Like many of you, I attended Dreamforce last month. As is often the case, some of the most interesting conversations happen in the hallways between sessions.
During one of those conversations, I got pulled into a debate between two VPs of Inside Sales.
The question under consideration
If 40% of the reps on a sales team miss quota, who is at fault?
VP #1 argued that the team wasn't properly led - essentially failure was on the sales leader’s shoulders. VP #2 countered that it was more likely territories were uneven and many reps were assigned unrealistic quotas - failure was on the shoulders of the sales planning organization. Having made their cases, they looked at me to choose a side.
Being a bit of a quant and card-carrying deliberator, I said I needed to look at some data and mull it over. I promised to post my thoughts here.
Well, Ed & Kristin, here's my reaction
First, here are a few non-sales stats I dug up:
- % of golfers not making the cut in a given PGA match: 45%
- % of public companies generating earnings below consensus estimates: 41%
- % of students enrolling at a four-year college who don't graduate (within 6 years): 43%
So perhaps if 40% of sales reps miss quota, there is no fault. Perhaps roughly 40% should miss.
Think of it this way.
If one out of five reps are hitting the number, then perhaps the Sales Leader is at fault or the territories are uneven. And if four out of five are hitting quota, perhaps the target is too soft and the planning organization is at fault. For me, 40% missing goal in a given year feels about right.
Towards a benchmark
The folks over at CSO Insights have done excellent work in sharing that, for years, the percentage of reps achieving quota has been roughly 60%. Jim Dickie was kind enough to share a preliminary CSO Insights number for all of 2013. We are right there at 57% making quota.
I’m working on a tool that will allow sales leaders to measure the health of their sales team. Until it's ready, here is a chart representing data from roughly 3 dozen companies who’ve shared their rep performance with me. It represents nearly a thousand inside sales reps and the distribution of performance vs. quota.
In my view, the percentage of reps hitting quota doesn’t separate high-performance from lame sales teams. As you can see from the chart above, there is a distribution of rep performance. Many reps who 'miss quota' are still at 90%+. On balance, overachievers make up for those who miss and the team goal is still achieved.
I’m not endorsing failure for reps, teams, companies, and/or our entire profession. But I am saying: If 40% (or even 50%) of your team won’t hit quota in 2013 and you still hit your team number, you’ve done your job well.
I know I haven’t really settled Kristin and Ed’s debate. But I hope I’ve made my point that lonely metrics (metrics in isolation) aren't incredibly meaningful.
Am I way off-base?
This is the part where you get tell me how wrong I am. I honestly want to know what others think. So please, have at it.