2. • Is defined as a group of present and potential customers
assigned to an individual salesperson, a group of
salesperson, a branch, a dealer, a distributor or a marketing
organization at a given period of time.
• Territories are defined on the basis of geographical
boundaries in many organization.
• In broader term, it is a geographical area that
identifies and serves a category and a certain number
of customers.
Sales Territory
3. •However in some instances, companies do not
follow geographic designs for sales territories.
• E.g - a small firm catering to a niche market.
• There are some situations where companies to
build sales territories on the basis of the urgency
and frequency of customer requirements rather
than geographical coverage.
• The problem with such a method is that the same
customer may get calls from multiple salespeople
from the same organization.
4. • An alternative method is to make a single salesperson
accountable for one set of clients only and if required call
technical specialists for assistance.
• Also in situations where personal relationships and
acquaintances have a bearing on sales, organizations do
not prefer territorial designs.
5. • Ensures better market coverage, effective utilization of
sales force and efficient distribution of workload among
salespeople.
• Convenient way to evaluate the performance of
salespeople.
• A territorial design brings more clarity and focus to the sales
targets to be achieved.
• The sales force can build higher sales through up selling
and cross selling to the same set of customers.
• Customer service improves over a period of time.
Advantages of Sales Territory
6. • Helps understand customers current and latent need.
• Helps salespeople to generate a better valve from the
customers.
• An effective territorial design helps to integrate the
selling efforts with other marketing and
promotional functional functions in the territory.
7. • May not prove good in regions where personal
relationship is required rather than professional
approach.
• Organizations with vast geographic area and large customer
distribution, with a lower density in any specific block, firms
using telemarketing and internet marketing as tools, do not
plan territories on the basis of geographic division.
Disadvantages of Sales Territory
8. • Small firms, particularly firms with single
salesperson do not establish sales territory.
• Highly sophisticated and technically complex products are
sold through sales teams systematic effort.
• Organizations sell products like insurance, fixed deposits
and other investment products through personal
acquaintances of sales people.
10. • An outstanding salesperson will be an outstanding sales
executive?
• A sales executive’s job demands administrative skills much
beyond those required of salespeople.
• But personal selling experience and outstanding personal
selling performance are two different things.
Functions
11. Basically the sales executive has two sets of
functions :
OPERATING AND PLANNING
• The operating functions include sales force management,
handling relationships with personnel in other company
departments, communicating or co-ordinating with other
marketing executives and reporting to some superior
executive.
• The sales executive planning function includes those
connected with the sales program, the sales organization
and its control.
12. • The sales executive is responsible for setting personal
selling goals, for developing sales programme
designed to achieve these goals, for formulating sales
policies and personal selling strategies, and putting
together plans for their implementation.
The relative emphasis that a sales executive gives
to the operating and planning functions varies with –
• Type of products
• Size of company
• The type of supervisory organization.
13. 1) Ability to define the position’s exact functions and
duties in relation to the goals the company should
expect to attain:
• The sales executives calculate what is entailed in their
responsibilities.
• They draw up their own descriptions.
Qualities
14. 2) Ability to select and train capable subordinates and
willingness to delegate sufficient authority to enable them
to carry out assigned tasks with minimum supervision:
• Effective executives select higher caliber subordinates
and provide them with authority to make decisions.
• The more capable subordinates, the wider policy limits
can be.
15. 3) Ability to utilize time efficiently:
•They time of sales executive is very valuable.
• They allocate time to tasks which yield the greatest returns.
• Even the use of off-duty hours is very important.
• Successful sales executive balance their time with their
activities.
16. 4) Ability to allocate sufficient time for thinking
and planning:
• Able administrators make their contribution through thinking
and planning.
•They recognize that reviewing past performances is a
prerequisite to planning.
17. 5) Ability to exercise skilled leadership:
•Competent sales executives develop and improve their skills
in dealing with people.
• To a large extent, they depend more on the
motivational factors.
• Skilled leadership is important in dealing with
subordinates and with everyone else.
18. Definition
• Sales Quotas are the targets that that the sales people
try to achieve within a specific period of time, which
contributes towards achieving the organizational goals
regarding sales forecasts.
Sales Quotas
19. • Quotas are routinely assigned to the sales unit.
