For sales organizations to succeed, sales leaders must motivate reps to meet and exceed their sales quotas. Here are the types of sales quotas and the correlated sales quota attainment tips you can use to improve performance.
What is a Sales Quota?
A sales quota is the guiding star for Sales teams and leaders — a predefined target representing your expectations for sales performance over a designated period. It's a benchmark for individual reps or Sales teams, outlining the predicted sales volume, profits or other relevant KPIs.
Sales quotas are typically determined based on a blend of historical data, market analysis, AI, and your business objectives. They're driving forces that align sales efforts with individual and team goals, making sure every member works toward the greater good of the company.
What is Sales Quota Attainment?
Sales quota attainment is a measure of sales rep performance—specifically, whether they reached their sales target in a given period, or not. So, what does quota attainment mean? To put it simply, if they have reached their goal, they have attained quota. If your Sales team has 50% quota attainment, then half of your sales reps have reached their set quotas.
It's the act of achieving those predefined sales targets — or, ideally, surpassing them. With Xactly Incent, you can reward high-achievers and shape future top salespeople using AI-optimized tools to streamline compensation planning and get the most out of your salespeople.
Types of sales quotas
There are many types of sales quotas, with each one placing emphasis on a specific metric, enabling you to measure and reward sales performance based on company goals and priorities.
Volume sales quota
Volume sales quotas focus on the units sold in a given timeframe. For products with high turnover rates or companies in which sheer sales volume is the key driver of success, this metric is a great tool for reaching numerical targets.
Forecast quota
Forecast quotas are driven by historical data, market trends, and customer insights. For reps to meet the sales forecast, the leadership team must master strategic planning, analyze historical data, train staff effectively, and be prepared for market shifts.
Profit quota
Profit quotas focus on the profitability of sales rather than units sold, placing more emphasis on high profit margin deals that contribute more to the bottom line.
Revenue quota
Revenue quotas measure total income generated by a sales rep or team, aligning sales efforts with revenue generation goals. They focus on total income generated, offering a high level overview of sales performance.
Activity quota
Activity quotas look at how much effort reps put into closing deals, taking into account the quality and quantity of actions performed. This can be especially useful for new reps or team members who are going through a sales slump. Rather than measuring outcomes, you're assessing the work that's going into progressing deals.
Combination quota
Combination quotas blend several metrics into a single target, capturing multiple elements of an individual or team's workflow. For example, it might combine calls made, units sold, and profitability into a single sales quota.
How Do You Set a Sales Quota?
For sales reps to meet quotas, they must be thoughtful and intentional. Start by analyzing historical data, market insights, and organizational goals. Then, define targets that are ambitious when it comes to growth but realistic for each rep's ability. Take into account territories, seasonality, tenure, and individual strengths to ensure targets are fair and achievable.
Sales Quota Attainment Tips to Improve Performance
1. Avoid the Peanut Butter Spread (in most cases)
According to Xactly Insights™ data, companies that use one-size-fits all quotas across similar sales roles achieve only a 14 percent quota attainment. Because different roles have different responsibilities, they should be measured on different metrics—and both their quota and incentive plan should reflect that.
However, that being said, a “peanut butter spread” strategy could be preferable under specific business conditions, e.g. startup mode or introducing new products to market.
2. Avoid capping your sales commissions
Incentives drive sales behaviors—we all know this, and we use incentives because they work. Capped commissions are a type of sales commission structure, where incentive payouts max out—and commission rates don't increase once a rep hits their sales quota.
If sales incentives are reduced after reps meet 120% of quota, you are sending reps a clear signal to stop once that level has been met. Ultimately, it's great that reps have hit their number, but when they stop selling because of a capped commission, you're leaving opportunities untouched and money on the table.
3. Remember your new hire ramp time
New employees in any role aren't able to operate at 100% speed on their first day. They need time to get their bearings and complete the proper training. The same is true for sales reps—they need time to ramp up to full productivity. When setting your sales quotas, you need to consider sales ramp up time and set appropriate quotas for new reps ensuring they can actually reach the quotas.
4. Give reps proper training and coaching
Did you know that using a variety of sales coaching content can keep sales reps more engaged and ultimately reduce rep turnover? Reps at all levels of experience need the proper training and coaching to ensure they are fully prepared to succeed. Poorly trained reps will not be equipped to achieve their sales quota. Upskill your sales reps with customized training and leading by example.
5. Benchmark incentives against industry data
Do you know how your sales quotas and incentive plans compare against the rest of your industry? Better yet, do you have the insights to identify if your plan has too many measures or other changes you can make to optimize performance?
Benchmarking against industry pay and performance data allows you to catch potential flaws in your plans and make changes to improve. It also ensures that you are paying reps competitively—which is crucial to retain top performers.
6. Balance your sales territories
Your sales territories and quotas must be closely aligned in order to hit your revenue goals. In fact, unbalanced territories can wreak havoc across your entire sales organization. Sales reps tend to think the grass is greener in somebody else's territory, so be sure your territories are capturing opportunity equally.
The best way to ensure your territories are balanced is through automated territory planning. In fact, a recent study with the Sales Management Association found that enterprises using automated technology to map their territories can see up to 30% higher sales quota attainment!
7. Embrace sales planning automation
Let's cut to the chase—easier sales planning and improved quota attainment aren't feasible with manual planning processes. Your sales plan—including your capacity plan, quotas, and territory design—is the foundation to achieving your annual goals. If this plan isn't optimized through automation to drive top performance, you will never see the results you want to.
Setting Quotas Is Easy with Xactly Sales Planning
Xactly Sales Planning™ streamlines and automates the process of setting sales quotas. Effortlessly align KPIs with strategy, track progress in real time, and use AI and predictive analytics to empower your team to sell more. In fact, Xactly Sales Planning automation does more than make sales planning easier. It can:
- Reduce planning time up to 25%
- Improve quota attainment by 14%
