The process of assigning bottom-up quotas is very similar to top-down quotas, but you have the option to either calculate and distribute, or just distribute quotas without calculating.
To learn about the setup for bottom-up quotas, watch the following video:
As with top-down quotas, the first step is to set the quota baseline. However, before setting the baseline, we first need to configure the quota calculation parameters. These parameters allow us to select a baseline period to calculate the year-over-year growth percentages based on historical performance, and to set the guardrails for growth targets. The quota calculation parameters are global to all the territories in the selected territory program.
Quota calculation parameters are set during the territory creation process; however, they can be updated at any time.
To update quota calculation parameters:
- Open the territory program.
- Navigate to the Detail tab for the program.
- From the Quota menu, select Base Calculations.
- Select an ending baseline period and the number of periods to use for historical data.
- Enter the values for the growth targets and attrition relief.
- Select Update and Calculate.
The Ending Baseline Range: displays the period in the historical data that the application uses to calculate the Baseline Quotas. For example, if your historical data is for 2022, select December 2022.
Baseline Periods: specify the number of periods to be considered in the baseline quota calculation. In this case, the period is the period type for the entire territory program. In this scenario, the period type is year; therefore, if you have one year of historical data, you would enter 1 in this field.
Growth Target: displays the growth percentage of each rep-level territory in the territory program with respect to the quota baseline. This value is applied to the base quota value. For example, 10% of Growth Target % results in 110% of the base quota.
Attrition Relief: allows you to apply a depreciation percent to the growth target of each territory in the program. This is considered for special scenarios, such as churn in sales force, less experienced sales teams, and so on.
Variance Boundaries: allow you to set minimum and maximum values for the Growth Target and Attrition Relief fields. These values are then used in territory quota calculations, and the application rejects any value that is outside the specified range.
The Quota Reduction Factor: allows you to reduce the quota as it rolls up the territory hierarchy.
The final quota is then calculated as Base Quota * (100% + Growth Target % - Attrition Relief).
Let’s look at a scenario. In the image above, the growth target is set to 10%, with a 5% minimum and a 25% maximum variance. Attrition relief is set to 2% with a 5% maximum. If the Base Quota is $1000, the final value would be 1000 * (100% + 10% - 2%) or 1000 * 108%, for a total of $1080.
Once we have set the baseline quota, we can see it by navigating to the Quotas tab for the root territory and looking at the Calculated column.
To learn more about bottom-up quotas, watch the following video: