Meaning of sales Quota
• Quotas are quantitative objectives assigned to sales
organisation unit- sales personnel.
• Quotas specifies the desired level of performance level for
• Sales management sets Quotas for organisational units such as
individual sales districts and sales personnel.
• May be for middlemen also.
• Time dimensions.
• Device for directing and controlling sales operation.
Objective of using sales Quota
Quantitative performance standard.
Sales and expanse control.
Motivate desired performance.
Connection with sales contests.
Sales volume Quota
• How much for how much
• Set for geographical areas,
product line, marketing
channels, or combination of
• Smaller is-more effective.
• For Example: one product vs
whole product line.
Types of Sales volume Quota
1. Rupee sales volume quota.
2. Unit sales volume Quota
3. Point sales volume Quota
Rupee sales volume quota
For broad product line.
Rupee terms rather then Unit values
Easy to relate performance data like expanse through
For products having no established price and sales
person has discretion of cutting the price .
Requires assurance that sales personnel don’t cut
prices too deeply to build sales.
Unit sales volume Quota
When price of the products are fluctuating.
For example, if product ABC Is sold at 80 rs and
50 units are sold and hence total 4000 rs is revenue
and if price is not 100 rs then only 40 units will be
sold and hence rupee quota will bring down total
Narrow product line at stable price.
Point sales volume quota
For example 100rs= 1 point.
For avoiding problem of sales of those products which
are easy to sale which are followed by sales person to
attain their sales Quota.
Performance standard can be set as minimum points
in each product or product line.
Procedure of setting sale volume Quota
Sales person setting their own Quatas.
Sales volume Quota related to compensation plan only.
Sales volume Quota based on Executive judgment
Sales volume Quota from past sales data
Sales volume Quota from total market estimates
Sales volume Quota from territorial sales potential
• Set for controlling expenses, gross margin or profit.
• Objective of using sales quota is to make clear to sales person
that their job consist of something more than obtaining sales
• Two types of budget Quota:
1) Expense Quota
2) Gross margin or net profit Quota
• Mainly used in combination with other Quotas mainly with sales
• Supplement standards for keeping expense in line with sales volume.
• Financial incentives to sales personnel to control their own expanses
which is done in two ways:
1) Using directly with compensation plan.
2) Expanse bonus for those expense which are lower than the quata.
• They are generally used in percentage to sales term, because in rupee
term it leads to increased administrative burden and
Gross margin or Net profit Quota
• The rationale behind this Quota is that sales personnel work
more efficiently if they recognize that sales increases,
expense reduction or both are important only if Gross
margin or net profit are increasing.
• Useful when product line has both high and low margin
• Used to know and control how sales person allocate their
time to various activity.
• For example time on total sales calls, number of new
accounts or missionary phone calls.
• Activity Quotas are appropriate when sales personnel
perform important nonselling activity.
• For an insurance agent must continuously develop new
contacts or customers.
• Combination quota control performance of both selling and
• Problem here is that it is difficult for sales personnel to
understand this and appraising their own performance.
• Design imperfection leads to more emphasis on mainly one
aspect of quota only.
Administrating sales Quota
•Accurate, fair and attainable Quotas.
•Securing and maintaining sales personnel’s
acceptance of Quota.
•Participation of sales personnel in setting Quota.
•Keeping sales personnel informed.
•Need for continues managerial control
Reasons for not
1. When it is difficult to estimate accurate
2. Emphasis on sales only not on