Managers Need Training on Quota Setting

null set 2Companies spend billions on sales training. The latest trend is helping customer-facing teams evolve from being product sellers to solution and industry experts. Companies also spend billions on sales compensation. In some industries, sales compensation is the single largest payroll expense. So why is the intersection between these two priorities a null set? Why do companies spend so much on sales compensation and training, yet so little on quota setting?

Managers are not born with an ability to set sales quotas well. In fact, managers have innate tendencies to set them poorly. They tend to approach the process with intuitive rules of thumb rather than analytically tested methods. And they resist being measured on how well they set quotas. Indeed, it is a surprise to most managers that quota setting effectiveness can be measured in the first place!

Just as shocking: Not a single book on quota setting even existed until this November. There were no publicly available training courses on quota setting until early this year. Most sales compensation books give no quantitative guidance on quota setting. So, from this perspective, no wonder quota setting training gets short shrift: even the experts pay it scant attention!

The lack of training on quota setting has serious consequences. Just witness all the complaints about quotas. Finance complains quotas are too low. Salespeople complain quotas are late or too high. Marketing complains quotas are not tied to market potential. Human resources complains sales quotas are inconsistent and demotivating. Sales management complains there are too many cooks in the kitchen. And everyone complains at the end of the year when quotas are not achieved.

Stop and ask yourself: Should we let managers set sales compensation quotas without a drop of training? We think the answer is obvious.

To find out about the first book on quota setting, and the first publicly available course on quota setting, click here.