Definition
A sales quota is a specific, time-bound sales target set by a company and assigned to an individual salesperson, a team, or a geographic region. It serves as a key performance indicator (KPI) to measure achievement and is often directly tied to a sales professional’s compensation, such as commissions and bonuses. Quotas are a fundamental tool for driving performance and aligning the sales team’s efforts with the company’s overall revenue goals.
Examples
- Revenue Quota: An Account Executive has a quarterly quota to close $200,000 in new annual contract value (ACV).
- Volume Quota: A medical device salesperson is required to sell 100 units of a specific machine in a fiscal year.
- Activity Quota: A Sales Development Representative (SDR) has a weekly quota of booking 8 qualified meetings and making 200 calls.
- Profit-Based Quota: A sales manager is given a target to generate $500,000 in gross profit for their region, encouraging profitable deals over simply high-revenue ones.
Advantages/Benefits
- Clear Performance Benchmark: Provides a clear, objective, and measurable goal, making it easy to evaluate individual and team performance.
- Motivation and Focus: Gives salespeople a concrete target to aim for, which drives motivation, especially when linked to financial incentives.
- Predictable Business Forecasting: Company-level revenue forecasts are built by summing up the individual quotas of the entire sales organization.
- Alignment with Company Goals: Ensures that the daily activities of the sales team are directly contributing to the broader financial objectives of the business.
Related terms
- Commission
- Sales Forecasting
- KPI (Key Performance Indicator)
- Pipeline Coverage
- Sales Performance
- Revenue Target
Complete GTM Solutions
From lead generation to revenue operations, we provide end-to-end Go-To-Market
services specifically designed for software companies in data and cybersecurity.
