The title says it all, but unrealistic quotas simply suck.
What bothers me most about this is that the ratio often does not go hand in hand with the targets that are communicated on the stock market. Each management level has a buffer and the actual goal is different from the quota.
But if the actual target and the target of the sales team differ so greatly, then the sales people are nearly always the losers.
If I have a target and a salary that I will receive if I achieve 100% of my target (OTE), then this target achievement must also be realistic. It can be ambitious, but it must be realistic. If we assume that talent is distributed as in a normal distribution, then 50% of sales people should reach their quota.
If this is far from the case, and it starts with ramping, then companies are depriving their sellers of a realistic opportunity to achieve their quotas, or one step further: their money.
I firmly believe that win-win deals create the biggest pie for everyone and hope that more tech companies adopt this mindset to succeed together with their revenue teams with mutual respect for each other.
I spoke with a sales leader recently and we talked about this topic. He explained to me that this is part of the plan: The compensation structure is being used as a cost-control mechanism rather than a true incentive system.
I never thought about this so drastically in this way before, but it became quite obvious when I thought about it.
When a salesperson creates value for the company by closing deals, they should receive a predictable, proportional reward. Simple as that. The company makes more money, the salesperson makes more money. True alignment.
But if this is not the case it is something like that: For Companies top performers leave for organizations with more transparent compensation and remaining salespeople focus on gaming the system rather than creating value. For Sales Professionals income becomes less predictable and career progression gets harder to plan. For Customers high sales team turnover disrupts relationships and rushed deals don’t align with their needs.
I don’t think this is the case in every org. But I think every sales person knows such development. For me it means to be even more thorough in any interview process, reading reviews about orgs, speaking with sales people of the org etc…
I have never thought of the compensation structure as a cost control mechanism, but it makes perfect sense.
I have also never seen a top performer in an organization who could deliver on a consistent basis (=over years). Sooner or later the cash cow accounts were always taken away and distributed.
But as you also wrote, I can not imagine that the company benefits the most from this strategy. On the contrary, it is rather a lose-lose situation, which encourages high churn of talent and customers.
In addition, companies with unrealistic growth rates can easily create a narrative that the sales team is underperforming and always have a scapegoat = the Chief Revenue Officer when growth targets are not met.
This is exactly why I am so glad that RepVue exists and that you can get visibility into quota attainment. Overall, as someone who strongly believes in meritocracy, I wonder how it has come to this state in what feels like the majority of tech sales orgs.