There are several types of sales quotas that can be used including sales volume, dollar sales volume, unit sales volume, and point sales quotas. Sales volume quotas are the most common and communicate a sales target for a given time period. Budget quotas can also be used to set targets for expenses, gross margins, or net profits. Combination quotas control both selling and non-selling activities by combining different performance metrics into a single measure. When establishing a quota system, management must ensure quotas are accurate, fair, attainable, and accepted by the sales force.

2. communicates – “ how much for what period”

3. set for geographical areas, product lines or marketing channels or combination

4. the smaller the unit, the more effective the quota for controlling sales operationbudget

9. Companies perpetuate past errors

13. Management provide sales personnel with financial incentives to control their own expenses

14. To reduce administrative burden and misunderstandings, expense quotas are generally expressed as % of sales

15. Problems –

16. Variations in coverage difficulty & other environmental factors, make it impractical to set identical expense % for all the territories

17. Different sales person sells different product mixes, so some incur higher expenses than others

18. Advantages –

19. Makes sales personnel more cost conscious

21. Problems –

22. Sales persons do not set the price and have no role on the manufacturing cost. Thus, not responsible for gross margin

23. Certain selling expenses are beyond the salesperson’s influence

25. Appropriate when sales personnel perform important non-selling activities

26. Control & recognition of sales person performing non selling activities

27. Reward sales person on quantity of work; irrespective of quality

29. Design imperfection may cause sales personnel to place too much emphasis on one component activityFull line quota Designed to secure some desired balance of sales among various products

31. Keeping sales personnel informed

33. Since quota requires statistical technique, fear is that sales personnel will not accept quota prepared by hard to explain techniques

34. Place too much emphasis upon making sales – legitimate criticism of sales volume quota

35. If product is in short supply, quotas are not appropriate