Why Sales Professionals Are Not Hitting Quota
We posted something on LinkedIn this week 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.
What was surprising to many was that the list was so small. RepVue has ~330 sales organizations published on the site (which means they have at least 7 ratings), and only 7 of those 330 sales orgs have more than 75% of the team hitting quota. Yeah so about 1 in 50!
Here’s the screenshot (that we shared with the post) that shows which 7 sales orgs those are. So congrats to the sales leaders at these orgs – you’re doing something right!
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 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.
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 happen 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 quota 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. If you missed the post from earlier this week, here’s a link to it.
Anonymously rate a company to get full access to RepVue's sales org data
- Salary & compensation data
- % Team to achieve quota
- Product market fit scores
- Leadership scores