Build targets bottom up from real win rates, deal sizes and cycle length, then check them top down against the plan.
Work backwards from the revenue goal to the weekly activity it takes, so every rep knows what a good week looks like.
New reps need ramped quotas. A full number on day one is a resignation letter in slow motion.
When the bottom-up number falls short of the plan, the gap tells you what to fix. Raising the quota doesn't close it.
You set the number in December. By March, half the team has quietly stopped believing it.
Nobody says it out loud. They just start sandbagging deals, padding the pipeline and talking about "next quarter." Your best rep starts taking calls from recruiters.
The target wasn't too high because your team is lazy. It was too high because nobody checked whether the math could work.
Here's how to fix that, step by step.
The short version
To set sales targets that hold, start from your revenue goal and work backwards through your real average deal size, win rate and sales cycle to the pipeline and weekly activity it takes. Adjust for new reps who are still ramping. Then compare that bottom-up number to the plan, and fix the gap instead of hiding it in a bigger quota.
The board's wish, divided by headcount
This is how most targets get set.
The board, or the founder, decides the company should grow a certain amount next year. Someone divides that number by the number of reps. Each rep gets a slice. Done.
It feels rigorous because it's a spreadsheet. It isn't. It never asks the only question that matters: can this team, with this pipeline, at these conversion rates, actually produce this number?
When the answer is no, the target doesn't motivate anyone. It does the opposite. Reps can do the math in their heads. They know when a number is fiction, and once they decide it is, they stop chasing it and start protecting themselves.
Good targets come from a different place. They start with what your team really does: how many deals it wins, how big they are, how long they take. Then they get checked against what the business needs.
Top down vs. bottom up
You need both. The trick is knowing what each one is for.
Top downBottom up
Starts withWhat the business needs to growWhat the team actually produces today
Answers"What do we want?""What can we really do?"
RiskA number nobody believesA number that's too safe
Use it toSet the ambitionBuild the target, then test it against the ambition
Top down on its own gives you fantasy. Bottom up on its own gives you comfort. Build from the bottom, check against the top, and the difference between the two becomes the most useful conversation you'll have all year.
How to set sales targets, step by step
Here's the order I work in.
- Start from the revenue goal. Split it into what comes from existing customers (renewals, expansion) and what has to come from new business. They're different jobs with different math.
- Find your real average deal size. Use closed deals from the last 12 months, not the deals you hope to close. Pull out one-off whales, or they'll distort everything.
- Find your real win rate. Of the qualified opportunities that reached a decision, how many did you win? Count the losses honestly, including the ones that went quiet.
- Measure your sales cycle. How many days from first meeting to signed deal? This tells you how early pipeline has to exist to close inside the year.
- Work out the pipeline you need. Deals needed divided by win rate gives you the number of qualified opportunities.
- Account for ramp time. New reps don't produce at full speed for months. Your capacity is lower than your headcount suggests.
- Set activity targets. Turn the pipeline number into weekly meetings and conversations per rep.
If you don't trust your CRM enough to pull these numbers, that's the first problem to solve. A target built on bad data is still a guess. It just looks nicer.
The math, worked backwards
Here's what that looks like with simple numbers. These are an example, not a benchmark. Plug in your own.
From revenue goal to a good week
EXAMPLE NUMBERS$1.2Mnew business
÷ $30K average deal
40deals won
÷ 25% win rate
160qualified
÷ 50% of first meetings qualify
320in the year
÷ 48 selling weeks ÷ 4 reps
~2first meetings
Then add your sales cycle. With a 90-day cycle, deals that close in Q1 had to start in Q4. Pipeline created late in the year mostly lands next year.
Look at what just happened. A big, abstract number ($1.2M) became something a rep can act on Monday morning: about two new first meetings a week.
Now go one step further back. If it takes your team around 15 real conversations to book one first meeting, that's 30 conversations per rep, per week. Use your own ratio. That's your activity target, and it's one people can see themselves hitting.
This is also where targets become honest. If two first meetings a week sounds impossible for your team, you've learned something important before the year started, not in October.
Ramp time and real capacity
The math above assumes four reps selling at full speed all year. You almost never have that.
