Best Practice Report

Quota Setting For Monthly Recurring Revenue

January 1st, 2018

Summary

Inaccuracies in monthly recurring revenue (MRR) quotas often lead to unanticipated compensation costs or sales turnover. Applying a simple calculation method can help sales planners establish recurring revenue quotas that set the right expectations and help drive performance. The timing of positive and negative events can mean the difference between exceeding and missing targets.

Because each increment to monthly recurring revenue affects future periods as well as the current period, a series of such increments results in exponential growth. Unfortunately, sales planners are often inaccurate in estimating this growth, so they set quotas incorrectly, which leads either to compensation cost overruns or, even worse, high sales turnover when quotas are set at unattainable levels. In this report, we explain a three-part process for setting accurate MRR quotas that can ultimately help drive sales results.

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