Sales and Distribution
Management, 2e
Dr Tapan K. Panda, Great Lakes Institute of Management, Chennai
Dr Sunil Sahadev, Un...
Chapter 8
Management of Sales Quota

Copyright © 2011 Oxford University Press

Chapter 8: Management of Sales Quota
Sales quota
• a quota is an expected performance objective
• a quota is a sales assignments or goal to be
achieved in a sp...
Principles of quota setting
• setting of sales quotas is a challenge to the sales
manager and should be handled with preci...
Principles.. contd.
• flexible to the prevailing and emerging market
conditions
• there should be a level of definiteness ...
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Copyright © 2011 Oxford University Press

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Organization of the sales job
Defining annual objectives
Procedure for setting sales quota

Individual Goal setting form

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Types of sales quota
• sale volume quota
• sales budget quota
• sale activity quota
• combination quota

Copyright © 2011 ...
Methods of setting sales quota

Quotas are based on…
• sales forecasts and potentials
• forecast
• past sales and experien...
Problems in setting sales quota
1. There is a high level of individual difference in every
organization
2. A perfect quota...
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  1. 1. Sales and Distribution Management, 2e Dr Tapan K. Panda, Great Lakes Institute of Management, Chennai Dr Sunil Sahadev, University of Sheffield, UK Copyright © 2011 Oxford University Press Chapter 8: Management of Sales Quota
  2. 2. Chapter 8 Management of Sales Quota Copyright © 2011 Oxford University Press Chapter 8: Management of Sales Quota
  3. 3. Sales quota • a quota is an expected performance objective • a quota is a sales assignments or goal to be achieved in a specific period of time • it is routinely assigned to the sales units (e.g. departments, divisions, and individuals) • sales units proceed to reach quotas in their respective domains “A sales quota is the sales goal set for a product line, company division, or sales representative. It is primarily a managerial device for defining and stimulating the sales effort.”. … Kotler Copyright © 2011 Oxford University Press Chapter 8: Management of Sales Quota
  4. 4. Principles of quota setting • setting of sales quotas is a challenge to the sales manager and should be handled with precision and adequate skill • objectivity to be observed while fixing quotas and should be based on facts and figures drawn from the market • it must be simple to understand both to the manager and the sales people • quotas set above the achievable limit often demotivate and result in high turnover in the organization Copyright © 2011 Oxford University Press Chapter 8: Management of Sales Quota
  5. 5. Principles.. contd. • flexible to the prevailing and emerging market conditions • there should be a level of definiteness in the quota set for a salesperson • it should be fixed either in terms of geographic territory, on money value, or on the basis of units of product(s) • a participatory quota setting procedure followed jointly by the sales manager and sales people together serves as a tool of motivation and leads to the realization of the organizational sales goals Copyright © 2011 Oxford University Press Chapter 8: Management of Sales Quota
  6. 6. S P E CI FI C M E A S U R A B L E A T T A I N A B L E Copyright © 2011 Oxford University Press R R E A L I S T I C T I M SPECIFIC E SBO… MBO in the Sales domain? Chapter 8: Management of Sales Quota
  7. 7. Organization of the sales job Defining annual objectives Procedure for setting sales quota Individual Goal setting form Output 1. Volume per month 2. Expenses per month Name Year Your territory Results expected Pessimistic Realistic Results Optimistic 3. Gross margin per month 4. Market share per month 5. Key account coverage per month Conferencing with each sales person Copyright © 2011 Oxford University Press Chapter 8: Management of Sales Quota
  8. 8. Types of sales quota • sale volume quota • sales budget quota • sale activity quota • combination quota Copyright © 2011 Oxford University Press Chapter 8: Management of Sales Quota
  9. 9. Methods of setting sales quota Quotas are based on… • sales forecasts and potentials • forecast • past sales and experience • executive judgment • sales people judgment • compensation Copyright © 2011 Oxford University Press Chapter 8: Management of Sales Quota
  10. 10. Problems in setting sales quota 1. There is a high level of individual difference in every organization 2. A perfect quota is a combination of selling and nonselling activities 3. Often sales people do not give proper attention to the non-selling activities (e.g. searching for prospects, handling customer objections, and creating market for probable entry of new products) Copyright © 2011 Oxford University Press Chapter 8: Management of Sales Quota

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