What Is a Sales Quota?
TL;DR
A sales quota is the revenue or volume target assigned to a rep or a team for a defined period, usually a month or a quarter. It is a commitment used for compensation and capacity planning, which is what separates it from a forecast, an estimate of what will actually happen.
How is a sales quota set?
Top down from a revenue target, bottom up from capacity, then reconciled. The top-down number divides the company target across the team. The bottom-up number takes what one rep can realistically work and multiplies it by historical win rate and average deal value.
When the two disagree, the gap is a hiring or a pricing question rather than a motivation question. Setting the number above what the capacity calculation supports does not change the capacity.
What is pipeline coverage?
The multiple of quota a rep needs in open qualified pipeline to be likely to reach it, and it falls out of the win rate rather than being chosen. A team closing one deal in four needs roughly four times quota in pipeline, and one closing one in three needs three.
That is why a coverage target does not transfer between teams. A ratio copied from another company imports their win rate and their definition of a qualified deal along with the number.
Frequently asked questions
A quota is a target set at the start of a period and a forecast is an estimate, updated during it, of what will actually close. A forecast that always equals quota is a report on the target rather than on the pipeline.