• Sales quotas are the sum of total sales of a future
period and duties to achieve the component of total
sales by each salesperson are handed down to them
at the beginning of the period.
Meaning
20. ‘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 sales effort.’
21. • Quotas are based on sales.
• A sales forecast is an estimate of what a firm can
sell.
• Sales quotas may be set equal to, above or below
the sales forecast.
• Sales potential is the maximum share of the market
demand that a firm can obtain.
22. • There is no specific formulae or method for setting sales
quota, however a scientific method can be followed for
effective quota setting.
• There should be objectivity in approach while fixing quotas
and it should be based on facts and figures drawn from the
market.
• There should be an equal level playing field.
• The set sales quota should be achievable by an average
salesperson with minimum effort.
Principles of setting Sales Quota
23. • A flexible quota often helps the salespeople to adjust
their efforts and returns to the market behaviour.
• There should be a level of definiteness in the quota set for
the salesperson based on – either geographic territory, or on
money value or on the basis of units of product(s).
• A participatory quota setting procedure serves as a tool of
motivation and realization of organizational sales goals.
24. • Three kinds of objectives can be towards the quota:
Quota Objectives
1) Regular and recurring
• These objectives are related to the sales volume, target
market share, expenses, frequency and quantity of calls,
prospects and lead generation, growth in order size,
market coverage, and reporting procedures.
• Achieving these goals is a satisfactory
performance evaluation of the concern.
25. 2) Problem solving
• Are individual salespersons goal that involve deviations
from the standard and routine objectives, where things
have gone wrong and bringing a blockage in the smooth
functioning of the organization system.
• These objectives need specific unique
commitments form the salesperson.
26. 3) Creative
• Creative objectives are actions the sales person states and
commits which are new, challenging, creative, innovative,
intelligent and original in the territory or in another area of
responsibility.
• These goals mean managing breakthrough and quantum
leaps to new levels of performance.
The manager needs to talk to sell the objective and
commitment to his sales staff as they meet customers to sell
products and services.
28. 1) Scheduled planning
• It involves planning for goal setting meetings with individual
salespeople and particularly with new recruits.
• These schedules are necessary to explain systems and
reasons, benefits and incentives for each salesperson and
goals for the organization.
• The salespeople should be allowed to ask questions and
get clarification for their doubts.
29. 2) Conferencing with each sales person
• Here the sales manager allows the salesperson to
discuss.
• The discussion revolves around four key areas –
territory, account, call management and self
management.
• The purpose is to create a win-win situation for
both the organization and the employee.
30. 3) Arriving at a summarized written quota
statement.
• The next task is to prepare written summary of the
goals agreed upon.
• The written goals become a document of
understanding for all purposes.
• It provides clear cut goals and responsibilities for the year
ahead.
31. Types of Sales Quota
Sales volume
Quota
Monetary sales
volume quota
Unit sales
volume quota
Point sales
volume quota
Sales budget
Quota
Sales activity
Quota
Combination
Quota
32. • It is the most commonly used method as it provides an
important standard of appraising the performance of
individual salespeople, intermediaries and the branch.
• Sales volume quotas communicate the organizations
expectations in terms of what amount of sales for/in
what period.
Eg: sales person has to sell pieces of product in one month.
• This kind of quota can be set for geographical
territories, different product lines, different marketing
intermediaries, or more than one of these
combinations.
Sales volume quota
33. • The annual quota is set for the year and then
broken down into specific time periods.
• In many cases, these specific time periods may
vary depending upon the seasonality of the
business, consumer attitude towards buying
and the geographic location of the customer.
• Organizations make sales forecasts on the basis of
the sales divisions, regions, branches, districts and
individual sales territories.
• Sales volume quota is of three kinds :
– Monetary sales volume quota
– Unit sales volume quota
– Point sales volume quota
34. • The sales volume is set in monetary terms and not in
terms of units of the product.
• The monetary quota is set for each sales unit
separately.
Monetary sales volume quota
Unit sales volume quota
• It is used in two situations:
―When the prices of the products are expected to
fluctuate considerably during the quota period
―when the companies with a narrow product line sell
at a price that fluctuates little during the quota
period.
35. • It helps the company to achieve the sales in terms
of volume.
