Sales Quota

S.Arul (10Ab05)
A.Balaji(10Ab07)
S.Sidharth(10Ab35)
Shano (10Ab12)
 WHAT IS A QUOTA?
Individual sales target figure assigned to each sales unit such a
sales person, dealer, distributor, region, or territory, as a
required minimum for a specified period (month, quarter,
year).

Sales quotas may be expressed either in figures (monetary

terms) or in number of goods or services sold (volume terms).
 TYPES OF QUOTAS
Sales volume quotas.
Profit quotas.
Expense quotas.
Activity quotas.
Quota combinations
 Sales volume quotas

Monetary sales Volume Quota

Unit sales volume Quota ( eg motor
companies)
Point sales volume Quota (RBS)
 Profit quotas
Gross margin quota determined by
subtracting cost of goods sold from sales
volume.
Net profit quota determined by subtracting
cost of goods sold and salespeoples direct
selling expense from sales volume.
 Activity quotas set objectives for job-related
duties useful toward reaching salespeoples
performance targets.

Expense quotas are aimed at controlling costs

of sales units. Often expenses are related to
sales volume or to the compensation plan.
 Combination quota
Sales performance is calculated based on
selling and non selling activities.
Various quotas are there.
uses points as common measure
 Evaluating with combination quota
Type Quoata Actual % Weight points

Sales vol 5 0,00,000 52,00,000 104 3 312

Selling 5,00,000 5,20,000 96 1 96

expense

New 10 13 130 4 520

customer
928
 Objectives
To provide quantitative performance Standard
Quotas provide a means for determining
which sales unit are doing an average, below
average or above avg. job. It is the yardstick
for measuring sales performance, but
management must dig deeper to uncover
reasons for variations
 To obtain tighter sales and expense
control Quotas are designed to keep
selling expenses within limits. Many
companies reimburse sales expenses
only up to a certain percentage of sales
quota.
 To motivate desired performance Quotas
provide incentive to achieve certain
performance level. Companies may use quota
to provide their sales force the incentives of
increasing their earnings through commissions
or a bonus if the quota is surpassed and
recognised for superior performance.
 Controlling Sales Persons activities
Quotas provide an opportunity to direct and
control the selling activities of sales persons. If
the sales person fails to attain the quota the
company can take corrective actions to rectify
the mistake.
 Management must make sure that the sales
personnel understand quotas and quota
settingProcedure. Conveying this understanding is a
critical step in securing acceptance of quotas.
It is important that sales personnel understand
the significance of quotas as communicator of how
much for what period. It requires:
Keeping sales personnel informed: Effective sales
management keeps sales personnel informed of their
progress relative to quotas. It permits them to
analyse their own strong and weak points.
Need for continuous managerial control:
In administering any quota system, there is a
need for continuous monitoring of
performance.
Sales personnel need encouragement, advice
and occasionally warnings in deciding to take
measures to improve their performance.
Continuous managerial review and appraisal
are required.
Methods for setting sales quota

Territory potential.
Past sales experience.
Total market estimates.
Executive judgment.
Sales person estimates.
Compensation plan
Setting Sales Quotas for a Sales Team

1. Establish Parameters for developing quotas

Historical trends
Last years revenue
National Standards
Territory Analysis
2. Add a Growth Expectation now predict revenues
for the next year.
Expectation should be:
Realistic
Challenging
3. Adapt the Quotas to each Sales Reps dividing total revenue
by total number of salesperson.
Factors to consider:
Tenure
Assigned job
Sales skills
Market potential
Competition
4. Get buy-in from your sales team
outline the process you'll be using to set quotas to your
team.
Make it a joint decision, if possible, to assign a specific
quota.

5 Adapt Quotas to market realities

Review Periodically.
Change Quotas according to the economy
 Name
For Year
List Your Responsibility Area

Results Expected

Output Pessimistic Realistic Optimistic Results

1. $ Volume/month
2. $ Expense/month
3. Gross margin/month
4.
5.
6.
7.
8.
9.
10.
11.
12.
Other

Instruction: List the regular, ongoing, recurring objectives. Cover the ten major respon-
sibilities of your job next year to manage territory, accounts, calls, and yourself.
A GOOD QUOTA PLAN IS
SMART
Specific
Measurable
Attainable
Realistic
Time specific
THANK YOU