Are Sales Quotas Really Necessary?

Last week, I pointed out that only half of the world's sales reps achieved quota in 2009, and a number of posts complained that quotas were being misused to beat sales reps over the head. They're often unrealistic and, obviously, not very effective at actually driving performance. So that raises an interesting question:

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I'm of two minds on this one. On the one hand, I feel that -- theoretically -- we could all get along without them. In ideal world, compensation would be set up so that each sales rep continued to be motivated to sell to his or her potential.

However, we do not live in an ideal world, and I can see the situation from the viewpoint of sales management, which has assigned a territory to a rep and naturally wants to be able to predict the amount of revenue that will come from that territory.

That being said, there's no question that many sales managers abuse the concept and end up demotivating their sales staff.

I strongly suspect that now that we have the capability (using CRM and Sales 2.0) to create compensation plans that are immediately visible to the sales staff and easily adapted to new conditions, quotas will become somewhat less important.

Anyway, those are my half-baked thoughts on the subject. Anybody else want to weigh in?