Understanding Sales Quotas : A Guide to Setting up Forecast in SugarCRM

Understanding Sales Quotas : A Guide to Setting up Forecast in SugarCRM

Sales CRM aims to enhance the productivity of sales team members and track sales towards organisational goals. SugarCRM, through its Sugar Sell for Sales Force Automation (SFA), provides features for setting sales quotas and forecasting sales progress over upcoming months and quarters.  As a SugarCRM partner since 2007, we have implemented various CRM solutions and assisted in establishing sales quotas and enabling the forecast module in SugarCRM for future sales expectations.  Let’s delve into sales quotas and forecasts in SugarCRM with examples.

What are Sales Quotas ?

A sales quota is the target established by management for the sales team, outlining the amount of sales to be achieved within a year, which can be further divided into quarters and months. In case of companies with distributors and dealers, sales quotas are also defined for them.

Sales quotas are crucial for salespeople and their manager as they are tied to the incentives paid by the company at the end of the month, quarter and year. Therefore, a sales team’s performance is measured by the extent to which they meet or exceed their sales quotas. 

Likewise, a salesperson’s productivity is determined by the achievement of their assigned quota. 

Sales Quota vs Sales Target

While the sales quota serves as an overall target for the year, it can be broken down into monthly targets for each sales team and its members. For instance, in  a company with 3 sales teams selling different product ranges, the management may allocate a $1 million sales quota as follows. 

Team A : $120,000

Team B :  $360,000

Team C : $520,000

If Team A has 1 sales manager and 1 sales executive, they may be assigned a monthly target of $5,000 each to achieve $60,000 by the end of the year with a $120,000 target. Additionally, if Team A sells a consumable product with a short sales cycle, their incentives are typically defined monthly, and the team members receive their incentive payouts at the end of each month based on their achievement. 

Consider Team B, which sells high-value products with sales cycles typically lasting 1 to 3 months. In such cases, consistently securing orders week after week and month after month can be challenging for salespeople. In this scenario, the management may not stress much about month-to-month performance but rather focus on the salesperson meeting their quarterly quota, despite having monthly targets. Consequently, the salesperson’s incentives are calculated based on their quarterly performance. 

For instance, if there is only one sales manager for Team B, with a monthly target of $30,000, the manager may achieve $10,000 in January, $50,000 in February, and $30,000 in March totalling $90,000 for the quarter, thereby making them eligible for the incentive.

For high-value products and solutions, certain opportunities may extend beyond quarterly timeframes, making year targets the sole basis for incentives.

Additionally, not all sales team members are directly accountable for generating revenue, as their roles may not be directly linked to order bookings. For example, pre-sales executives are responsible for product qualification rather than direct sales. These distinctions give rise to various types of sales quotas, each serving a different purpose. Let’s delve into understanding these different types of sales quotas.

Types of Sales Quotas 

There are various types of sales quotas depending on the activities of the sales team:

  • Sales Quota based on Revenue / Forecast
  • Sales Quota based on Sales Activities
  • Sales Quota based on Volume
  • Sales Quota based on Profitability

Sales Quota based on Revenue / Forecast represents the yearly revenue target, usually for team members directly responsible for closing orders. 

Internal sales team members are tasked with identifying potential targets and contacting them through methods such as emails, calls, and arranging meetings with sales managers. In this scenario, a salesperson’s performance is evaluated based on daily email quantity, call frequency, and meeting arrangement, known as Sales Quota based on Sales Activities.

At times, companies prefer to track the quantity of products sold rather than their monetary value. This is called Sales Quota based on Volumen.

Additionally, when dealing with high-volume, low-margin goods with associated selling costs, companies opt to assess the salesperson’s monthly profit rather than focusing on volume or revenue. This type of sales quota is referred to as Sales Quota based on Profitability.

These sales quotas can be tracked and measured in SugarCRM to determine the salesperson’s productivity. When specific targets and incentives are set, salespeople tend to perform better.

How do you set up Sales Quotas in SugarCRM

Different methods can be used to track various types of sales quotas, with the most crucial being the Sales Quotas based on Revenue. 

Let’s explore how we can measure and oversee different types of sales quotas. 

The simplest method is the Sales Quota based on Sales Activities, which can be achieved by modifying some of the standard activity reports. Sales Quotas based on Volumes can be implemented by creating a basic custom module and associating it with the product quantity in the Revenue Line Item. 

