WIRELESS LIFESTYLE QUOTA PHILOSOPHY

Transcription

1 Quota is the driving force of every salesperson at Wireless Lifestyle. Each level of the company is assigned a monthly quota (i.e., individual, store, market, region, and company). As a sales organization, we are judged daily, monthly and yearly on how well we perform compared to not just other dealers, but corporate locations as well. It is our expectation that every salesperson at WL will hit quota every single month. Though every salesperson will experience peaks and valleys in their sales performance, it is expected that achieving quota is the ultimate goal for each salesperson, every single month. There is no perfect method to setting quota, and there are many opinions on how to set quota fairly. Our goal is to set quota in a fair and consistent manner, which allows salespeople the opportunity to not just hit, but exceed quota, each month. WIRELESS LIFESTYLE QUOTA PHILOSOPHY WL subscribes to what is referred to as the Run Rate Quota Calculation philosophy. Simply put, quotas are set based on what the company sold the prior month. Prior month s sales are the best indicator of what we should expect to sell the following month with consideration to the following: SEASONALITY: There are historical standards on sales performances from month to month. To determine seasonality, we will examine the prior years to determine what increase or decrease we experienced from one month to the next. For example, if there was a 30% increase from November to December last year, then we would take into account last year s increase when determining this December s quota. SPECIAL CIRCUMSTANCES: To ensure a fair and consistent quota, we also consider special circumstances that may have affected sales in previous years in the same and/or previous month. For example, if a very successful phone launch was held last year, we will take this into consideration when calculating quotas for this year. The same is true of month-over-month Run Rate quota calculations. If a successful event was held the prior month, the sales from this event will be factored out when calculating quota for the new month. Other special circumstances are rare but will be considered, such as natural disasters or unexpected, extended store closings. These modifications may either increase quota or decrease quota, based on the special circumstance. SUPERVISOR DISCRETION: This portion of setting quota is the only subjective portion. Supervisors will make manual adjustments for your store at their discretion for any number of reasons. As an example, perhaps your store had a particularly rough month due to turnover, or a perhaps a significantly high return rate. For these reasons, your DM may choose to increase your quota higher than the normal seasonal adjustment, as these factors should not harm you in the new month. These adjustments are made due to the expectations that your supervisor has based on all factors they can see surrounding each store. Any modifications outside the normal seasonal adjustment are explained in detail, directly to the Store Manager. RUN-RATE PHILOSOPHY Some may argue that the Run Rate Philosophy rewards stores that performed poorly by giving the store a lower quota for the following month, while punishing stores that performed well, by giving the store a higher quota. This is not a flaw. It is designed to do exactly what it states above. The foundation for this philosophy is that every salesperson and Store Manager is always working diligently to exceed quota each month. If that is the case, then a poor month (in relation to quota) is a reflection of the market, and traffic, more so than a reflection of poor performance on the part of the sales team. Therefore, it should be assumed that the driving forces that led to a poor performance will not repeat themselves again the following month. In turn, your run rate may appear higher than others Page 1 of 5

