Is Your Sales Team Hitting Quota? Probably Not
We posted something on LinkedIn a few months ago that got a lot of attention. Positive and negative, many folks were surprised but many weren’t. It was a list of all the sales organizations where more than 75% of the team is hitting quota. We’ve now broken it down by sales team.
RepVue has 988 sales teams from 435 sales organizations published on our site (which means they have at least 7 ratings), and only 31 of those 988 sales teams (across 30 companies) have more than 75% of the team hitting quota in the past 12 months. That’s about 1 in 33!
Not only did we get a lot of interest, but we got a lot of questions.
Why are there so few? Is the ‘state of sales’ really in this bad of shape? Is this a rep problem? A quota setting issue? What gives?
I mentioned I was going to share my thoughts so here are a few of them.
First, ‘sales’ as it relates to those who frequent LinkedIn, social selling, and many of you reading this blog post are likely selling technology, be it software, IT / services, internet, etc.
In these industries, over the past 20 or so years, particularly with the shift to SaaS, there’s been a massive influx of dollars (VC, PE, etc) provided to any company that looks like they have a reasonable chance of scaling and success. And many of these dollars are expected to do one thing – drive growth.
When the founder takes that $6M series A, what he or she is really signing up for is simply getting to a $25M series B. And the way they secured that series A was via growth projections in a PPT based on theoretical targets, theoretical sales professionals they haven’t hired with theoretical quotas, and theoretical features which haven’t been built that may or may not resonate in the market. So at this point they are on the back of the funding beast. And it’s hard to get off.
And at the core of the SaaS model is the notion is that you can spend now to acquire customers, in an inefficient way, and the life-time value of those customers will more than make up for that up front spend in the long run. And largely this formula can work, assuming your product stays towards the top of the market to ensure that the customer lifecycle is 5-7 years minimum (i.e. customer unit churn under 20%).
The reality of the situation is that many companies have succeeded IN SPITE of a 40% annual attrition rate on their sales team. They simply factor this into the model. Additionally, many companies have succeeded IN SPITE of only 30% of the quota carrying sales execs hitting their target. This is also factored in.
THEIR model includes metrics around YOUR failure.
And that’s because they’re simply playing the numbers game. AKA throw sales bodies at it. Not really realizing that those sales bodies have families to support, career objectives, and pride in their work.
As we’ve moved more and more to this type of numbers game, it’s completely expected and accepted that sales professionals will be hired at scale, some portion (a very small portion) will ultimately succeed, most will move on and hit the reset button somewhere else, and the company will continue to bring in a new crop of sales professionals so we can move from series A to series B to series C.
Sales professionals, account executives have just become pawns in this numbers game by the C-levels at many organizations.
Throwing more bodies at internal inefficiencies to hit a growth target is the only way most founders know how. To be fair, replicating a proven sales model seems like the most predictable path to revenue, but sales tech companies like Dooly are starting to challenge this assumption.
Rather than accepting the startup model’s flaws and using hiring as a bandaid, why can’t sales teams just remove every inefficiency in their control? Admin work eats up a fourth of a salesperson’s day. So why not give sales teams a better view of rep pipelines and sync deal notes back to Salesforce so they’re never re-entering data? RevOps, sales managers, and AEs talk past each other, so why not give them a central spot to collaborate? It’s an interesting approach that seems to be paying off — for Dooly and reps.
Apart from inefficient hiring and onboarding, an additional byproduct of the need for high growth NOW in SaaS is a stunning lack of experienced leadership at the manager, director, and VP level. “Jane was the best rep, let’s make her the manager.” It happens time and time again in earlier stage companies.
Not only is this unfair to Jane, but it pushes the cycle of attrition and attainment challenges even further in the red.
So no, I don’t think necessarily that sales professionals are just bad at their job. And no I don’t intrinsically think quotas are just ‘too high’.
What I do believe is that high growth sales orgs are structurally set up such that only a few tenured professionals will carry the load, and a large number of other professionals will cycle through the system. When you find an org with experienced leadership and more than 50% of the team actually hitting their annual number, the grass AIN’T greener somewhere else.
It’s interesting when you look at the RepVue overall top 20 sales org list, there are a LOT more public companies than VC backed. That’s because on average or in general they have tenured leadership that has done it before and knows how to navigate some of these critical challenges, at scale, and have grown past the A to B to C to D to E challenge. PS if you like our content and haven’t added a rating in a few months please consider it. We’re not even trying to keep the lights on here, we’re trying to figure out how to buy a lightbulb! Just click ‘rate now’ from our home page or anywhere on our site. If you missed our prior post, here’s a link to it.