Quota attainment: reading plan levels, versions and gaps

Quota attainment is the ratio of revenue won to the target of the same level: organisation, region or sales rep. It is readable only with level, period, opportunity type, state of the plan and definition of the amount. Each level is planned independently. A missing target is named, never replaced. Actual against forecast is another quantity: the EFV Ratio.

Symptom: how do you notice that an attainment figure is not readable?

Two reports lie on the table in the quarterly meeting. Both name a quota attainment for the same period, and the two figures do not match. Nobody in the room can say which of the two holds.

Three observations belong to this pattern:

• The targets of the topmost planned regions do not add up to the target of the organisation.
• A sales rep's figure differs systematically from the attainment for the quarter.
• The question which plan is meant gets several answers.

None of these observations is in itself an error in the data. The first is a finding about the plan; the other two show that a detail is missing from the figure.

For the finance leader who sets plan and actual side by side, that is the real question. What exactly is in the numerator, and what is in the denominator?

Cause: what is quota attainment, and what does a plan consist of?

Actual against plan is not actual against forecast

Quota attainment compares actuals with the plan: revenue won, divided by a target the organisation has set. The entry quota attainment, actual against plan explains the term and the calculation.

A second quantity looks similar and measures something else. EFV Ratio divides actual Closed Won revenue by rEFV at the start of the period.

rEFV (Risk-Adjusted Expected Funnel Value) is bEFV weighted by SLA Health. The weighting uses measured factors per band. More on this is in the entry rEFV, the risk-adjusted expectation.

The EFV Ratio, actual against forecast, therefore divides by a forecast. Quota attainment divides by a plan. The two quantities are not interchangeable.

An EFV Ratio near 1 says something about the calibration of the forecast, not about quota attainment. It says nothing about whether the plan was reached. No verdict follows from a single value of the EFV Ratio; the EFV Ratio is read as a series.

Three levels, each planned in its own right

A plan has three levels: organisation, region and sales rep. Each level is planned in its own right. No level is the sum of another.

Many organisations deliberately distribute more quota downwards than the level above carries. That is an over-distribution. The opposite direction occurs as well, even within the same plan: the under-distribution. Both are a finding about the plan, not an error in the data and not a gap.

A target is therefore always read from one level. The target of the organisation is its own target. A report does not “correct” it to the sum of the regions and does not take the largest level for the real target.

A plan version is a state, not a period

A plan can be revised in the course of a year. Each state is a plan version. The state belongs to the figure: whoever names a target names its state.

The name of a state is not a time span. A plan that covers the whole fiscal year can be called “Q1” and still cover all four quarters. Whether a fiscal year is planned is shown by the target itself, not by the name of the version.

A region is not a team

Regions are a structure in their own right, and the targets hang on it. Regions can be nested: further regions can lie beneath a region. A region is not a team. Where a region is missing, it is not derived from a role, a manager or a country.

A sales rep can have targets in several regions. The rep's opportunities need not lie in those regions. This matters for the manager who leads a sales team directly. The figure of a region is not the sum of the figures of the sales reps who have targets there.

Measurement: how is quota attainment read?

Numerator and denominator per level

Each level has its own numerator and its own denominator.

Both halves stand on the same period, the same opportunity type, the same state of the plan and the same definition of the amount. Definition of the amount means: numerator and denominator count the same kind of amount.

Where one half differs in one of these points, the quotient looks like quota attainment and is not.

For a person, quota attainment applies as a whole, not per region. Opportunities outside the regions in which the person has targets count towards the person's actual.

The one exception: the sales rep

Targets per sales rep exist only as an annual value. There is no quarterly target per sales rep.

A person's quota attainment therefore sets the revenue won in the finished quarters of the fiscal year against the annual target. The running quarter does not count.

That is the one exception to the rule of the same period. The consequence: this figure is not comparable with the attainment for the quarter of a region or of the organisation. Its denominator is a year.

Another report can count the running quarter and then shows more. In that case the definitions differ. The difference alone makes neither figure wrong.

Gap or not planned

Where a target is missing, there is no quota attainment. The figure is then not zero; it does not exist. The missing target is named and never replaced: not by zero, not by the previous year, not by an estimate.

No target for a person is derived from the target of the region or the organisation either.

Two cases are kept apart. A gap is a missing target within what the organisation plans in this fiscal year, or a fiscal year with no targets at all. “Not planned” means: the organisation plans this kind of amount at this level nowhere in this fiscal year. Nothing is missing there.

Where the plan covers a period only in part, what is missing is named. The sum of the targets that exist is then not a plan for the whole period.

Countermeasure: which five questions belong to every attainment figure?

This article recommends reading every quota attainment figure with five questions.

The same care applies to comparisons. Attainment figures are not added and not averaged: the attainment of one level is never the mean of the level beneath it.

Where two reports differ, the five questions come first. A difference in one of the details can explain the gap without the arithmetic being wrong.

Quota attainment looks back. Other quantities look ahead. The entry HACR, rEFV divided by the amount still open to target describes one of them.

The article Forecast Integrity, the forecast against plan and actual shows the comparison of a forecast with the plan of the same period.

For the CEO and their view of the revenue forecast, both directions belong side by side. Quota attainment answers what was won against the plan. rEFV answers what the open pipeline lets one expect.

Quota attainment is readable only when level, period and state of the plan stand beside it. It measures actual against plan, not against forecast.