SALES QUOTA

Definition of Sales Quota

Kurtz and Boone (2009) defined sales
quota as the specified sales or profit
targets that the firm expects salespeople
to achieve.

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

Objectives in Using Sales Quotas

1) To provide quantitative performance
standards
2) To obtain tighter sales and expense
control
3) To motivate desired performance
4) To use in connection with sales contests

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

 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

Sales Quota- A Tool for Sales Analysis

A quota is a quantitative standard being
allocated to the sales units and is
expressed in absolute terms.
Quotas help compare actual sales with
target sales.
Quota is the benchmark which sales
managers use to perform sales analysis.

Types of Sales Quota

1)Sales Volume Quota
Sales in monetary terms ( rupees, dollars, etc.)
Sales in units (number of pieces)
Sales in quantity (kilograms, pounds, etc.)
2) Financial Quota
Gross margin or net profit.
Budget quota can consider selling expenses as
well.
Ideal to use when companies handle low and
high margin products.

3) Activity Quota
Number of sales calls.
Number of new customers procured.
Number of sales demonstrations made.
Number of intermediaries handled.
Number of installations or commissioning works
completed in customer premises.
Number of missionary-selling activities
undertaken.
4) Combination Quota

Methods of Setting Sales Quota

Quotas are based on
sales potentials
forecast
past sales and experience
executive judgment
sales people judgment
compensation

Individual Goal setting form

Organization of the sales job

Defining annual objectives

Procedure for Setting Sales Quota

Output

1. Volume per month

2. Expenses per month

Name
Year
Your territory
Results expected
Pessimistic Realistic

Optimistic

3. Gross margin per month

4. Market share per month
5. Key account coverage per
month

Conferencing with each sales person

Results

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)