The complete guide to understanding the quota attainment rate metric for SaaS startups

What is quota attainment and why is it important?

Sales quotas and quota attainment are two sides of the same coin – sales quotas are the goal and quota attainment is the actual performance relative to that goal.

More specifically, a sales quota is a predefined target that sales reps must work to achieve within a specific timeframe and are used both as a motivational tool and a benchmark for evaluating performance. They help sales managers assess productivity, set realistic goals, and incentivize their teams.

Quota attainment (expressed as a percentage) measures how well sales representatives meet their sales quotas. Let’s say that the quarterly quota of each sales rep is $100,000.  One closes $110,000 in sales while the other closes $80,000. In this scenario, their quota attainment is 110% and 80%, respectively. 

This straightforward calculation makes it an objective measure of performance, enabling sales leaders to identify top performers and those needing support. They can also arrive at data-backed decisions about coaching and resources.

Types of sales quotas

Sales quotas can be expressed in a number of ways. We’ll cover the most common ones here and compare them in terms of key features in the table below. 

Revenue-based quotas

These are straightforward as they measure pure revenue generated from sales, creating direct alignment with company growth objectives. 

Profit-based quotas

Profit-based quotas are slightly more sophisticated as they evaluate deals based on profitability rather than purely revenue. 

This approach is typically effective for later-stage companies that are focused on unit economics because it naturally discourages excessive discounting, which is common in early- or growth-stage companies that are often aiming for growth at all costs. 

A profit-based quota by design, encourages sales reps to focus more on high-margin deals rather than the number of deals. However, the complexity of calculating these quotas, particularly in determining COGS and final payouts, often makes them impractical for younger companies.

Volume-based quotas

This type of quota measures units sold or customers acquired and works particularly well for high-velocity, lower ACV products. Volume-based quotas are straightforward to track and understand, making them popular for software companies that sell seat licenses or subscription-based services. 

This relative simplicity comes with a (major) trade-off, though – reps might prioritize quantity over quality, potentially pushing lower-margin products or offering steep discounts to hit their numbers.

Activity-based quotas

Activity-based quotas focus on specific sales activities like calls made, emails sent, or meetings booked. They are particularly useful for SDR/BDR teams or for companies with complex, multi-touch sales cycles where consistent activity is crucial for winning an account. 

While this type of quota does provide clear daily objectives, it comes with a significant risk: reps might prioritize quantity over quality. An example of this would be reps sending hundreds of low-quality emails just to hit their numbers, without considering whether it will actually result in any new revenue.

Hybrid quotas

When companies combine multiple quota types, say measuring both revenue and volume targets, it provides a more balanced view of performance. Hybrid quotas do come with their own challenges, though. 

The complexity of calculating multiple metrics can make it difficult for reps to understand their compensation structure and forecast their earnings accurately. 

That said, to the extent that reps clearly understand their targets and how they align with company objectives, they'll be more likely to focus on activities that drive meaningful results. This means prioritizing the right deals so they can effectively contribute to the company’s revenue goals.

Setting realistic sales quotas

Achieving good quota attainment rates begins with setting realistic sales quotas. While setting realistic sales quota is more art than science, there are several things you can do to help ensure the quotas you set are achievable. 

Analyze historical data

A good place to start with quota setting is your company's historical performance. You should analyze at least 12 months of sales data, and give special attention to average deal size, typical sales cycle, and seasonal patterns (if any). 

For example, if your average deal size is $50,000 and typical win rate is 25%, a rep would need a pipeline of $2M to hit a $500,000 quota. 

Studying your top performers' benchmarks to understand what makes them successful is also very useful. And for new hires, don’t forget to factor in ramp time. 

Get clear on the company’s strategic objectives

In order to set realistic sales quotas, leaders must have absolute clarity on the company’s strategic direction. And that means going deeper than just the revenue goals. 

You need to have a clear idea on your company’s strategic priorities. For example, which is more important, market penetration or profitability? You also need to deeply understand your sales cycle, market segments, and your product mix (and its roadmap, too) in order to evaluate what might be possible in the context of those priorities and set your quotas accordingly.   

Ultimately, your quota structure should directly reflect these priorities and provide a clear line of sight between individual sales targets and company-wide objectives.

Seek input from the sales team

Your sales reps are one of your best assets for setting realistic quotas because they have the most accurate pulse on what’s possible in your market and what isn’t. This is why a strictly top-down approach often doesn’t work well when it comes to setting quotas and in fact, in some cases, it might be detrimental. 

Regular one-on-one meetings with top performers can reveal valuable insights about territory-specific challenges and market conditions that sales managers can use to reduce barriers to closing deals and mitigate competitive pressures. 

Segment your sales team

The thing about sales quotas are that they really can’t be the same for everyone. The cliche ‘one size fits all’ doesn’t work here. 

For example, your enterprise sales team faces different challenges than your SMB team, or it might be easier to close deals in certain geos given your brand name and tougher in geographies where you are relatively unknown. 

So, in order to set realistic quotas that are also fair, sales leaders must consider territory potential, market opportunity, and experience levels when setting quotas for their teams and individual sales reps. 

Establish milestones

It is important to define milestones (say quarterly or monthly, depending on the sales cycle) and specific metrics for measuring progress. This data-driven framework will help in ongoing assessment and also act as an early warning system so that you can spot potential problems before they become real problems.  

Once you have milestones in place, you need to monitor pipeline coverage ratios and create comparable metrics across similar territories to ensure quotas remain achievable and fair.

Review your quotas regularly and adjust as needed

No matter how realistic you think your quotas are, it’s critical to run regular (weekly/monthly) calculations to track your sales team’s progress towards quota attainment. 

Make sure to track different quota types (e.g., revenue, units, activities) separately if using a hybrid model. This will help you pinpoint problems early.  

For example, if  too many people are missing their quotas, or if everyone is easily exceeding them, you probably need to revisit the numbers. 

Aside from your regular reviews, market changes or new product launches might warrant a fresh look at your quotas. Leaders must stay flexible and be ready to make mid-course corrections when and if needed.

Leverage quota over-assignment (but do so carefully) 

Quota over-assignment is a practice where managers set quotas above what they expect sales reps to hit in order to motivate (or pressure) them. Over-assigning quotas can help companies meet and exceed revenue goals by encouraging reps to pursue every possible opportunity, however it can also lead to burnout if the resulting quotas are too high. 

Quota over-assignment is essentially a sales target handed down to the sales department that is higher than the commitment the CEO had made to the board. Ideally the over-assignment would be no more than 25%. In this case, if your sales team manages to hit only 80% of its target, the company would still meet the number actually promised to the board. It’s important to avoid the temptation to add too much to your sales team’s target as doing so would lead to unrealistic quotas.  

Determining the right over-assignment is best done after analyzing your historical data. Start by calculating key metrics for sales efficiency, including the Q factor, average sales productivity, and average sales cost efficiency. Then look at your sales ramp rates and historical booking patterns. 

Once you’ve pulled all the data together, look at your results across different dimensions, such as regions, product lines, and individual reps and compare your results to benchmarks available from sources such as Benchsights and VC reports.  

Remember, balance is crucial – your compensation structure must ensure reps can achieve their on-target earnings (OTE) despite the stretch goals you set for them. Keep your bookings and pipeline data handy and reevaluate their quotas quarterly if possible to help prevent burnout and attrition.