SaaStr published guidance on setting sales targets for SaaS sales teams, emphasizing a structured approach using three confidence-based plans: C-90, C-60, and C-10. The C-60 plan serves as the base for overall sales and revenue goals, representing a 60% confidence level that targets will be met. The C-10 plan acts as a stretch goal with significant bonuses, while the C-90 plan is reserved for financial planning and cash flow management, kept internal to the leadership team, according to saastr.com.
The recommended process begins with establishing the C-60 plan, which sets realistic quotas that at least 60% of the sales team can achieve. Sales compensation and quotas should align with this plan to maintain motivation and avoid unattainable targets. The approach includes using top-performing sales representatives to benchmark what a 'Pretty Good' rep can accomplish, ensuring quotas are fair and achievable. Additionally, variable pay structures can reward reps who exceed the C-60 plan and approach the C-10 stretch goals.
This method addresses common challenges in SaaS sales management, such as demoralization caused by unreachable quotas and misaligned compensation. By tying sales targets and compensation to confidence levels, companies can better forecast revenue and manage cash flow. The approach also supports financial planning by distinguishing between operational sales goals and conservative cash planning, which is critical for SaaS firms balancing growth and profitability.
SaaStr’s framework offers SaaS companies a replicable model for quota setting that integrates sales performance with financial planning. The article provides practical advice for CEOs and sales leaders to structure sales goals and compensation plans, aiming to improve sales team morale and company financial health.