CHAPTER 4

People: The First Dimension of Success

It was a cool evening in April 2017, but the atmosphere was hot and wild. I was crushed in the middle of 50,000 screaming, euphoric fans at the intersection of Franklin Street and Columbia Street in Chapel Hill, North Carolina. After a long season, the University of North Carolina Tar Heels had just won their sixth NCAA basketball championship.

After that event, I thought about the teams that succeed in the NCAA tournament of 64 teams. With more than 350 NCAA Division I men’s basketball teams in the United States, why do the same programs show up year after year in the field of 64, the Sweet 16, the Elite 8, the Final Four, and the championship game? That’s a powerful Challenge Question. As of this writing, the top-tier teams in terms of championship game appearances are UCLA (12 appearances and 11 championship wins), the University of Kentucky (12 and 8), the University of North Carolina at Chapel Hill (11 and 6), and Duke University (11 and 5). Only 15 teams (the top 4 percent) since 1941 have won more than one championship game. There must be a reason, an approach that leads to success. These top teams don’t always have the top talent. Coaches rely on their charisma, vision, and program strength to persuade new recruits. Many players cycle through the top college basketball programs like a revolving door on the way to the NBA. But, year after year, many coaches remain with their loyal rising sophomores, juniors, and seniors plus the next generation of new freshman players.

While the college game continues to evolve, what differentiates the top programs? People, process, and resources. The people side includes coaches who have superlative leadership skills, who can chart a vision, and who can train and develop their players to compete as a team rather than as individuals. The core of the people are the players, many from diverse backgrounds and different perspectives. A lot of players start as lone wolves, individual stars, not yet team players. But they are coachable and, in the end, they share a common vision.

On the process side is a methodology for how to develop the team and how to play the game. I was fortunate to take a tour of Dean Smith Center in Chapel Hill with Scott Smith, the legendary coach’s son. What he showed us made the point. In the post-game film room, where the coach and team review video of each game, a stats board hangs to the side of the video screen. On one axis of the board each game of the season is listed. On another axis the key metrics are listed for each game. The list includes metrics such as blocks, assists, screens, and rebounds with the leading players for each metric. There is, however, one metric that isn’t included: points scored. The process of winning is based on critical factors to be executed. Follow the process and play like a team. The points will come.

Resources provide the facilities, trainers, and programs that enable a winning team. Of course, some teams have invested heavily up front in making a run at a championship. But with the perennial winners, often a successful coach and a successful process will help with recruiting talent that leads to a winning record that ultimately draws the funding and resources to help the team continue to build into the future. With quota setting, leadership and coaching is paramount. A strong leader with a clear vision and process can draw talent and investment in improving quota competency that will help the business grow. When we look at disciplines like selling, creating winning sales strategies, and developing a game-changing quota approach, the people, the process, and the resources are paramount.

Introducing the Quota Success Model

Conventional wisdom holds that setting effective quotas is all about the numbers. But if that were true, quota setting would be totally analytical, based on fact, and completely objective. If it were about only the numbers, it would be a lot less messy and a lot less emotional. We’d have fewer turf wars about who owns the process, sales and finance would love each other, and there would be little to no emotional turbulence from managers and reps who’ve been saddled with an unattainable goal that they fear will “bottom out our sales compensation plans” and “destroy our financial futures!”

Sales Design Thinking relies on the principle of simplification. Most of the challenges we deal with in sales problem solving have a good deal of complexity and “hair” on them. Quotas, in particular, are a hairy issue for most companies because they involve market information that may be incomplete, capabilities of the sales organization that are hard to define, people with views that are hard to understand, and the sales organization’s compensation, which can become a hot, emotional issue. Let’s look at the big, global Challenge Question around quota setting that we address in this book:

There are many answers, of course. When we explore “methods,” “processes,” “attainable quotas,” and “company performance” we find three fundamental dimensions that describe the practices of high-performing sales organizations. Examining these three areas can simplify how we approach the problem:

• the people who engage in setting and receiving quotas

• the market opportunity that’s available to the people in the sales organization

• the sales capacity of the people in the sales organization to pursue that market opportunity and attain those quotas.

