Sales Quotas vs Sales Goals - What Are the Differences?

Sales Quotas vs Sales Goals - What Are the Differences?

Anirban Banerjee
Anirban Banerjee
April 17, 2022
5 min read

Mark Twain once said, “the secret of getting ahead is getting started. The secret of getting started is breaking your complex overwhelming tasks into small manageable tasks, and starting on the first one.

Reaching a milestone and merely declaring it as a goal won’t make any difference. The classic advice of taking “baby steps” doesn’t just form the moral of bedtime stories; it also finds a place in business, and specifically, while setting sales goals.

How do you grow your business? By selling more and more of what you sell, and increasing your revenue year over year. But that’s something your sales team already knows they’ve been hired to do. Needless to say, you need to think beyond just the “selling more” concept; you need to set clear sales goals, specific to your business aspects, and you need to define smaller targets to achieve those overarching goals. 

Smaller sales quotas to achieve bigger sales goals

What are sales goals?

"The trouble with not having a goal is that you can spend your life running up and down the field and never score." –Bill Copeland

If you want to see a significant hike in your ROI, you need to communicate the same to your sales team, but just communicating is not enough. That’s where you factor in sales goals to give your salespeople a clear picture of what you want them to achieve.

Sales goals are the big-picture objectives that you, as a sales manager, set for your sales team to increase your company’s revenue. Sales goals are tied to underlying sales metrics and KPIs that your sales reps work upon to hit time-sensitive sales quotas. For example, a sales goal can be increasing your annual recurring revenue by 25% year over year or reducing your customer churn rate.

Did someone say sales quotas?

Duh! Of course, sales goals cannot be a part of a conversation that doesn’t lead to an in-depth discussion regarding sales quotas.

Sales quotas are the smaller, time-sensitive targets that your sales teams have to achieve to further accomplish the bigger sales goals. If you have to reduce your customer churn rate, a sales quota could encompass renewing x subscriptions of existing customers every month. Sales quotas can be weekly, monthly, or quarterly - depending on the sales goals and the capacity of the sales team. 

Can sales quotas go wrong?

If you follow the S.M.A.R.T. (Specific, Measurable, Attainable, Realistic, and Timely) way of setting sales quotas (and sales goals), you will be well equipped to achieve your desired results. But if you don’t put enough research, analysis, and thought into your sales quota setting, unattainable sales quotas can lead to disappointed sales teams, unaccomplished sales goals, and toxic work culture. And on top of that. You might end up draining all the money you saved for your company’s future growth into rehiring and training. 

So, it’s better to set achievable sales goals and quotas over the specific period of time that they can be achieved in. Here are some S.M.A.R.T. ways you can leverage to set sales quotas - broken down into different types, based on the sales metrics you want to improve:

Types of sales quotas with examples

Revenue quota

Your sales reps are finally on their best game, and the business operations are quite stable. What’s next? Of course, you would want to increase the revenue your business is generating. In this scenario, you should set revenue quotas for your sales reps to achieve bigger revenue goals.

For example, you can ask your sales reps to bring in $10,000 every month, close ten $1,000 deals a month, or increase their individual sales revenue by 6% for every subsequent month.

Profit quota

Is there a product that you think has the potential to yield you more profit? Whenever you think that there’s scope to improve the profit margins through your products/ subscription renewals, or any additional services you offer, it’s time to set a profit quota for your sales reps. 

For example, you can incentivize the sales reps who earn you a $10,000 profit on a product that is otherwise trending low in your sales CRM ledger.

Forecast quota

Let’s say you’re rolling out a product upgrade, and you want to forecast how much revenue it could generate so that you can set clear, attainable quotas for your sales team. This is when the forecast quota comes into the picture. The forecast quota is based on the historical data of your previous sales, and you can leverage it to derive accurate sales forecasts. 

For example, your sales team closed 90 deals in the last quarter. Now, you are selling your upgraded SaaS product to your existing as well as new customers. Based on the previous sales data and sales conversations with your existing clients and potential customers, you can derive the likelihood of the number of deals you can close and then predict the revenue they would bring in.

Luckily, sales intelligence software (like Wingman) can provide you with these KPIs for sales enablement to forecast accurate metrics. Wingman leverages your pre-recorded sales phone calls and the historical performance of your salespeople to give you actionable insights for setting sales forecast quotas.

Activity quota

Activity quota is the target for executing sales activities such as making x number of calls and sending y number of follow-up emails. Small activity quotas complete the bigger picture of closing a deal by moving a qualified lead down the sales funnel. Activity quota helps you get a 360º visibility into each sales rep’s deals and the efforts that they are making on a regular basis - helping you go beyond just what the final numbers convey - for assessing their sales performance. 

Volume quota

Clearly, volume quotas are directly related to how many products you sell. However, there’s more to it. You can further utilize this type of sales quota to sell more to a specific buyer persona or to increase the sales volume of a particular product. For example, you need to increase the number of sales for enterprise-level prospects. So, you can set the quota for your sales reps to close four out of ten deals with small or mid-sized businesses every month. 

Combination quota

Expanding on the same example we used for volume quota, let’s say that you want every sales rep to generate $12,000 of sales revenue every month. Now, you can combine the volume quota with the revenue quota for your salespeople to accomplish these sales goals as the end-game:

  1. To close more deals with enterprise-level prospects
  2. To increase the sales revenue at the same time

Set a combination quota to hit $12,000 in sales revenue and at least four deals to be closed with the enterprise-level prospects.

Sales goals vs sales quotas 

If a sales goal is that Porsche you’ve wanted to buy for so long, sales quotas are the recurring monthly deposits in your savings account until you can finally buy the car of your dreams. 

Here are a few differences between sales quotas and goals:

Sales Quotas

  1. Sales goals are the long-term objectives based on your aspirations and ambitions to drive business growth and high ROI. 
  2. Example: Increasing the sales for larger clients

Sales Goals

  1. Sales quotas are time-sensitive targets that you set for your sales teams. They have to be achieved in that timeframe to reach the ultimate sales goal.
  2. Example: Closing five enterprise-level qualified leads every month

Common sales goals & how sales quotas help achieve them

Pushing up the sales revenue

Sales goal:

Increasing the sales revenue is the most fundamental sales goal for any sales organization and it’s just as tough to attain this goal without hitting smaller sales quotas. 

To boost your revenue, you can create 20 new products and sell them in 20 new markets to become an overnight success. Just kidding! (Though I know I got you there!)

Sales quota:

Let’s have another go at it. To boost your sales revenue, you can set a revenue sales quota for achieving a month-on-month increase in revenue by 10%. However, you can go beyond that and spice it up with these sales quotas:

  • Activity-based: Making 40 calls to prospects every day and 20 calls to existing customers every month
  • Volume-based: Increasing the volume of products sold by five more units month-over-month

You can have your team hit these quotas separately, or you can create a combination of either two or all three to make the sales-wonders happen! Remember, achievable quotas and realistic timelines, always!

Boosting customer lifetime value

Sales goal:

Lifetime Value (LTV) is the value that the customer contributes to your business over the term of their relationship with you. The key to increasing this metric is by keeping a tab on your existing customers and looking for the apt moments when you can upsell. For example, you can set a sales goal to increase the customer lifetime value by x% year-o-year.

Sales quota: 

Making x calls to existing customers and closing y up-sell deals every month/quarter

Minimizing customer acquisition costs

Sales goal:

Sales process for selling SaaS products often takes away a big bite of your profit pie and countless efforts from sales and marketing teams. This cost is called customer acquisition cost (CAC), and the goal is to minimize it and hit the right balance between CAC and LTV. 

Sales quota:

Analyze your sales cycle and see what’s using up the major chunk to your CAC. Ideally, you should try to hit an LTV:CAC ratio of 3:1.

Reducing the customer churn

Ah, the tricky one! Yet, the most important.  

Lost customers = lesser revenue (duh?)

Sales goal:

For your business to keep generating revenue and sustain, you first need to get a stronghold of your existing customers before you set out to close more deals. Because if you can’t keep existing customers, how do you plan to retain the new clients that you close?

Sales quota:

The key to cracking this one is by first, building healthy relationships with your customers, and second, to water that plant regularly - if you want to see it bloom. 

This can be achieved by assessing your customer’s needs from time to time and unraveling cryptic key points from various customer calls. To begin with, you can set a sales target of making 20 calls to existing clients every month and identify 2 KPIs for every customer on the basis of the sales conversation. Then, you can identify the upsell opportunities and hit the iron while it’s hot. 

However, prospects and customers often speak through smoke screens, and many easy-to-miss signals fly under the radar. As soon as your prospect hangs up, there goes all the valuable information that you couldn’t pen down to use for your next sales conversation.

Seems like you need a wingman

Wingman is a sales intelligence software that transcribes all your sales calls and gives you AI-powered, actionable insights to get more clarity into your sales funnel and customer’s mindset - to ultimately achieve your sales quotas and sales goals.

You would need to consider all the revenue-impacting factors to set insight-driven sales quotas. Wingman allows you to integrate various platforms into its sales intelligence software, such as your CRM, calendar, dialer, and communication channels like Slack.

Wingman even enables you, a sales manager, to quickly navigate through your reps’ sales calls and identify coaching opportunities. This further helps your sales reps course-correct and step up their sales game within the time to hit their sales quotas without disturbing the final picture of your business’s sales goals. 

To set S.M.A.R.T. and data-driven sales quotas and sales goals, book a demo with us today!

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