The document discusses sales quotas, including their purposes of providing goals and standards for measuring performance. It provides examples of quotas set for individual salespeople and compares their actual sales to their quotas. The document also discusses factors to consider for setting good quotas, such as ensuring they are fair, challenging, and help achieve management goals. Methods for setting quotas include using sales forecasts, past performance, and executive judgment. Proper administration of quotas includes motivating salespeople and keeping them updated on their quotas.

1. Sales Quotas
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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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12. Combination Quotas: Apportionment of weightage
between various activities …
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13. What is a good Quota?
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14. What is a good Quota?
 Fair;
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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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19. Quota Setting Process
Based on
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20. Quota Setting Process
Based on
A. Sales forecasts and market potential
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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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