AE quota attainment has been around 40% industry-wide for over a decade and most sales leaders don't even know what that means.

Let me clear things up. It DOES NOT mean that 40% of AEs are hitting or exceeding 100% of quota.

The reality is that around 15% of AEs hit or exceed 100% of quota and the ones who exceed are driving the total average up to around 40%.

It's important to remember when we're talking about industry-wide data that we cannot conflate in our minds our personal experiences at individual companies. Some of us have seen much better performance and some of us have witnessed much worse performance, but the averages are what they are and they mean what they mean.

On one hand, sales leaders want to take an "extreme ownership" approach with their teams, and this can lead to them defending high quotas. There is logic to this at the individual company and team level but when we're talking about industry-wide data we have to view things from a different lens because we cannot assume every company is doing things correctly, clearly they aren't and it's driving these numbers.

So why is quota attainment so low? It's simple, it's because quotas and headcount are used to make sales forecasts and those forecasts are used to pitch investors and drive stock valuations upward. Each round of investors pitches and sells their bag of shares to the next round of investors and wants to sell those shares for more than they paid for them. So they're incentivized to claim some large sales forecast is reasonable. 

The end result is companies over-hiring and setting quotas most can't hit after each round of new funding. Then they do massive layoffs, restructure, and start the game all over again with a new round of investors. 

The problem is there's no pipeline plan for these additional AEs. These companies narrow their teams down to the best performers maximizing their existing pipeline (via layoffs) and then they make forecasts that claim they can replicate those numbers by doubling or tripling the size of their sales team. What happens is they hire more people who all split the existing pipeline while trying to generate some of their own, and everyone's quota attainment goes down.

The correct way to forecast is to use pipeline and win rates by channel or lead source and then to factor in what you plan to invest into each channel or lead source. If you can maintain your win rates on those channels, that's how you forecast future sales accurately. But investors and founders don't like this because the reality isn't good enough to pitch investors. 

The end result is salespeople get screwed while founders and investors get wealthy. 

Before you jump to defend quotas, make sure you understand what you're talking about because the situation at your specific company is not the same as speaking about the industry as a whole.

Salespeople deserve much better but unfortunately I don't see any solution to the problem unless investors become forced to STAY invested until the final exit. Otherwise their incentive is to look for short-term hacks to increase their valuation and sell their shares before the truth comes to the surface. 

The best thing we can do today is be aware, ask the right questions, and try our best to land at an employer who does things right. One way to give yourself a good chance of success is to land at a company with a truly viral product. When the product is awesome, these problems go out the window. Remember, there are plenty of great companies out there and their performance is factored into the 40% average attainment. Which means it's awesome to work for them, but terrible to work for the rest who drive that number down. 

Be aware, ask the right questions, and speak up when the numbers simply don't make sense.

Especially sales leaders and executives, you must speak up.

Happy Selling,