According to CSO Insights World Class Sales Practices Report, quota attainment averaged across all geographies, industries and size companies has dropped from 63% of salespeople in 2012 to 53% in 2016. In the same period Revenue Plan attainment dropped only from 89% to 85.5%
Who is to blame for this downward trend?
I discussed this question already almost 9 years ago in this blog post: Sales Quota Attainment: Who's Performance is Measured? I consider what I wrote then is still a correct analysis of the situation and is sound advice how to curb this downward spiral of performance. However today, I am more outspoken about who is to blame for this abysmal performance and I am aware that my advice could only fall on deaf ears.
When the corporate leadership defines the top line targets without providing clarity about the target customers and not being able to deduct a realistic market potential and the target then is simply cascaded down in the form of quotas to the sales force, individual quota attainment is not a KPI for individual contributors. Instead quota attainment measures a corporation’s ability to set attainable quotas for the individual contributors. It is thus the corporate leadership who delivers the Piss Poor (2P) Performance.
Corporate Leadership sees a rosier picture
The corporate leadership’s main concern is that the top line number (Revenue Plan) announced to the financial stakeholders is met. With the right balance between under- and over-performers, this can be achieved despite the underlying poor performance of almost half of the individual performers of a sales force. Seen from this perspective, the quota attainment ratio is also a misnomer. We actually measure what percentage of a sales force makes or overachieves the quota. How else can we explain why the quota attainment ratio is lower than the Revenue Plan attainment ratio.
For only about 1 out of 7 corporations, the leadership is faced with the problem of not making the top line target. If the top line number will not be met, the knee jerk reaction is to outsource the blame for the missed target to unforeseeable trends in the “market”. If the financial stakeholders require visible actions to avoid missing the number again, the highest-ranking sales officer, to whom the target is very often handed down without any consultation, will be fired.
If it ain’t broke, don’t fix it
If corporate leadership does not see the problem, advice how to improve the performance of quota attainment will be ignored. I have to blame myself for having not considered this aspect in my post mentioned above. Reading it again, I feel, sounding like a salesperson rattling down a features and functions list to somebody who is not even aware of the problem.
If we want the performance of quota attainment to improve, we first have to find means to explain to corporate leadership how this poor performance affects KPIs they care about. Examples that might get their attention are negative impacts on the bottom line:
· Due to high voluntary and involuntary churn rates on all levels of the sales force caused by quotas mismatched to the revenue potential for a given area of responsibility.
· Excessive compensation cost caused by compensation plans tolerating and incentivizing quota overachievement.
· Investing in performance improvement programs for individual contributors hoping that unrealistic quotas become achievable.
I am aware that this last point might, at first glance, might be a thorny issue for the sales consulting and training industry as it negatively impacts their revenue potential for their services. There is, though, an alternative potential to curb the shortfall, by offering services helping corporate leadership to come up with more effective quota setting procedures first and then delivering programs to improve the performance of individual contributors.