We’ve taken a leap from a very complex challenge to three dimensions that can help us simplify and solve the challenge.

Keep those three dimensions in mind. The Quota Success Model is built on them (Figure 4-1). The model looks at how organizations go about planning and exceeding their growth goals in the context of the roles and process the organization engages to create goals and allocate quotas (people); what’s available and addressable in our markets based on where we focus and what we offer (market opportunity); and our ability to win more than our fair share of the market opportunity and achieve or exceed our goal (sales capacity).

Figure 4-1. The Quota Success Model

This chapter looks at the people dimension. In the chapters that follow, we’ll look at market opportunity and sales capacity. Then we’ll look at some methods we can apply to the overall process.

Enter the Team

While quota setting heats up for most companies around midyear, quotas are at play all year long. Management is (or should be) continuously evaluating the organization’s performance, looking at results for each month and quarter, making adjustments to the sales coverage model based on performance, and using that information to plan for the coming year. As the game clock ticks, we see figures in motion. It’s a company deep in the midst of operations, moving quickly but purposefully down the court. The team appears:

The Board of Directors

Silhouettes appear high above the court in the owner’s box, standing shoulder to shoulder. There are eight of them, maybe 12, with a bird’s eye view of the action, gazing at their board books. This sage group is intensely reviewing and approving the big plays, the strategic recommendations of the C-suite executives. The board is focused on the “why”—the vision, performance to the major goals like corporate revenue, bookings, and profit.

In more than a third of companies, the board leads or supports setting the corporate goal versus just reviewing and approving the C-suite recommendation, so the board of directors can be a major player in the process and highly involved in the direction of the business. At most other points in the quota process, the board plays a minimal role or no role. Bill Thomas, former president of Western Union and Bristol Myers-Squibb, discusses the role of the C-suite and the board:

In mid-cap and private equity–owned companies, the board tends to play a more active role beyond just reviewing and approving the goal. In fact, sometimes board members can be overly engaged, as Todd Abbott, executive vice president of global sales for Mitel, describes. “I had a board member who literally was proposing a 20 percent uplift on sales rep goals. And she was saying that’s what she has experienced in software. I mean there’s no way. I’d have a sales team so demotivated. Now, fortunately, I had a CEO that had the same reaction I did. But, I think there’s always this healthy debate.”

The CEO, COO, and President

Not far from the board, the executives direct at the top of the organization. Commanding before the board of directors, they look ahead, eyes focused on the scoreboard and game clock, planning for each quarter, the full game, and the rest of the season. From the court below, the entire team looks to the C-suite for strategic direction. The C-suite charts the vision, goals, and strategy for the organization. They also lead the corporate goal-setting process in a majority of organizations. Jana Schmidt, CEO of Harland Clarke, describes her involvement: “I’m accountable for top line and bottom line, establishing how much of that top line is coming from recurring revenue that’s already sold and differentiating the recurring revenue from new sales that need to happen and new bookings that need to happen within a given year so they’ve got time to build. This also helps us to achieve our revenue and margin goals and set a budget.”

The CFO and Finance

Walking in long strides back and forth across the owner’s box is the CFO, the minister, head held high, focused on the big picture. Behind the CFO streams the finance organization double-stepping to keep pace. The CFO is the watchperson for the C-suite, making sure the team gets a return on its investments in talent and infrastructure. The CFO is also engaged in setting the corporate number in most organizations, along with the CEO, COO, and president. The CFO interfaces with the market analysts to give them insight and temper their expectations. According to Frank Hall, CFO of Radian, the CFO isn’t always aligned with the analysts: “They may either have you too high or too low relative to what the business is able to do. So, it always makes me laugh a little bit when the headline says, ‘Company exceeds analyst expectations.’ The assumption is that the analyst expectation was the right number, versus the company actually producing the right number, and the analyst getting it wrong.”

