2. Sales Quotas
a) Provide goals: sense of directions, salespeople
have to focus on work in keeping with co.
objectives, present challenges to work harder and
perform better
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3. Sales Quotas
a) Provide goals: sense of directions, salespeople have to focus
on work in keeping with co. objectives, present challenges
to work harder and perform better
b) Standard for measuring performance:
• Sales representative
• Dealer/Distribution
• Branch / Region
• Territory
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4. Can compare performance throughout
organization irrespective of territories/product
Sales Person Quota (in Actual Sales Difference (in Performance
lakh rupees) (in lakh lakh rupees) Index (in %)
rupees)
A 20 20.5 +0.5 102.5
B 15 15.1 +0.1 100.66
C 18 17.8 -0.2 98.88
D 22 22.1 +0.1 100.45
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5. Sales Quotas
c) Controlling expenses/salespersons’ activities;
failure to achieve quota enables sales manager to
spot deviation in performance
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6. Sales Quotas
c) Controlling expenses/salespersons’ activities;
failure to achieve quota enables sales manager to
spot deviation in performance
d) Strengths & weaknesses in structure; Change of
direction
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7. Sales Quotas
c) Controlling expenses/salespersons’ activities; failure to
achieve quota enables sales manager to spot deviation in
performance
d) Strengths & weaknesses in structure; Change of direction
e) Basis for compensation plan: tool for motivating sales force;
achievement of quota increases self confidence
Different view also prevails that salesperson need
compensation as well as acknowledgement; cos. compensate
on customer satisfaction; also in traditional quotas bonus
ranges between 90 – 110%, in new compensation plan bonus
ranges between 25-300%, new system allows rejection of
non-profitable/non-strategic customers
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8. i. Sales Volume Quotas: Most simple, set for
product/territory/line/channel or distribution;
may be re Sales/unit sales; annual quota can be
broken down into half yearly / quarterly /
monthly quotas
Managers can evaluate / compare performances
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9. ii. Gross margin / Net Profit Quotas: Fixed on gross
margin / net profit aimed at; cuts expenses (Sales /
Expenses);
Gives an accurate picture of profits generated
Commission paid is more accurate when calculated
on gross margin
Help managers do profitability analysis for
organizational effectiveness
But sales people can concentrate on selling only
profitable products
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10. iii. Budget / Activity Quotas: Emphasis on non
selling activities; Have to know that apart from
selling there are other considerations – should be
clubbed with sales volume quotas – prospects
called – displays – service – demos – dealer
training …; After sales calls, customer relations,
promotion management
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11. IV. Expense quotas: For making people cost conscious
– expense tied to sales volume.
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15. What is a good Quota?
Fair;
Challenging and Rewarding: Sufficiently
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16. What is a good Quota?
Fair;
Challenging and Rewarding: Sufficiently high &
linked to bonus / commission
Understandable
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17. What is a good Quota?
Fair;
Challenging and Rewarding: Sufficiently high &
linked to bonus / commission
Understandable
Flexibility
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18. What is a good Quota?
Fair;
Challenging and Rewarding: Sufficiently high &
linked to bonus / commission
Understandable
Flexibility
Must help achieve management goals
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21. Quota Setting Process
Based on
A. Sales forecasts and market potential
B. Sales forecast alone (used when company does not
have data / software / personnel to calculate market
potential
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22. Quota Setting Process
Based on
A. Sales forecasts and market potential
B. Sales forecast alone (used when company does not
have data / software / personnel to calculate market
potential
C. Past experience; arbitrary increase over past years
sales / averaging sales over past years; used when
company does not have sales forecast / market
potential data
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23. Quota Setting Process
Based on
A. Sales forecasts and market potential
B. Sales forecast alone (used when company does not have data
/ software / personnel to calculate market potential
C. Past experience; arbitrary increase over past years sales /
averaging sales over past years; used when company does
not have sales forecast / market potential data
D. Executive judgment; common in small orgn’s
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24. Quota Setting Process
Based on
A. Sales forecasts and market potential
B. Sales forecast alone (used when company does not have data
/ software / personnel to calculate market potential
C. Past experience; arbitrary increase over past years sales /
averaging sales over past years; used when company does
not have sales forecast / market potential data
D. Executive judgment; common in small orgn’s
E. Sales people compensation
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25. Quota Setting Process
Based on
A. Sales forecasts and market potential
B. Sales forecast alone (used when company does not
have data / software / personnel to calculate market
potential
C. Past experience; arbitrary increase over past years
sales / averaging sales over past years; used when
company does not have sales forecast / market
potential data
D. Executive judgment; common in small orgn’s
E. Sales people compensation
F. Set by sales people themselves
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26. Quota Administration
Motivating Quota
Setting understandable quotas
Involvement of sales person
Keeping them updated
Common problems
Deciding priority of accounts
Allocation between present & prospect
customers
Proper balance between selling & non
selling activity
For overly demanding a/c s.
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