Quota, what is it good for?

I'm building a comp plan for a new SMB team I'm building and something occurred to me:


What's the point of quota?


Hear me out. What if, instead of a quota, you just had a commission rate?


Now, as a leader, I can work back from what I want/expect you to sell, and give you a rate based on that.


But, as a sales rep, do you really need a quota?


Would you take a job where they said "There's no quota. You have a $50k base. You get paid 10% of everything you close. Good luck!" Would it make a difference?


I can do the math. In the scenario above, I want you to close $500k, so your OTE is $100k. I can even report up to my CRO on expectations. I can coach reps who are struggling, I can manage territories, I can even choose to get rid of reps who don't cut it - literally nothing changes.


Except you, the AE, doesn't have a $500k number floating over your head that you have to sweat about every day.


Am I overthinking this? I just had this weird moment where I was like "WTF is a quota even good for?"


Maybe my whiskey level is low, I don't know. But seriously, why do we have quotas?

📈 Closing
💰 Compensation
🧢 Sales Management
12
Pachacuti
Politicker
4
They call me Daddy, Sales Daddy
I understand what you're thinking, but your C-level group is going to have a fit over this for all the obvious reasons.

But if you share with someone your math, while you don't say there is a quota, you imply there is one with the OTE, even if you don't share that.  Eventually someone will figure it out and the 500k is the number.

If you don't want to impose quota, then just hire everyone as Independent Contractors and bump up the commission to 15-20% and have a 6 month no-recoverable ramp.
GreenLeader
Contributor
2
Director of Inside Sales
I don't mind imposing quota.  I was just suddenly wondering why we had them, instead of simply telling people what their comp % was.  But I think maybe my edibles kicked in too early or something.  
SunTzu
Opinionated
3
Legendary Historical Figure
You're overthinking it. There have to be revenue and growth expectations, and everyone has to pull their weight. Quota is just the share of weight every rep is expected to pull for the company to operate as expected.
GreenLeader
Contributor
0
Director of Inside Sales
Thanks - I figured as much.
CuriousFox
WR Officer
3
🦊
Drink more whiskey. 
GreenLeader
Contributor
1
Director of Inside Sales
Always the right answer!
Sunbunny31
Politicker
3
Sr Sales Executive 🐰
I’ve never minded holding a quota. I understand it’s my contribution to keeping the lights on. ;)
BigSkySeller
2
VP of Sales
I work in the SaaS space and we recently went from Salary only to Commission.  With this and OTE, we set a quota that was attainable and would attract some top performers.  After a year, we have sold, but I wouldn't say it is better.  I support your concept; the biggest issue we see is lack of effort once quota becomes unattainable.

With Quota and Commission, we tend to see the wrong behaviors which results in more overhead spent solving problems with customers.  In either scenario, the challenge is finding sales people who want to win and understanding that wins are rewarded...


You might be on to something!
NotCreativeEnough
Big Shot
1
Professional Day Ruiner
I've worked jobs with no quota before. The lack of pressure to perform was great. But it also meant if I just wasn't feeling motivated, I had nothing forcing me to stay motivated. 

Where I think most companies get it wrong is that they set quota's unrealistically high. 90+% of the team should be hitting it otherwise its too high or you hired wrong. Usually the first option. I've subscribed to the theory that a quota should be the bare minimum a company needs that sales rep to bring in for them to be an asset and not a liability. Everything after that is a bonus. 

For example in my current role, most of my team is roughly 1.5x quota each quarter. On our team of 12, you may have 1-2 people at most who don't hit. And if they don't, they will just barely be under. Even with that level of attainment, my boss is talking about lowering everyone's quota so we can hit accelerators quicker and make more money. 

Hire the right people, set realistic expectations, and allow the to flourish. No one performs well when they're constantly stressed about whether or not they'll still have a job next month. 
TennisandSales
Politicker
1
Head Of Sales
yeah so the quota really is just telling you what your part of the company goal is. But still its just kinda a made up number, 


there are some companies that OTE/quota determines commissions. 

and that is messy and confusing. Been there
ScopeCreep
Good Citizen
1
Regional Sales Manager
Haha! This is awesome. I love the quota debate.

Lots of times it’s to measure growth against a real commit to the board and investors. If reps are blowing out that number, they are over indexing. It gives them the metrics they need to either raise quota or ask for more headcount.

It’s a fair question. Also, lots of sales people are competitive and gives them a target to go after.

Don’t over think it. I had a sales leader give us all really similar quotas and had us duke it out on the leader board…
Fenderbaum
Politicker
1
Retired Choirboy🪕
...absolutely nothin'!  Good God y'all!
4

Quota

Question
9
4

Quota or no quota?

Discussion
15
Individual Quota should last
81% Yes
19% No
67 people voted
16

Mislead about quota attainment

Question
20