Sales professionals are expected to meet sales goals, also called targets or quotas. The proof is in the pudding, and the pudding is the sales quota attainment.
Quota attainment measures the revenue a sales representative achieves in a specific period of time. It is expressed as a percentage of the total sales goal. If sales reps reach their goal, they have attained quota. If your sales team has 75% quota attainment, then three-quarters of your sales leaders have achieved their set quotas.
For SaaS businesses, this KPI is useful to:
Create a transparent appraisal system: Linking the compensation plan to quota attainment does not leave any room for doubt on how sales reps' earnings are determined and creates a shared understanding of how your company measures individual and team performance. From a management standpoint, the sales metric helps determine the right compensation for each sales rep.
Enable more effective sales forecasting: You can predict future revenue based on the number of reps who hit their sales quota and how close the rest were to meeting their targets. You will also have the data to adjust your sales expectations, implement sales training refreshers, review your sales process, and take informed calls on improving individual sales performance.
Improve win rates and revenue: If fewer sales reps hit their sales quotas, you're likely to miss your revenue goal by a long shot. Tracking quota attainment will allow you to keep sales performance on track and make revenue milestones proactively. With a monthly reporting frequency, for example, you can take quicker decisions than with quarterly reports.
Quota attainment is calculated as follows:
Total qualifying amount from deals won over a specific time period/The reps' quota for the same period x 100
You can apply this formula to different types of sales quotas, including:
Revenue quota: The number of revenue sales reps are expected to generate over a predetermined period
Volume quota: The number of free trial users or paid users reps must acquire over a specific period
Combination quota: A combination of revenue and volume quota to measure rep performance
Quota attainment can also be measured for different time periods:
Quarterly: Based on the attainment of quotas within the quarter
Monthly: Based on the attainment of quotas within the month
Year to date: A comparison of the actual quota achieved in a year to the proportional quota expected at that date
Full-year: A comparison of the actual quota achieved in a year to the total quota for that year
If a sales rep has a quota of $200,000 in annual contract value (ACV) but achieves $100,000 of their annual quota, their quota attainment would be $100,000/$200,000 = 50%.
The standard is that 80% of sales reps should achieve their monthly quota. Any less, and you'll likely miss your revenue targets. That said, just 69% of enterprises meet their annual revenue goals, implying the challenge of maintaining a high quota attainment.
Regarding actual quota attainment numbers, 79% of sales representatives miss quota, and 14% fail to meet even 10% of the quota. The average quota attainment is 58%, regardless of rep tenure.
Setting sales quotas for salespeople too high can also bear on performance. If none of your top performers have met their quota, it probably isn’t achievable. It's also worth investigating any perceived lack of motivation in hitting sales targets.