WHAT IS A QUOTA?
• A quota refers to an expected performance
• Quotas are tactical in nature and thus derived
from the sales force’s strategic objectives.
• Sales quotas are sales goals or targets set by a company for
its marketing / sales units for a time period
• Marketing / sales units are regions, branches, territories,
salespeople, and intermediaries
• Generally, company sales budget is broken down to sales
quotas for various marketing units
Objectives of Sales Quotas
• To use quotas as performance standards or performance
• To control performance
• To motivate people by linking quotas to compensation
• To identify strengths and weaknesses of the company
SALES VOLUME QUOTA
• Sales Volume Quotas is oldest and most common type ,it
includes Sales in Rupees or Product Unit objectives for a
Specific period of time, E.g. Bajaj calculates sales as number of
vehicles sold. It can be set in following areas Product Line
Product range Sales Divisions Sales Territories Sales Districts
Branch Offices Sales Force
Sales force (Individual)
• Rupees / dollars sales volume quotas are appropriate
when salespeople are required to sell many products
• Unit sales volume quotas are suitable when
• Salespeople are selling a few products
• Prices of the product fluctuate rapidly
• Price of each product / service is high
• Point sales volume quotas are appropriate when the company
wants salespeople to sell products that contribute more to
• Many companies use a combination of quotas.
The two most commonly combined are sales
volume and activity quotas. These quotas
influence selling and non-selling activities.
• Calculate gross margin by subtracting ‘cost of goods sold’ (i.e.
cost of manufacturing) from sales volume. Sales managers
are not responsible for cost of manufacturing
• Net profit quotas are generally accepted by sales mangers as
it is calculated by subtracting direct selling expenses from the
Sales Activity Quota
• Sales Activity Quota Salesmen are involved in sales and
non-sales. The activities of a sales person directly
affects the sales of the organization. Sales activities
could include lead generation, prospecting, imparting
information, developing new business etc. The quota is
fixed on the activities a salesman has to perform rather
than the final outcome alone. Activity quota can be set
on total sales calls, calls on prospects, number of new
accounts, product demonstrations, order/call ratio,
conversions (in retail). It helps sales people focus
equally on the non-sales activities too.
• In many companies, expense quotas are stated as a
percentage of sales
• Expense quotas to be administered with flexibility, to make
salespeople cost conscious, allowing reasonable expenses
METHODS FOR SETTING SALES
• Quotas based on Territory potentials.
• Quotas based on forecasts only.
• Quotas based on past sales experience.
• Quotas based on executive judgments.
• Quotas sales people set.
• Quotas related to compensation
A GOOD OBJECTIVE AND QUOTA
PLAN IS SMART
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