The finance organization comes in close behind, keeping tabs on goal allocation to the organization then leading the top-down, bottom-up reconciliation at the end of the quota-setting process to make sure the organization’s number tallies up.

Senior Sales Leadership

At the top of the business units, theaters, and divisions stand the senior sales leaders. They’re the field generals. We see them poised on the sideline, looking over the game, charting the plan, directing the players, and making adjustments as the game ensues. The senior sales leaders are assessing the opportunity in the markets, evaluating the sales capacity of the organization, and determining the players and capabilities they need to win each game. They’re also allocating the quotas to their division and region sales leaders in the field. Sometimes those quotas are attainable and winnable by the field sales managers. Sometimes the senior sales leaders have to hand down orders that they know are simply too much for the field to handle in the market.

“Our process typically starts with a discussion with the CEO in which we set revenue and profit goals for the upcoming year,” said Radian’s chief franchise officer, Brien McMahon. “Even if the market expectations are below last year, typically the number will be higher, as we must show growth,” he told me. “I receive the number, and then I will typically add revenue to create a stretch goal for our team. So if some people miss it, others will compensate and we’ll still hit the original goal that was set.”

Marketing

Backing up the sales team, marketing is providing intelligence on the market, the competition, and where we can score points. It often has a big view on the field of customers and competitors, complete with game stats on every angle. Sales leadership has to take this insight and translate it to focused goals, align the right sales capacity and talent, and create game plans for how the team will reach those objectives.

Division and Region Sales Leadership

Suited up on the court, the division and region sales leaders direct the team of field managers and their front line. They’re close to the action. They provide bottom-up input to the goals in about half of companies and help allocate the goals to first-line sales managers and the front line. They also swoop in to help their first-line sales managers make adjustments, rally the troops, and win each play.

Sales Operations

This is the group at the core of the team. Behind the results and the accolades that sales receives while it’s winning in the spotlight, sales operations supports them across multiple fronts. Sales operations plays a range of mission-critical roles from market planning to account strategy, sales talent development, compensation, and—of course—quota setting. They play a combination of lead and support positions depending on the company and the sales discipline they’re covering. Without sales operations, sales would have to scramble to enable its game plan.

When it comes to quota setting, they’re often the voice of reason, as Diane Boudreault-Owen, vice president of sales operations for Poly describes:

First-Line Sales Management and Frontline Sales

As the intensity of the game continues on the court, we see the first-line sales managers and their frontline sellers engaged in the battle for customers. In the frenzy, it’s hard to tell if they’re beating the competition and gaining market share or just holding ground. Amid the fray, the managers and reps are in a different reality than those executives up in the owner’s box. “We have the business on our backs. Corporate has no clue about what we go through every day. Special projects? Corporate initiatives? The new CRM implementation? What do they think we’re doing out here?” they might be saying.

First-line sales management is the defender of the front line. They make sure the front line is trained, equipped, and in winning shape every day. They coach and nurture the front line. They give corporate the stark reality in their bottom-up quota input. But, too often, they feel like the ones in the owner’s box pay lip service to bottom-up input and just push down the corporate goal anyway, further distancing the front line from the corner office.

The Game Unfolds—Engagement in the Process

When it comes time to begin the business planning process for next year, we look at the major steps required to allocate that corporate goal to each rep in the organization. The major players get involved in varying degrees, either leading or supporting the process as illustrated from our research.

Determining Market Opportunity

Understand the organization’s addressable market in terms of customer revenue retention, customer penetration, and new customer acquisition. Senior sales leadership leads or supports this process in 59 percent of the companies we surveyed, taking the lead 68 percent of the time. Sales operations plays a either a lead or support role in 44 percent of companies, and marketing takes either the lead or support role in 31 percent of companies. Finance supports in 28 percent of companies.

Determining Organization Sales Capacity

Understand what the organization can produce based on factors such as staffing, available sales time, and sales workload. Senior sales leadership leads this process in 63 percent of respondent companies (Figure 4-2). Sales operations primarily plays a support role, engaging more than with the market opportunity determination step, in 59 percent of companies. Division and region sales leadership primarily support in 44 percent of companies. Finance supports 34 percent of the time.

Figure 4-2. Organization Engagement in Business Planning and Quota Setting

Setting the Corporate Goal

Determine the highest-level financial goals to be allocated to the organization. While investor and market expectations weigh into setting the corporate goal, senior leaders in most companies consider market opportunity and sales capacity when finalizing the corporate number. Investors want to increase performance, but they usually want to be realistic and don’t want to fall short of goals. A lot of team members get involved in leading or supporting the setting of the big number.

The CEO, COO, or president leads or supports setting the corporate goal in 78 percent of companies we surveyed, taking the lead about 60 percent of the time. The CFO works alongside, either leading or supporting in 75 percent of companies. The CFO’s finance organization typically supports in 63 percent of companies, with senior sales leadership close behind, playing primarily a support role in 56 percent of companies. The board of directors either leads (about two thirds of the time) or supports, setting the corporate goal in about 38 percent of companies, otherwise evaluating and approving the goal proposed by the C-suite. Sales operations supports the process in 40 percent of companies.

Allocating to Major Business Units or Geographies

Distribute the corporate goal to the next organization levels, usually business units, regions, or divisions. With the corporate goal set, senior sales leadership allocates the goal to the next level in 69 percent of our respondent companies, leading this about 77 percent of the time. Finance primarily plays a support role with this next level allocation engaging in about 53 percent of companies. Sales operations also supports, participating in 44 percent of companies. Division and region sales leadership plays a support role about 38 percent of the time.

Allocating to Field Managers

Distribute the business unit or geography goals to first-level sales management. Division and region sales leadership conduct this allocation in 66 percent of companies in our survey, usually leading the process and teaming up with sales operations in about 62 percent of companies, usually playing a support role. Senior sales leadership engages in about 55 percent of companies also leading like division and region sales leadership most of the time. Finance plays primarily a support role in 25 percent of companies.

Providing Bottom-Up Input

Use field-level customer and sales information to provide intelligence to the organization as it sets and allocates quotas. During corporate goal setting, allocation to each organization and management level, and allocation to the front line, companies may incorporate bottom-up input. Sales operations is engaged in providing bottom-up input in 56 percent of companies surveyed, balanced between leading and supporting; along with senior sales leadership, division and region sales leadership engaged in just over half of companies, leading and supporting. First-line sales managers provide direct input the bottom-up in about 34 percent of companies.

Reconciling Top-Down With Bottom-Up

Align and reconcile the top-down requirements with bottom-up input in opportunity and capacity. With all the information calculated on the top-down requirements and the bottom-up capability to attain the top-down goal, there’s usually a gap or shortfall. For most organizations, this is the final tension point before goals are finalized and locked in for each level of the sales team and the gap has to be reconciled. Someone’s got to do it. In 54 percent of respondent companies, finance most often takes a lead role. Along with them, senior sales leadership and sales operations also work on the reconciliation in about half of companies, either co-leading with finance or supporting the process. Division and region sales leadership support in about 40 percent of companies. In our experience, this collaborative engagement is important as goals are finalized to ensure that the sales organization owns the goals. If finance completely owns the reconciliation step then, despite all the hard work the organization does with top-down and bottom-up, the sales team can perceive that, in the end, they were just handed a goal from finance.

Allocating to Reps

Distribute the first-line management goals to the frontline sellers. Sales operations gets involved in about 65 percent of companies in our survey, typically playing a support role to first-line sales management in 59 percent of companies and either leading or supporting, along with division and region sales leadership, in 41 percent of companies. Depending on the company, either the division and region sales leadership or first-line sales management will lead the rep allocation, with the other management level supporting. Senior sales leadership also engages in about 37 percent of companies, usually supporting. In our experience, given an actionable set of tools and development, first-line sales management is usually most effective at frontline rep allocation due to their familiarity with the team and markets. In a solid quota-setting process, first-line sales management’s assumptions and decisions are validated by sales operations and sales leadership to minimize any subjective decisions or rep bias.