2 Many stores that receive quotas that were higher than expected will find that hitting quota is quite obtainable. While setting quota is not a perfect science, much of the time, statistically speaking, the method of setting quotas is extremely accurate. It is also important to keep in mind, that using run rate is also the only effective way for a company to grow. As sales increase over time at each location, and for the company, increased quotas must follow in order to keep the company moving in the right direction. Much focus is placed on year-over-year (YOY) growth. It is expected that each location will experience YOY growth, by a specified percentage. At no point is it acceptable to have negative YOY percentages! Keep in mind, as locations become more established, and more repeat customers return to purchase, sales will continue to grow. Repeat and referral customers will compound over time, and increases in sales will continue, year after year! A higher quota should never be considered a punishment; rather, it should be considered praise for performing well! Stores that perform well will gain recognition from management/executives, and as time moves on, those individuals responsible for the store s success will find themselves as strong candidates for promotions. Quotas are only effective when they are challenging! A quota that is too low rarely helps a store achieve maximum potential. Increased quotas and subsequently, increased sales, will result in increased commissions, since commissions are paid on a per-phone basis! In essence, the more phones sold, the more commissions earned! WHO SETS QUOTA? The company quota is set by the CEO, using the WL Run Rate Philosophy. This quota is provided to the Vice President of Retail, who breaks down quotas by Region. The Regional Directors will break quotas down to the market level. The District Managers will then down quotas by location. Finally, the store quota will be split evenly amongst each salesperson in the store! The WL Run Rate Philosophy is used throughout the entire process. At each level, a detailed explanation is provided as to how the quota was derived. The WL Philosophy on quota setting is the guiding principle. This explanation should be viewed by every salesperson! Our goal is to have everyone s quotas in-hand no later than the 2 nd of each month. However, should extenuating, unforeseen circumstances arise, it is possible quotas may be delayed by one day, to the 3 rd of the month. The following scenarios will provide an overview of how individual quotas are calculated by the Wireless Lifestyle Home Office. Guidance or questions regarding this document may be directed to your immediate supervisor. CALCULATING QUOTA INITIAL QUOTA CALCULATION For most of the situations covered in this document, we will use a hypothetical Store ABC with a NEWMIN quota of 107 and a TOTAL quota of 211. In this scenario, Store ABC has an approved headcount of five, with five employees working at the first of the month (one RSM, one ASM, and three RSAs). RSM: NEWMIN: 107/5 = 21.4 * 40% = 8.56 (round up to 9) [1] TOTAL: 211/5 = 42.2 * 40% = (round up to 17) All RSMs are on a 40% quota. 40% quota is defined as 40% of the quota if divided up equally among all employees. In Store ABC, a 40% quota would be 9 NEWMIN and 17 TOTAL phones. [1] All quotas are rounded up at the individual level. For example, if a store had, after dividing by the headcount in the store, a NEWMIN quota of 6.01, the NEWMIN quota would be 7 (6.01 rounded up) Page 2 of 5

3 RSAs/ASMs: NEWMIN: = 98/4 = 24.5 (round up to 25) TOTAL: = 194/4 = 48.5 (round up to 49) For most employees, this will apply and individual quotas will remain unchanged. However, there are some situations in which quotas may change after the first of the month. Those scenarios follow, with examples. Also, our highest volume stores with Zero Quota Managers have a different calculation, reviewed below. MID-MONTH HIRE Again, we will use the same scenario of Store ABC with an approved headcount of five, but let s suppose four employees (one RSM, one ASM, two RSAs) are working, and they still have a NEWMIN quota of 107 and TOTAL quota of 211. If, on the 16 th of the month, a new employee for the store has completed his or her training, quotas for Store ABC s individuals will be adjusted down to take into account the extra help. We have already determined the individual quota for the store above if five were working (9N/17T for the RSM, 25/49 for the ASM and RSAs). For the new expectations, we follow the same steps above to figure the five person quota, prorate it and the five-person quota based on the day the new employee began commission, and then add both together to get our official, new quota for the individual salespeople in Store ABC. NEWMIN: 107/4 = * 40% = 10.7 (round up to 11) TOTAL: 211/4 = * 40% = 21.1 (round up to 22) After the RSM s quota is removed, the remainder is equally divided among the ASM and two RSAs in the store. Their quota is 32 NEWMIN and 58 TOTAL phones. NEWMIN: = 96/3 = 32 TOTAL: = 189/3 = 63 We determine how much to prorate a quota by reviewing the Daily Budget Sheet, whose daily indexing indicates how much business, sales, or traffic we expect to see each day of the month. For the purposes of this example, we will assume the daily indexing states that the 15 th of the month represents the first 50% of the month and the 16 th on is the next 50%. NEWMIN (RSM): first half of month - 11 * 50% = 5.5; second half of month - 9 * 50% = 4.5; add together = 10 (prorated quota) TOTAL (RSM): first half of month 22 * 50% = 11; second half of month 17 * 50% = 8.5; add together = 19.5 (round up to 20 prorated quota) NEWMIN (ASM/RSA): first half of month 32 * 50% = 16; second half of month 25 * 50% = 12.5; add together = 28.5 (round up to 29 prorated quota) TOTAL (ASM/RSA): first half of month 63 * 50% = 31.5; second half of month 49 * 50% = 24.5; add together = 56 (prorated quota) As you can see, each employee sees a slight drop with proration. The RSM goes from 11N/22T to 10N/20T and ASMs/RSAs see a drop from 32N/63T to 29N/56T Page 3 of 5

