The New Year is synonymous with setting new goals for the sales organization, a process which frequently involves revisiting existing quota methodologies.  This is especially true in today’s uncertain economic climate where companies must address the unpredictable factors that come with an expected economic recovery.

A few trends have emerged among our clients that have been grappling with this problem.  Clinton Gott, Principal, Better Sales Comp Consultants elaborates in our “Ask The Expert” column:

• “Companies realize that it is of utmost importance to set appropriate quotas. In many cases, this includes looking beyond last year’s results and attempting to use more typical growth rates or even ones with recovery expectations factored in.

• Furthermore, companies are sometimes pairing these informed quotas with relief on the lower end of the pay line, particularly in the form of reduced thresholds. A salesperson’s perception of the challenge to meet an assigned goal can be somewhat relieved by the opportunity to earn a portion of variable pay at lower achievement levels.

• Third, as companies are increasingly hesitant to assign larger or aggressive quotas at the potential risk of poor seller morale, some sales organizations are lowering accelerators above plan which effectively pushes out the expected excellence point, i.e., the achievement percentage where they expect top performers to reach.

• Fourth and of key importance, many companies are reexamining or at least ensuring that a large deal clause is in place. While the definition of a large deal can vary based on the selling environment, plan policies often include a clause where a deal of a particularly significant size or type can be pulled out of the core compensation plan and reviewed for appropriate payment.”

Write in if you face similar problems or if you have any additional inputs you would like to share.