• Some organizations use sales volume quota
expressed in ‘points’ into which money or unit
sales or both can be converted as desired by the
sales manager.
• A multi-product firm may fix a point volume quota
where sale of one unit will bring a certain point..
– Eg: if a salesperson is given a quota of 1000 points.
Points sales volume quota
36. • These kinds of quotas are set for various units
of the organization in order to control the
expenses (expenses quota), gross margins and
net profits (profit quota).
• The objective not only to make desired sales
volume but also make profits.
• Organizations emphasize net profits more than
sales volume.
Sales budget quota
37. • Expenses quota ensures that the salespeople limit
their expenses in alignment with the volume and
control the cost to acquire customers.
• The rationale behind this type of quota is that the
sales personnel operate more efficiently to reduce
the expenses and increase the sales resulting in
increased margins and profits.
38. • Profit quota can be set on gross margin or on
net profits
• Generate profitable sales rather than mere
sales.
39. • The sales person is not always involved in
sales realization.
– Eg: A retail salesperson has a job of providing
information only.
• In addition to direct sales activity, the
salesperson is expected to do some non-
selling activity and the quota can be set as a
mix of these activities.
– Eg: Insurance selling, Medical Reps.
Sales Activity Quota
40. • Activity quota can be set on total sales calls,
particular classes or set of customers, calls on
prospects, number of new accounts, product
demonstration, etc.
• Activities quota set objectives for job
related studies, which help the sales
person in achieving the performance
targets.
41. • The most common combination is the sales
volume and activity quota.
• It is used to control the sales force
performance on the basis of selling and non-
selling activities.
– Eg: sell 1000 units, develop 100 new customers,
identifying 100 prospects and bringing back 50
lost customers.
Combination quota
42. • Fixing sales quota in organizations is a challenging
task today due to the sheer size of the sales
organizations, complex sales force structure and
varied competition conditions in different territories.
• For fixing quotas, the following methods can be
followed:
Methods of setting Sales Quota
43. • Organizations forecast the total sales or volumes for
the entire market, which is then divided into
territories and then brought down to the individual
salesperson level.
• Estimated future sales per territory are then divided
by the number of salespersons or by the branches to
determine the sales quota for each.
1.Based on Sales Forecasts and Potentials
44. • It is not always possible to obtain the forecasted
figures for individual sales territories as companies
lack information, data, money and people to
determine the sales potential for individual sales
territories.
• Small companies set quota in relation to their sales
forecast or total market estimates.
2. Based on Forecast
45. • Here the companies collect the sales data of previous
years, average them out for each geographical territory
and then add an arbitrary percentage for next years
quota.
• This average method is followed due to the ease in using
trends and projecting them in future.
• This method gives a rare view perspective, as it does not
take into consideration the sales potential.
3. Based on Past Sales or Experience
46. • This method is used when there is no or little
information available in the market.
• It may also be impractical to find out the
potential of new product in an existing territory
or an existing product in a new territory.
4. Based on Executive Judgement
47. • Many companies ask their own salespeople to set the
quota for themselves.
• This is mostly applicable in situations where the company
is expanding the territory or starting up its own sales
force.
• These inputs from the salespeople allow the company to fix
their production and manufacturing schedules.
• Asking the salespeople their quota, provides an opportunity
for the salespeople to test their abilities and it makes them
to work with higher motivation.
5. Based on Salespeople Judgement
48. • Salespeople are promoted on the basis of their
achieving quota.
• Salesperson get extra compensation by reaching sales
volume quotas for total unit or rupee sales, sales of
existing products and new products
• Quotas related to compensation are determined by any of
the previously explained quota setting methods.
6.Based on Compensation
49. Problems
• High level of individual difference : while
setting sales quota , differences in ability,
quality , experience and position are not
considered in many organizations.
• Complex procedure : econometric models
used in quota setting, adds costs
• Helps in achieving sales and maximizing
profits only : some organization focus on
shareholder equity reduce attrition rates
50. • No relevance in sellers market: demand >
supply. Sale is easy.
• No importance to manufacturers : profits not
always result of selling effort, cost of
production, nature of competition, demand
supply, quality, price also affect profits
• Quota setting based on assumption and
estimates: can go wrong due to volatility of
business
