Reverse Buffer
Glass Half Empty
The proof is in the data – too many sales reps miss their goal. Studies from CSO Insights peg the number between 40%-50% each year, leading to “glass half empty” pessimism. And only 43% of reps were expecting to hit quota from Salesforce’s State of Sales report from a few years ago. Can you blame them?
Individual rep quotas and revenue goals are growing exponentially out of whack. When reps do reach the end-of-year pinnacle, the reward is a bigger quota. Most sellers who hit their annual target tend to see goals increase by 25-50%. If fictional ace closer Sally Sellers hits “goal” each year, her quota would shortly balloon to over a million dollars:
- Year 1 Quota – $400,000
- Year 2 Quota – $600,000
- Year 3 Quota – $900,000
- Year 4 Quota – $1,350,000
The Buffer Origin
The “buffer” is another reason reps are missing goals. In sales, this goal-setting technique is (an understandable) CYA for sales leaders. Atlassian’s Head of Enterprise Sales, Kevin Egan, shares the origin of the buffer in this sixty-second clip on the Sales Hacker podcast. Many sales leaders and organizations ascribe to this notion and end up choosing a cushion somewhere in the 10-20% range (we reported on the Qualtrics sales machine two weeks ago and uncovered a 16% quota buffer).
Let’s say we have a team of ten reps. If we give each a quota of $500,000, then add them all up, we should be in great shape to hit our team plan of $4,500,000. The half-a-million-dollar (11%) buffer, in this case, gives us a sigh of relief, knowing it’s next to impossible to have all ten reps hit their goal. A few will crush their quota in theory, a few will fall short, and the rest will be near target.
Foolish Ratios
According to this article with an outrageous title, “a healthy sales organization should aim for about 60% of reps hitting their quota.” The Chief Research Officer from CSO Insights, Seleste Lunsford, adds, “If you’re studying quotas, you generally want people to be in the 60 to 70 percent range.” The thinking goes if all your reps hit quota (is this happening inside any sales organization?), you’re sandbagging and setting targets too low. If all your sellers miss, you set goals too high. Amy Volas writes about a sales team where one out of twenty-six reps hit quota.
Let’s say you’re a sales leader and end 2021 with that “sweet spot” of 60-70% of your reps hitting quota. Are you strutting into the CEO’s office popping a bottle of champaign shouting, “we did it, boss!” Of course not.
Believe it or not, some reps are working without a quota right now, but we don’t realize it. Mentally, they are so far behind their goal (and it’s only May) that suppressing the “number” is the only way to self-preserve. As sales managers, we sound like Charlie Brown’s teacher when we bring gap-to-goal calculations into the next round of one-on-ones. Andy Paul foments we should get rid of the quota altogether.
Reverse Buffer
Unless your company is a high-flying startup with a war chest of cash, or one that was early to the product-led growth sales motion, then any year-over-year revenue goal above 20% could be unrealistic and dangerous. Perhaps nothing is more demoralizing than missing the number – for reps, managers, and the head of sales. Turnover increases, morale takes a nosedive, reps lose confidence, and sales leaders start taking calls from executive recruiters.
The answer is the "reverse buffer" – set individual quotas that accumulate to 10-20% below the team plan.
The reverse buffer isn’t necessarily novel as much as it’s gaining momentum as a goal-setting strategy. ADP has been setting first-year rep quotas as low as $250,000 for years, gladly exchanging a loss for a more confident (and profitable) seller in year two and beyond. Another prominent sales organization known for challenging the status quo, HubSpot, is rumored to be experimenting with the reverse buffer.
The onus of hitting the team plan with this strategy shifts from the reps to the head of sales in our opening scenario. Each seller’s quota goes from $500,000 to $400,000. Now left with a half-a-million-dollar gap instead of a surplus, the leader must get strategic and brainstorm with other functional leaders to solve the puzzle.
Pivoting to a product-led sales motion, offering free trials, experimenting with price increases, and expanding your ideal customer profile to bring in more leads are examples where other functions need to support sales. And this cross-functional collaboration subtly redistributes revenue responsibility across the organization.
Lower Quota, Higher Self-Worth
Salespeople like making money. But high-performing reps, or even those in the middle of the sales performance bell curve, don’t need a big quota as motivation to make a lot of money. They’re motivated by hitting goals, taking pride in their work, contributing to a growing company, and a job well done. They want to matter.
The bottom line is more sales reps need to be hitting their goal. In this constant, never-ending race for growth, they should be the heroes, not the victims, of our goal-setting strategy.
The benefits of the reverse buffer are too significant to ignore:
- Lowers rep turnover
- Attracts top reps from other places
- Boosts team morale
- Grows rep confidence and well-being
- Builds strategic skills in sales leaders
- Amplifies cross-functional collaboration
- Redistributes revenue responsibility
Please share this article with your team to gauge their reaction. And drop us a note if you want to chat about this goal-setting strategy, especially if you disagree 😬