We have encountered this situation several times, but one notable case where we implemented this custom module-based Sales Quota setup was for a leading Asset Management Company in Singapore. 

For this company, which was selling mutual fund products through banks, it was crucial to track the quantity of sales made by each bank.The asset management company closely tracked a custom module that captured the committed target set by the bank and the actual monthly sales of mutual fund units, for quarterly and annual reviews.

Setting Up Sales Quota in SugarCRM

The Sales Quota in SugarCRM is closely connected to the Opportunities and Forecast modules. In Sales CRM terms, closing an Opportunity with “Closed Won” status is seen as a sales team achievement. Therefore, the Sales Quota and its attainment are tied to the successful Closed Won Opportunities, while the likelihood of meeting future targets is associated with the open opportunities in the salesperson’s pipeline.

Therefore, within SugarCRM, the forecast module serves as the central component for enabling the sales quota for the sales team. It allows for monitoring at both individual and team levels, based on the available opportunities. 

SugarCRM forecast configuration is the foundation for setting up sales quotas and monitoring them.

What is the Sales Forecast ?

The sales forecast in CRM involves predicting the company’s future orders using the opportunity information that is consistently captured.With the exception of high volume, fast-moving, low-cost products, most companies utilize forecasts on a monthly, quarterly, and yearly basis. 

The SugarCRM forecasts module can be activated by administrators through the Forecast Settings. These settings include the frequency of the forecast (monthly, quarterly, or yearly) and the fiscal year start date. Sales quotas can only be enabled after configuring the forecast settings.

How does sales Forecast work in SugarCRM

Sales forecasts in SugarCRM are closely linked to the Opportunities module. As salespeople convert leads into opportunities, a pipeline begins to form. The salesperson, who has direct contact with the potential customer, possesses the knowledge needed to determine when the opportunity can be closed. When the manager inquires, the salesperson can commit to closing the opportunity within the current quarter or express that it will not be closed during that time. The accuracy of the forecast is dependent on the pipeline of opportunities in the CRM system, the commitments made by the salesperson, and the manager’s expectations. Each salesperson’s forecast sheet displays the committed opportunities and their expected close dates, as well as the forecasted close date for the month. Additionally, the forecast is adjusted based on the stage of the opportunity and its value.

Sales Quotas and Forecast Sheets in SugarCRM

The forecast is closely integrated with the reporting hierarchy, wherein the reporting manager manages the forecast sheets, quotas, and commitments of their subordinates. The sales head can access the forecast module’s commitment page to input quotas for their team for a specific quarter, month, or year. After the input, the reporting manager can reallocate the quota through their own forecast module using their login credentials, allowing for distribution within the sales team based on the hierarchy. Additionally, the commitment sheet displays sales quotas, commitments, and performance based on past and future opportunities data for both past and future months.

Sales Quotas and Forecast Sheets in SugarCRM

Each sales person accesses his own forecast sheet to adjust his commitments to the manager. 

Sales Quota to drive Sales Person Targets

Each salesperson has a Dashlet in Sugar that provides a daily update on the sales quota achieved for the month, based on “Closed Won” opportunities and other open opportunities. If there aren’t enough open opportunities to meet the quota, the manager must enhance marketing activities to build the opportunity pipeline. This allows each salesperson and their manager to focus on their pipeline month after month and find ways to achieve their targets. The Sales Target dashlets assist in driving sales.

Sales Quota, Opportunity Commitments and Forecast module

The integration of sales quotas, opportunity commitments, and the forecast module in SugarCRM aids companies in enhancing the productivity of their sales teams, ultimately leading to increased revenue. The Return on Investment for SugarCRM stems from leveraging this data in weekly and monthly meetings to effectively drive sales.

Conclusion

The integration of sales quotas, opportunity commitments, and the forecast module in SugarCRM aids companies in enhancing the productivity of their sales teams, ultimately leading to increased revenue. The Return on Investment for SugarCRM stems from leveraging this data in weekly and monthly meetings to effectively drive sales.

Bhea is a SugarCRM partner for more than a decade with extensive expertise in SugarCRM implementations. If you are looking to implement CRM or for any CRM professional services do not hesitate to contact us.

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