4 TRANSFER-IN Calculating for a transfer-in of a new employee follows much of the same logic as a mid-month hire. If Joe Smith, RSA of Store XYZ is transferring to Store ABC on the 16 th and Store XYZ has an individual quota of 22N/40T, his quota will increase proportionately to the expectations of his new store. NEWMIN: first half of month at XYZ 22 * 50% = 11; second half of month at ABC 25 * 50% = 12.5; add together = 22.5 (round up to 23) TOTAL: first half of month at XYZ 40 * 50% = 20; second half of month at ABC 49 * 50% = 24.5; add together 44.5 (round up to 45) The proration of the other employees at Store ABC would stay the same at 29N/56T (half of the month on the 32N/63T quota and half of the month on the 25N/49T quota). TRANSFER-OUT OR TERMINATION Wireless Lifestyle will not adjust up any quotas for an entire store after the month begins. Quotas may be adjusted down for an entire store due to a new hire beginning commission or a transfer into a store, or any other staffing change that would increase the headcount of the store from where it started at the beginning of the month. If a new hire beginning commission or transfer keeps the headcount at where the store started for the month, no quota change will occur. The same rules (no adjustment up) apply in case of termination. However, if there is no one in the missing slot when the new month begins or someone is in training instead of selling, quotas will be calculated based on the number of employees currently on commission and not the approved headcount of the store. RELIEF There is one other scenario in which quota can be adjusted: quota relief. RSAs and ASMs are eligible for quota relief, provided all guidelines in their respective states Employee Handbooks are met. [2] Quota relief is typically taken when an RSA or ASM has an extended absence due to vacation, illness, or leave. Wireless Lifestyle may also apply quota relief in limited circumstances when operational needs or training requires extended time away from the sales floor. Please see your District Manager for a comprehensive list of relief allowances. Calculating quota relief uses the same principles of calculating proration. Let s say that Jane Smith, of Store ABC, has a quota of 29N/56T for the month and takes off the 16 th 20 th for vacation. After consulting the Daily Budget Sheet, Jane s manager finds that she was gone for 18.6% of the month (the sum of the daily indexing for the 16 th - 20 th ). Jane s manager would then reduce Jane s quota by 18.6%, to get a reduced quota of 24N/46T. NEWMIN: 28 * 81.4% (the percentage of the month remaining after 18.6%) = 23.6 (round up to 24) TOTAL: 56 * 81.4% = 45.6 (round up to 46) Take care to consult the Employee Handbook to determine if a RSA or ASM is relief eligible ZERO QUOTA MANAGER STORES As stated above, there are a small number of stores who have a slightly different step due to the uniqueness of the expectations for the manager of their store. Zero Quota Stores are our highest volume stores who have a manager [2] RSMs are not eligible for quota relief, with the exception of FMLA or military leave, as all RSMs are assigned a reduced quota. ZQMs do not receive quota relief as they have no quota. Please contact your District Manager or Regional Director for additional clarification Page 4 of 5

5 with no quota a Zero Quota Manager. ZQMs are not included in the calculation of quota for their store. For example, if Store DEF (a Zero Quota Store) has a quota of 250N/500T and has nine employees, including the manager, the manager is not included in the total employee count when calculating quota. NEWMIN: 250/8 (number of employees on quota) = (round up to 32) TOTAL: 500/8 = 62.5 (round up to 63) These stores will still follow the same rules when employees are hired or transfer in, or have a termination or transfer out take place. Employees in Zero Quota Stores are also eligible for relief. FINAL QUOTA CALCULATION To review, this document lays out step by step the methodology that is used in calculating the quota of individuals by the Wireless Lifestyle Home Office. Individual sales reports are produced regularly with the official quota of each sales maker for Wireless Lifestyle, and payments of individual commissions are based entirely off of these reports. It is the responsibility of the individual sales representative and the Store Manager to review all individual reporting for accuracy in assignment of individual quotas by the end of each month. It is imperative that these reports are checked for accuracy and agreement and all discrepancies or questions regarding the official calculation are submitted to your supervisor. Calculation of quota by Wireless Lifestyle s Home Office is the official calculation for all stores and sales makers. All questions and errors reported will be reviewed in a timely manner and corrected or clarified as needed Page 5 of 5