First Book on Quota Setting
The first book ever published on quota setting.
Most companies set quotas but few are satisfied.
This book is for those who manage salespeople or set quotas for salespeople.
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- 1. Introduction
- 2. Distributions
- 3. Feedback Tool
- 4. Database
- 5. Business Plan
- 6. Basic Quota Math
The purpose of this book is to bring quota setting into the 21st century. It should be a science rather than one of the “dark arts” of sales management. The benefits are significant. As quotas become more accurate, sales force utilization and motivation increase, leading to higher sales and profits.
Don’t Cherry Pick
Bonus Plan Design
Four Quota Roles
Quota Setting Process
Normal Is Best
Lake Wobegon Bias
Law of Large Numbers
Less Mature Markets
Too Many Outliers?
Not for Feedback!
Stretch But Achievable
Time Series by Person
History and Potential
Four Data Types
Sales Data Issues
Market Potential Data
Make It Happen
Uniform Growth Quota
Relative Growth Quota
Which Is Best?
- 7. Quota Testing
- 8. Over-Assignment
- 9. Market Potential
- 10. Forecsting
- 11. Quota Tool
- 12. Implementation
Advanced Error Measurement
Conflict of Interest
How To Get It
Set Better Quotas!
Most companies set sales quotas, but few are satisfied. Why?
Too many bad habits! Here are the top four:
Yes, sales managers can acquire a good sense of market or account potential. That’s part of their job. Finding and using data to support gut feel is also part of the job … or should be. Market and account potential data can greatly increase quota accuracy.
Every sales territory has a unique sales history, which creates different trend and seasonality patterns. Sales forecasting techniques like exponential smoothing can detect subtle shifts in territory sales and forecast them into the future. A bad quota setting habit is to rely on overly-simplistic forecasts, like “last year’s growth rate will repeat next year.”
A small dose of thoughtful scrutiny reveals fundamental flaws in this surprisingly common “worst practice.” We have yet to find a compelling analytical case in support of quota padding. If you think you have one, send it to us and we will get back to you. Maybe you have a great case for over-assignment … or maybe not.
Some companies communicate quotas in the second quarter. This is a motivational disaster. Late quota setting processes should be reengineered to deliver quotas in the first month of the new year.
Never use quotas to give positive or negative feedback. Some managers “play favorites” with quota setting. Some quotas are much easier or harder than others. Every quota should have an equal dose of “stretch but achievable.” This enhances quota accuracy, which in turn maximizes sales performance over the long-term.
Break bad quota setting habits with our …
The Online Learning Advantage
Much cheaper than classroom training
Track learner progress and quiz grades
Option: integrate into your corporate LMS to track progress and completion
Multiple Learning Modes
Real-world application exercises
Set your own pace
Available 24 x 7
Retake the course as often as you like
Click on a chapter to learn more.
In the Overview, we set context, define the four roles of quotas, and outline the quota setting process. (Quick view: 5 min.)
In Chapter 2 we define frequency distributions and identify which type of quota distribution is best. (Quick view: 4 min.)
In Chapter 3 we identify three warning signs that quota setting has gone awry. Then we describe the first bad habit: using quotas as a way to give positive or negative feedback through easy or hard quotas. We identify common rationalizations for this bad habit, and expose their faults. (Quick view: 6 min.)
In Chapter 4 we specify what is needed in a quota setting database. (Quick view: 7 min.)
In Chapter 5 we examine two basic ways to set quotas: uniform growth and relative growth. Every person involved in quota setting needs to understand the strengths and weaknesses of these two methods. (Quick view: 5 min.)
In Chapter 6 we describe: the need for quota testing, how to do a quota test, how to measure quota error to find the best quota setting method, and how to further analyze the test through charting. Quota testing is a new concept that can help you increase quota setting accuracy. (Quick view: 8 min.)
In Chapter 7 we define over-assignment, or quota padding. Then we expose its various flawed rationalizations. We have yet to find a valid case in favor of over-assignment. (Quick view: 8 min.)
In Chapter 8 we define market potential and explore the various problems associated with not using market potential data during quota setting. (Quick view: 6 min.)
In Chapter 9 we integrate the essential ingredients from the prior eight chapters to create a powerful, yet easy to use quota setting tool. All managers, or those who are assisting them, need do is assemble the requisite data. From there, managers can review the initial quotas generated, make their adjustments as needed, and submit their recommended quotas for review. (Quick view: 14 min.)
To conclude, we describe the fourth bad habit (releasing quotas late), provide a five-step program for effective quota communications, and describe key administrative issues and best practices for resolving them. (Quick view: 9 min.)
Chapters include interactive quizzes and download links for
spreadsheets, exercises, and pdf copies
The best way to ensure mastery of our quota setting course is to augment it with coaching. Each team is assigned a quota setting expert who helps them apply the course to their specific situation.
- Managers are divided into teams of five or less.
- Three hour-long coaching calls ensure managers:
- Take the course
- Understand the content
- Apply it properly to their immediate situation
- Before each coaching call, participants submit assignments to their coach for review.
- During the call, the coach provides assignment feedback and answers questions.
- Ideally, the course coincides with the actual quota setting process, thus delivering immediate benefits.
Cost: $997 per team.