Sales quota


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Sales quota

  2. 2. WHAT IS A QUOTA? • A quota refers to an expected performance objective. • Quotas are tactical in nature and thus derived from the sales force’s strategic objectives.
  3. 3. SALES QUOTA • 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
  4. 4. Objectives of Sales Quotas • To use quotas as performance standards or performance goals • To control performance • To motivate people by linking quotas to compensation plans • To identify strengths and weaknesses of the company
  5. 5. Types of Sales Quotas Sales Volume Quotas Profit Quotas Expense Quotas Activity Quotas Quota Combinations
  6. 6. 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 Product line Product range Sales Volume Quotas Sales division Sales territories Sales districts Branch offices Sales force (Individual)
  7. 7. • 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 profits
  8. 8. Quota Combinations • 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.
  9. 9. PROFIT QUOTAS • 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 gross margin
  10. 10. 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.
  11. 11. Expense quotas • 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
  12. 12. METHODS FOR SETTING SALES QUOTAS • 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
  13. 13. A GOOD OBJECTIVE AND QUOTA PLAN IS SMART »Specific »Measurable »Attainable »Realistic »Time specific