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Setting the annual revenue target is only one part of sales planning. The more difficult part comes next: turning that company-level ambition into a plan the sales organisation can realistically deliver.
This is where a lot of quota planning starts to go wrong. A revenue target is agreed, an over-assignment percentage is added, the number is pushed down through regions, teams and reps, and the plan looks complete. On paper, the maths works. But that does not necessarily mean the sales organisation has the capacity to deliver it.
Good target and quota planning needs both a top-down and a bottom-up view. You need to understand what the business wants to achieve, but you also need to understand what the team can realistically produce based on its actual capacity, productivity and pipeline.
That is why these two steps sit next to each other in our Planning Done Right framework. Step 2 focuses on the top-down inputs that shape the plan. Step 3 looks at the bottom-up models needed to test whether that plan is achievable. The value comes from bringing the two together before quotas are finalised.
Start with the top-down inputs
Every plan needs a clear view of what the business is trying to achieve. At this stage, the focus is on the targets, resources and assumptions that will shape the year ahead.
Targets might include bookings, revenue, retention, pipeline goals, quotas and revenue mix. These numbers set the direction for the business, but they cannot be looked at in isolation. The resources available to deliver them matter just as much. Headcount, hiring plans, budget, customer base, products, partners, technology and data all influence what is possible.
The assumptions behind the plan are equally important. Attrition, ramp expectations, seasonality, segmentation, organisational structure, roles and territories all have a direct impact on how much selling capacity will actually be available throughout the year.
This is often where plans can become too simplistic. A company might look at total headcount and assume that every seat contributes equally to the annual number. In reality, some reps may be ramping, some roles may be vacant for part of the year and some experienced sellers will leave. Two teams with the same number of people can have very different levels of productive capacity.
The top-down plan is still essential. It gives the organisation a clear view of what it wants to achieve and the resources it expects to have available. The problem comes when that view is treated as the finished plan rather than the starting point.
Then test the plan from the bottom up
Once the top-down inputs are clear, the next step is to model what the revenue organisation can realistically deliver.
In our framework, we look at bottom-up planning across three areas: productive capacity, pipeline capacity and quota coverage. Together, they help answer a much more practical question: can the team, with the resources and conditions we expect next year, actually deliver the number?
Productive capacity
Productive capacity starts with the amount of selling capacity available across the team. That means looking beyond simple headcount and understanding productive headcount, productivity per rep and how capacity will change during the year.
At a basic level, capacity can be thought of as headcount multiplied by productivity. But the quality of those inputs matters. If a rep is only productive for part of the year because of ramp, or if a role is expected to be vacant for several months, treating that seat as fully productive will overstate the team’s true capacity.
Historical productivity is also important. If a fully ramped rep has consistently produced a certain level of bookings, that provides a much more useful starting point for planning than simply deciding what you would like each rep to deliver next year.
Pipeline capacity
The second piece is pipeline capacity. Even if the team has enough productive selling capacity, there still needs to be enough pipeline to support the revenue target. That means looking at conversion and win rates, sales cycle length, sales velocity, lead creation and expected pipeline generation.
A sales plan can look perfectly achievable from a headcount perspective and still fall short if the required pipeline cannot be created. If the plan requires a significant increase in bookings but assumes the same pipeline generation and conversion rates as the previous year, that gap needs to be identified before the year begins.
Quota coverage
The final piece is quota coverage. This is where the target, sales capacity and quota plan start to come together. Teams need to understand the target quota by role or segment, the relationship between sales capacity and quota, historical quota attainment and the level of over-assignment being applied.
Over-assignment can be a useful part of the planning process, but it should not be used to hide a capacity problem. Increasing quota does not create more selling capacity. If the underlying productivity, headcount or pipeline does not support the number, adding more quota simply moves the gap further down the organisation.
The gap between the two models is where the planning happens
The objective is not necessarily to make the top-down and bottom-up numbers match immediately. In fact, the difference between them is often where the most valuable planning conversations happen.
Imagine the business has set a $50 million revenue target. Once the team models expected headcount, ramp, attrition, productivity and pipeline capacity, the bottom-up plan shows that the sales organisation is currently on course to deliver $43 million.
That $7 million gap is not a failure of the planning process. It is the information the planning process is supposed to surface.
The business can now decide how it wants to close that gap. It might mean hiring additional capacity, improving productivity, increasing pipeline investment, changing territories, shifting the revenue mix or revisiting some of the assumptions in the original plan. In some cases, it may also mean acknowledging that the target carries more risk than initially expected.
What matters is that those decisions are made intentionally, with a clear understanding of the trade-offs involved.
Without the bottom-up model, the same company could simply distribute the $50 million target across the sales team and discover the capacity gap several quarters later, when it is much harder and more expensive to fix.
Quotas should be the result of the plan, not the starting point
This is why quota setting should come after the business has connected its top-down ambition with its bottom-up capacity.
By the time quotas are finalised, the team should be able to explain what sits behind them.
- What level of productivity is expected?
- How have ramp and attrition been accounted for?
- How much over-assignment is being used, and why?
- Is there enough pipeline to support the number?
- What happens if one of those assumptions changes during the year?
That does not mean every quota should feel comfortable or easy to achieve. The purpose of a quota is still to create ambition and accountability. But there should be a clear relationship between the number being assigned and the capacity of the team expected to deliver it.
If that relationship does not exist, poor quota attainment can easily be treated as a performance problem when the issue actually started in the planning process, and setting unrealistic quotas.
The company target tells you where the business wants to go. The bottom-up model tells you what the sales organisation can currently deliver and what needs to change to close the gap.
The strongest sales plans use both.
