You will be able to set a quota using team capacity, history and ramp, and explain it to the team.
The email from head office arrives in the second week of the new financial year. Your team's target is attached: a single number for the quarter, with a note that it is "in line with the company's growth plan". You divide it by the number of reps, send each of them their share, and watch the faces in the next team meeting. One rep laughs. Another goes very quiet. By the end of the month, your best seller has had coffee with a recruiter.
Quotas set from the top down alone tend to land this way. This lesson shows how to build one from the bottom up, compare it with what the company needs, and explain the result so that a hard target still feels like a fair one.
A bottom-up quota starts from what each rep can realistically produce in the period, based on their own history, and adds those figures together. Each rep's number comes from three things you already have in the CRM: how many qualified opportunities they usually work in a period, their win rate on those opportunities, and their average deal size. A fourth factor adjusts for anyone still in ramp.
The sum is simple. Opportunities times win rate times average deal size gives the expected value of what a rep will close. Multiply that by the share of full quota a ramping rep is expected to carry.
Here are Wei Ming's figures for the coming quarter. All are examples from his team's history, and each win rate is that rep's own rate from the past year.
Aisha: 18 opportunities, 30 percent win rate, S$12,000 average deal, which gives S$64,800.
Raj: 16 opportunities, 25 percent, S$10,000, which gives S$40,000.
Daniel: 16 opportunities, 25 percent, S$11,000, which gives S$44,000.
Mei Ling: 14 opportunities, 20 percent, S$9,000, which gives S$25,200.
Hui Min is in months four to six of her ramp, where lesson 3.1 set her quota at 50, 75 and 100 percent, which averages 75 percent over the quarter. Assuming she works 16 opportunities at the team's typical 25 percent and S$10,000, her full figure would be S$40,000, and 75 percent of that is S$30,000.
The bottom-up total for the team is S$204,000.
Head office's target for Wei Ming's team was S$240,000. The gap is S$36,000, which means the company is asking for about 18 percent more than the team's history suggests it will produce.
Do not hide this gap, and do not simply spread it across the reps. Take it to your own manager with your numbers and discuss it. There are only a few ways to close a gap like this, and each one has a cost. More opportunities per rep means more prospecting time, which has to come from somewhere. Higher win rates mean better skills, which take time to build through the coaching in module 6. Bigger deals mean a different kind of buyer or product mix. Another hire takes months to ramp, as module 3 showed.
Sometimes the discussion ends with the target being adjusted. Sometimes the company has reasons the target cannot move, such as commitments to investors, and the outcome is an agreed plan for closing part of the gap, with the rest acknowledged as a risk. Either way, your manager now knows what the target is based on, and you have not simply passed a number down.
Wei Ming and his manager agreed to keep the S$240,000 target, with two changes: a budget for one more hire next quarter, and marketing support to raise the number of qualified opportunities for Raj and Mei Ling, whose figures were lowest.
When most of a team cannot reach its quota, the quota stops doing its job. A target is supposed to shape effort. A target that feels impossible tells reps their effort will not be rewarded, so the most capable people, who have options, are the first to start looking elsewhere.
This does not mean every quota should be easy. A quota should require good work to reach. But there is a difference between a stretch and a number no one on the team, using the history you have, could plausibly produce. If your bottom-up figure is well below the target and nothing changes to close the gap, that is a warning worth raising.
Not every rep needs the same quota. Aisha's history supports a higher figure than Mei Ling's. Many teams set individual quotas that add up to slightly more than the team target, so the team can still reach its number if one rep falls short. Whether you do that depends on your company's policy and on whether the team will see it as fair. Lesson 7.2, The parts of a sales pay plan, covers how pay is attached to quota.
People accept a hard number more easily when they can see how it was built. Present the logic: the opportunities, win rates and deal sizes behind each rep's figure, the company target, the gap, and what is being done about it.
Wei Ming walked the team through his sheet in the next team meeting. He showed each rep their own inputs privately in their one-to-one, so nobody's numbers were compared in public, and showed the team total and the gap to everyone. Raj asked how he could raise his opportunities from 16 to 20. That was the most useful question of the meeting, because it turned the quota into a plan.
In the activity below you will build a bottom-up quota for a sample team of five and compare it with a given company target. Write each rep's inputs in separate columns so you can see which factor drives the difference between them.
Build a bottom-up quota for a sample team of five and compare it with a given company target.
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