A while back, we did a blog post on the advantage of Monthly vs Quarterly quotas here. The bottom line is I strongly believe unless your deal sizes are abnormally large (>$100k-120k ACV on average, and maybe even higher than that) … you’re a sucker for allowing sales teams to have quarterly quotas.
Brendon Cassidy wrote a differing view of the same perspective. It was so good I wanted to reproduce it below. Our original SaaStr piece also has some actionable advice around the issue.
Switch today. This month. Right now. You will see results. I guarantee 🙂
Yes, Salesforce has Quarterly Quotas. You aren’t Salesforce. Nine times out of 10. Quarterly Quotas are for suckers.
12 Sprints. 4 Jogs. 1 Marathon.
— Brendon Cassidy
A VP of Sales can break his or her goals into 12 months, 4 quarters, or 1 year. Actually lets eliminate one option: Any VP of Sales only beholden to the year is not working at a startup. Or not for long at least.
Quarters or months? Quarters is tradition — passed down from grandfather to son, Intel to HP, Oracle to Salesforce, Auspex to Network Appliance. Like the Rose Bowl. I like tradition. I love the Rose Bowl. And…in a startup…I absolutely hate running my business on quarters.
I’m sorry. I’ve tried it both ways. In a startup, quarters are like living in darkness for 60 days. For two months, you’ve been promised and sold sunlight. Then on day 61 you’re brought into the light with 30 days to do 90 days of work. No. No. No.
Slight hedge, thinking in quarters make sense for some. For Veeva, it was always gonna be quarters. For Workday; quarters. 97 out of 100 startups aren’t doing the types of deals Veeva and Workday do. Maybe someday you will too. If you are incredibly successful. Which currently there is zero guarantee of.
So if your ASP is under 80K, and your average sales cycle is 4 months or less, which is mostly every SaaS startup ever, months are better. Does this mean you sabotage all of your strategic deals to get them over the finish line faster? No. But it creates accountability at all times and forces the sales team to honestly audit and assess their pipeline. Constantly. Otherwise, everything becomes a March deal. And, newsflash: It ain’t all gonna close in March. You need to be hustling all 3 months, 12 weeks, and 90 days of a quarter. A monthly mindset ensures this. A quarterly mindset encourages a “tomorrow culture”. As in, “I’ll get to that tomorrow.” As in, “Let’s go golfing today.”
Running on months in SaaS is intense. You have to guard against burnout. On some level, you have to make it fun too. But if you want to create some level of real or perceived predictable month over month growth, you gotta do it.
Someday, off in the future, you will live on quarters. And when that becomes true, it means that, on some level, you won the race. And congratulations to you once that day comes. But until then, tomorrow you start at zero. Enjoy the ride.