Quota and the Sales Salary

Quota is usually arbitrary. I am unaware of any provider who looks at average sales size and sales cycle days to calculate Quota.

Most providers want the sales rep to pay their salary and then some.

So at $60K base, the provider is spending about $78K with taxes and benefits.

If you sold $1K per month, the revenue generated is 11 months of revenue for anything sold in January if it can be installed and billed in February. That would result in $66K in top line revenue in a calendar year.

  • Jan – $11,000
  • Feb – $10,000
  • March – $9,000
  • April – $8,000
  • May – $7,000
  • June – $6,000
  • July – $5,000
  • Aug – $4,000
  • Sept – $3,000
  • Oct – $2,000
  • Nov – $1,000
  • Dec – 0 (because it won’t bill or install in Dec.)

Since most providers have a 30% margin,  that $66K ends up being $19,800 above costs. 

The way many providers see it, that won’t cut it for sales unless you look at it as the cost of sales is a business overhead charge and you gained $66K of top-line revenue.

Even at $2K per month, we are at $132K.

How many sales do they need to make???

If the average UCaaS sales size is 13 seats at $20 per seat, then the average sale is $260. A sales rep would need to sell 4 deals a month (one per week) to make $1K in quota. And 8 deals to make $2K!

For quota of $4000 and the average sales size being $400, that is 10 deals per month — or one every 2 days of the 20 business days per month. Is that doable?

Not if a sales rep has to perform the duties of SDR, farming, retention, and hunting.

There is a two-fold reason 60+% of reps can’t hit quota: (1) unrealistic quota; (2) not many people are farmers + hunters. How much lead generation does a company do?

Quota is just one measure of sales activity.

Quota needs to be realistic and attainable.

I understand that a $60K sales rep brings in $66K per year in MRC seems unreasonable, but how much would you bring in without a sales rep?

And how much training and/or coaching do the sales reps receive?

Need help thinking this through? Call RAD-INFO INC at (813) 963-5884

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