Our clients are often shocked to hear that the average quota attainment for B2B sales organizations is only 47%. That means that more than half of sellers are missing their quota targets! Our research shows that this might not be such a bad thing. Companies derive seller quotas by taking their overall sales target and distributing it to their individual sellers. If all sellers achieve 100% of their individual sales quotas, then the company will achieve 100% of its sales target. This level of quota attainment is so far below expectations that companies often perceive it as an urgent problem that needs to be fixed. When diving deeper into the data, we see that those same sellers with only 47% attainment had a median seller attainment of 101%. This means the plan is successfully achieving its objectives. Here are three reasons why quota attainment is a misunderstood metric:
- Fifty-percent attainment is aligned with your incentive structure. If a company is at 50% attainment, this means that their average seller is achieving quota. It also means that if a rep is above average, the seller will get accelerated pay in direct proportion to how above average they are. If you are below average, you will get paid less in direct proportion to how below average you are. That’s exactly how you want your compensation plan to work.
- Comp program performance is not pass-or-fail. Sellers, like every other profession, have varying levels of performance. It is not possible to build a quota that determines success or failure based on meeting a specific target. There is a big difference between a seller who achieves 98% of quota and one who is at 55%, just like there is a difference between finishing second in a race versus next-to-last. Even with perfect quotas, sellers are going to perform at different levels based on their skill, and that’s OK.
- Increasing the percentage of reps achieving quota each year shouldn’t be a goal. Sales compensation plans are built to motivate sales to realize growth targets. Because of this, the perception is that a team’s quota attainment should get progressively better every year, in line with its company’s sales growth. This is not correct, because quotas are based on an annual budget. Performance is not supposed to increase annually with sales. Quotas are reset based on the budget set for that year. The aim when setting a quota is to be accurate, not to improve the percentage attainment year over year.
Company quota attainment is usually around 50%, which is often interpreted to mean that the sales team is underperforming. Because of this, leaders, sales tech vendors, or anyone trying to improve performance may make a decision to change based on a flawed metric. This is the wrong measure to look at to determine effectiveness and is not an indicator of an underperforming sales team. Effective compensation programs align seller and company performance. Change is needed when misalignment between the seller and the company is identified.