How Can We Work Together?

With this diverse group of players involved in quota setting, there are bound to be some conflicts and fouls. Everyone comes from a perspective where they believe they’re right and they understand how quota setting should be done. With this natural organizational tension around quota setting, here are some practices in organizations that we see are doing it well.

Understand the Motivators for Each Function

The C-suite, finance, sales, and marketing may each have different objectives and motivations during quota setting. For example, finance may be motivated to control costs and get a return on the company’s investment in sales resources. That could translate to the voices we hear from finance, which sound like, “The sales organization makes too much for what they produce.” Meanwhile, sales may have a different view, which sounds like, “We want the team to beat its quotas, but the organization needs to understand that at the same time, we take our fiduciary role seriously.” Marketing may look at the situation from yet another angle, which sounds like, “We have to do everything we can to motivate the sales team to sell our new subscription services, so let’s make sure we put enough quota on those.”

The key is alignment. Todd Abbott spoke of this. “My experience has always been when finance owns the quota-setting process, it’s done from a perspective that is more done from a financial protection perspective versus really aligning to the growth strategy, and the growth plan for the business,” he explained. “I think it’s important that it’s transparent, and everybody understands it, and has signed off on it. But it all starts with ‘Do you have a good sound business plan that starts with what’s the target addressable market? How big is the market? What’s your market share?’ If it’s not aligned, then setting quota is a little bit of black magic, and, frankly, much tougher to sell to the field.”

Create a Common Definition of Success

While each function may have a different perspective, left unchanneled, those differences can put the C-suite, sales, finance, and marketing in continuous friction. Find the commonality in how each function defines success, then work backward from that common definition to understand the differences and how those might be bridged with the process and methodologies the organization applies. It’s easier to find commonality when we start from the common point of agreement, then break apart the differences between groups into pieces we can discuss and reconcile one at a time.

Develop a Process With Rules of Engagement

As we’ll describe in later chapters, being clear about the process and making it known and visible to the organization creates a path for success. Get quota setting out from behind the closed doors of the conference room. Publish the process. Then define the roles each function will play, the rules of engagement for who will lead and support, and how each function will interface.

Agree to Methodologies for Each Market Type and Sales Role

Break apart the problem into its components by market type and sales role. Trying to solve the problem by getting each of the functions aligned around a methodology is easier if we develop methodologies specific to the major differences in markets. For example, finance may have greater comfort around trying a pipeline opportunity estimation process for large accounts if the organization is using a more analytical approach such as account potential estimation, which looks at predictors of potential for mid-sized and small accounts that comprise a large portion of the business.

Look to Senior Leadership to Set the Tone of Teamwork

Depending upon the culture of the organization and its level of cooperation, trying to influence and bring along a diverse group of people across functions will only take us so far. Nothing drives alignment like leadership. Senior leadership must make clear the importance of improving quota setting, establish the big “why” behind solving the problem, and demonstrate an expectation of alignment and cooperation for the common goals of the business. When alignment doesn’t happen, leadership also has to address it clearly and quickly. If there are active resistors in the organization, leadership must have the resolve to correct them or, if necessary, remove them from the organization. In my experience, when this happens once, the organization suddenly aligns with a great attitude.

Five Points to Consider

People are the first dimension of the Quota Success Model, and ensuring you have clear roles and rules of engagement is critical. With the roles defined, understand the motivators of the team and create a common definition of success. Look back to your solution vision from chapter 3 to pull out the big “why” for improving the quota approach to align the team to the vision. As you think about your team and people, here are five points to consider:

• In quota problem solving, draw upon the three dimensions of the Quota Success Model: people, market opportunity, and sales capacity.

• Lay out the functions and roles that must be involved in quota setting in your organization.

• Align the functions to each step in the quota process and be clear about rules of engagement.

• Create a common definition of success across the functions while understanding their varied perspectives.

• Engage senior leadership to set the tone of the bigger purpose and the importance and expectation of team alignment.