Large quota over-assignment, e.g., where the sum of ramped, rep-level quotas >= 150% of plan causes some major problems. A short 🧵
The company can consistently make plan when most sellers are not making good money and most bonus-driven staff are coming up short.
In short, a morale problem. As I once said when working at a large public company,
The only people drinking champagne at the end of the quarter are the CEO and the CFO.
That's bad for culture, morale, and turnover.
In short, a morale problem. As I once said when working at a large public company,
The only people drinking champagne at the end of the quarter are the CEO and the CFO.
That's bad for culture, morale, and turnover.
It makes marketing planning hard. Is marketing supposed to generate enough pipeline to cover plan or cover quota?
Say you need to generate 100 oppties at a per-oppty cost of $4K to covert plan.
To cover quota you'll need to generate 150 oppties, so you'll need $200K more in demandgen budget to do it.
This applies to other horsemen (pipeline generation sources) as well.
Say you need to generate 100 oppties at a per-oppty cost of $4K to covert plan.
To cover quota you'll need to generate 150 oppties, so you'll need $200K more in demandgen budget to do it.
This applies to other horsemen (pipeline generation sources) as well.
So everyone ends up confused. If you cover plan, then all the reps don't have 3x coverage at an individual level -- on average they have 2x -- so the sales team feels like marketing is failing.
If you cover quota, you're potentially spending 50% more than you need to cover plan. So the board thinks you're inefficient.
If you cover quota, you're potentially spending 50% more than you need to cover plan. So the board thinks you're inefficient.
In general, I say cover plan, but plan conservatively so you can beat it. That works, mostly, if your over-allocation is 20%.
But at 40%, 50% and 75% it just plain doesn't work. You can't fudge over it.
But at 40%, 50% and 75% it just plain doesn't work. You can't fudge over it.
That's why I think smart companies drive their annual planning off productivity models (not quota models) that model what you actually think you will sell and then uplight to quota and do so by around 20%.
That means you're covering plan, not quota, but the gap isn't that big and if you're low-balled the pipegen plan a bit you can beat it
That means you're covering plan, not quota, but the gap isn't that big and if you're low-balled the pipegen plan a bit you can beat it
The keeps costs in line, a larger percentage of the sales team hitting their number, and pretty much everyone but the CEO and CFO happier.
They're less happy because they're taking more risk on their numbers (and maybe should plan more conservatively as a result) -- but they'll start to realize the true cost of buying all that insurance on the number and the damage it does to the company.
They're less happy because they're taking more risk on their numbers (and maybe should plan more conservatively as a result) -- but they'll start to realize the true cost of buying all that insurance on the number and the damage it does to the company.
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