impact how you determine the likelihood of achieving your target and, therefore, your motivation to do so.

Meter Quotas to Increase Seller Motivation

There is another component to add to the value of lowering our quotas, which incorporates social pressure. If quotas are high and only 20% - 30% of your sellers hit their number, you have problems. Aside from attrition and the business likely missing the aggregate targets, your sellers will attribute the problem to the number itself and not their performance. Why? Well, being a part of the 80% of sellers who aren’t hitting their number isn’t an anomaly. While they may not be financially satisfied with their performance, there is comfort when you are part of the masses. However, if 70% - 80% of the team is above quota, then those that don’t will attribute the reason for missing their targets as something they can control.

As you start preparing to distribute quotas and make your ‘model’ work – keep this in mind. It is a scary thing to tell finance, or the board, that you’re going to meter quotas to impact motivation … but it works. The State of Territory and Quota Planning, 2021 research report examines all the trends and challenges that affect planning and shares what sales leaders told us can increase the effectiveness of their plans. Download the report today!