How to set sales quotas
Setting quotas well is a balancing act between the number the business needs and the number a rep can actually hit. Get it wrong high and you demoralize the team; wrong low and you leave revenue and rigor on the table. The answer is reconciling top-down and bottom-up.
Short answer
Set sales quotas by reconciling a top-down company target with a bottom-up view of each rep's capacity, territory potential, and historical win rate. Prorate for ramp, set the sum of quotas above the target for a buffer, and validate that roughly 60 to 70 percent of reps can realistically attain the number.
Step by step
Start from the company target
Take the revenue the business must hit and subtract expected contribution from the existing base and non-rep channels to get the new-business number to distribute.
Assess capacity bottom-up
For each rep, estimate realistic output from territory potential, deal size, win rate, and ramp status.
- Prorate quota for ramping reps
- Weight by territory and segment potential
- Ground it in the rep's historical win rate and deal size
Reconcile the two views
Compare the top-down allocation to bottom-up capacity. Where they diverge, adjust territories, headcount, or the target rather than forcing an impossible quota.
Add a coverage buffer
Set the sum of individual quotas above the company target so the plan lands even when some reps miss.
Validate attainability
Model the expected attainment distribution. If almost no one can hit it, the quota is broken. Aim for 60 to 70 percent attainment.
How Ardovo helps
Ardovo sets quotas from your target, capacity, and historical win rate, prorates for ramp, and models the attainment distribution before you assign, so Rook can warn you when a proposed quota is unrealistic rather than discovering it a quarter later.
Frequently asked questions
How do I know if a quota is realistic?
Model the expected attainment distribution: roughly 60 to 70 percent of reps should be able to hit it. Ground each quota in the rep's historical win rate, deal size, and territory potential. If the math says almost no one can attain it, it is too high.
Should quotas be the same for every rep?
Not usually. Adjust for territory potential, segment, and ramp status. A rep in a rich territory or a large-deal segment can carry more than one in a thin territory or ramping into the role. Equal quotas on unequal territories are unfair and inaccurate.
Why set quotas above the company target?
Because some reps will miss. Setting the sum of individual quotas above the company number builds a coverage buffer so the overall plan still lands when part of the team falls short. This overassignment is standard practice.