New reps take time. They learn the product, the buyer and your process. Their pipeline starts at zero. In complex B2B sales, getting to full speed can take two quarters or more.
So build capacity rep by rep. Here's an example. Say a fully ramped rep closes $300K a year. Three of your reps are ramped: $900K. The fourth starts in spring and spends a few months ramping, so call it $150K this year. Your realistic capacity is about $1.05M, not $1.2M.
That $150K gap is invisible when you divide by headcount. It shows up in month nine as a "missed quarter."
Give new reps a ramped quota: a reduced number for their first months that steps up to full. It protects them, and it protects your forecast. A new hire handed a full number on day one usually does one of two things: panics into bad deals or leaves.
Headcount isn't capacity. A rep in month two is a cost, not a quota.
Free Executive Revenue Review
Not sure your numbers would survive this math? Let's look at them together.
Answer 20 quick questions. My team and I study your business, then I send you a private review. Free, and personal.
Get your free revenue review About 4 minutesPrivate review in 2 business days
How to set sales quotas for each rep
People use "target" and "quota" interchangeably. They're related, but not the same.
A sales target is the goal: for the company, a team or a quarter. A sales quota is one rep's personal number, usually tied to how they get paid.
Here's how I set quotas once the team target is built:
- Start from each rep's capacity, not an even split. Territory, account mix and tenure all change what's realistic.
- Add a modest cushion. Not every rep hits every quarter, so the quotas usually add up to a bit more than the company target. Keep it modest. If quotas add up to far more than the plan, you're back to wishing.
- Ramp the new people as above.
- Set them quarterly, even if the plan is annual. A rep who's behind in month four needs a reason to keep pushing, not a number that's already lost.
- Connect them to pay carefully. Your sales commission structure should reward the deals you actually want, at the margins you actually need.
The test is simple. If most of the team misses quota, look at the quota before you look at the people. A quota that most reps miss isn't a performance problem. It's a planning problem.
When bottom up doesn't match the plan
This is the moment most companies flinch. The bottom-up number says $1.05M. The board wants $1.2M. So someone raises the quotas and moves on.
Don't. The gap is information. It tells you exactly which lever has to move, and every lever lives somewhere different:
- Win rate. Better qualification, better discovery, a clearer sales process. That's sales.
- Deal size. Pricing, packaging, selling to bigger customers. That's strategy.
- Pipeline. More qualified first meetings. That's marketing, and it's a big part of most revenue growth strategies.
- Cycle length. Fewer stalls, cleaner handoffs, faster proposals. That's operations.
- Capacity. Hire earlier, or keep the reps you have. That's the team.
This is why I say sales is all or nothing. A target is the output of around 20 parts working together across strategy, team, tools and systems, operations, and brand and marketing. Push harder on the reps while one of those parts is broken, and you just burn out the people closest to the customer.
It's also why this work usually sits with a fractional CRO or a senior revenue leader, not with the sales manager alone. The gap almost never lives only in sales.
Mistakes that break sales targets
I've led teams of 80+ people. These are the patterns I'd fix first.
- Last year plus a percentage. It ignores whether last year's pipeline still exists.
- One number, set once a year. Markets move. Review targets every quarter, and adjust openly when something real changes.
- Revenue-only targets. If the only number is closed revenue, reps can't tell in week three whether they're on track. Pair it with activity and pipeline targets.
- Changing quotas mid-quarter without a clear reason. Nothing kills trust faster.
- Setting targets without the team. You don't need a vote, but you should walk your reps through the math. People commit to numbers they understand.
That last point matters more than it looks. A target your team can explain back to you is one they'll chase. For more on what keeps people pushing once the number is set, read how to motivate a sales team.
Where to start this week
Pull three numbers from the last 12 months: average deal size, win rate and sales cycle. Run the backwards math against next year's goal. See what weekly activity it asks for, and whether your team can do it.
If the numbers don't match, or you can't pull them at all, you've found where to start.
And if you want a second set of eyes, my team and I will look at your business and send you a private review of where revenue is leaking. Start with the free revenue review.
Written by Joe Greco
Fractional CRO with 25+ years building B2B revenue. I lead revenue for a small number of companies at a time, with a network of 40+ specialists behind me.
More about me
