You Missed your Q1 number…Now what?
By David Stout
For many organizations, the first quarter is arguably the most important quarter of the year. Getting Q1 off to a strong start provides confidence - to those carrying quota as well as the broader organization - that Sales & Marketing are on track to accomplish the goals for the year. Conversely, missing Q1 can be a cause for concern: is it a product problem, a messaging problem, or a sales problem? Regardless of the cause, ending the first quarter in the hole requires GTM leaders to evaluate and course correct.
I recently pulsed my network to get a sense of how things were shaping up for Q1. I solicited feedback via LinkedIn, other social media and through 1:1 conversations, and from a small sample 30% were confident they would exceed Q1 quota. Another 17% estimated they would hit 90% of quota, but not make their full number. 33% of respondents estimated they would fall somewhere between 75% and 90%, and 20% shared they would fall below 75% attainment. Put differently, 53% of the respondents estimated they would finish Q1 below 75% of quota.
The results of this informal survey aren’t statistically significant, or likely even representative of many sales organizations. But I suspect there are some sales leaders right now looking at what they have to deliver over the next nine months, and starting to think about what adjustments need to be made in order for them to get back on track to deliver their number for 2023. For leaders in this situation, here are three common problem areas to investigate.
Are you incentivizing the right behaviors?
There is no magic compensation plan that will fit every organization, and successful incentive plans are tailored to the specific goals of the organization. If a significant percentage of your team is behind quota, you may have an issue with how you are motivating them. I learned early in my career that you need to monitor inputs (e.g. meetings, new opportunities etc.), but incentivize and reward outputs (e.g. contract signed, revenue recognized, etc.). Inputs are important, but can easily be gamed. Revisit the elements you are rewarding, and confirm they are in line with the broader outcomes you signed up to deliver. Review your payout curves to ensure you are motivating your reps to hit a minimum threshold, and rewarding them via accelerators when they exceed quota.
Are your Quotas & Territory assignments equitable?
A lot of sales teams grew quickly during the pandemic, and one consequence of fast growth is that territories can get out of balance. Orgs that have gone through rapid growth (and perhaps those that may be now contracting) should reevaluate this distribution. Territories don’t have to be equal, but should be equitable, and have the potential to meet and exceed quota. Areas to consider include:
Confirm territory criteria: Examples include market size, customer density, sales potential, and historical sales data.
Validate quotas: Consider the characteristics of each territory, including the size of the market, the number of prospects/customers, and the opportunity potential.
Involve reps: The biggest validation you can get is directly from your reps. Including your team in the process will not only build trust, it will ensure they understand the rationale behind the territory assignments and quotas, and drive ownership and accountability.
Are your front line managers equipped?
Organizational growth creates opportunities for career growth. If your team has experienced growth, you likely have employees that have evolved from an individual contributor role into a managerial role. It is common to promote reps to managers if they have demonstrated consistent performance of exceeding quota. However, great performance as an IC does not automatically translate into great sales leadership. If you have new front line leaders, make sure you:
Provide training and support: Offer the necessary training and resources to help them transition into their new role. Examples include coaching on leadership skills, sales management strategies and team management techniques.
Be clear with expectations and communication: Clarify their sales targets, KPIs, and other performance metrics. Remember to “Inspect what you expect”. Provide opportunities for feedback, both from their team and from other senior managers, and encourage them to share their own thoughts and ideas openly.
Empower them: Be clear that as a manager, they have authority to make decisions and take action to achieve their goals. Support their decisions and provide guidance when needed, but trust them to take ownership of their role and responsibilities. And remember to celebrate their successes!
Conduit Partners has extensive experience in designing and optimizing organizational and incentive plans needed to attract and retain top sales talent and produce world class sales teams. Interested in learning more? Click here to schedule an introductory call.