Grading on a Curve vs Quota Setting
Dec 13, 2024After taking a tough test in school, we cheered when the test was "graded on a curve." But salespeople think (incorrectly) that 70-100% of salespeople should be at or above quota.
Here's why this is ridiculous and risky for the sales leader who buys into this:
When graded on a curve, it typically follows a bell curve distribution that looks like this:
-2-3% of students getting an A,
-13-16% getting a B,
-60-68% getting a C,
-13-16% getting a D, and
-2-3% getting an F
Essentially meaning the majority of students will receive a middle grade like a C, with fewer students receiving extreme grades like an A or F.
🔑 And most importantly, that's basically 50% at C+ and better
And as students, we're stoked when the teacher grades on a curve.
But when those very same people get into sales, they get all worked up with only 50% of the sales team hitting quota and think that 70-100% of the sales team should be hitting quota.
⚠️ This is a big risk for sales leaders.
👉 When too many reps are above quota (more than 50%), it’s a red flag, not a win. And your Board of Directors knows this. Unrealistically low quotas mean your bar for success is too low. Your leadership will question why you’re inflating results instead of maximizing revenues.
👉 Worse, you’ve conditioned your team to expect easy wins. Your middle performers lack urgency and you're just keeping many low producers on the payroll.
The blame is completely on the sales leader for allowing this fake performance environment to exist.
CEOs don’t fire the salespeople in this situation.
They fire the sales leaders who fail to set and enforce realistic standards.
What do you think? Agree or disagree?
PS: the opposite is also true BTW. If more than 50% of your salespeople are below quota, you likely have some combination of too many heads, quotas are too high or territories are carved incorrectly.