Management of Sales Quota

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Organizations coordinate their functions to achieve their sales goals. The sales goals serve as targets for the organizations. Sales quotas are the targets that salespeople try to achieve within a specific timeframe in order to meet the sales goals contained in the sales forecasts. Sales quota is an expected performance objective. Quotas are fixed for departments, divisions, individuals, and so on.

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A quantitative goal assigned to a specific marketing unit such as a sales person or territory for a particular time period. A standard method of evaluating the effectiveness and performance of the sales staff. Quotas are fixed based on sales; but sales potentials and quotas are two different things. Sales quotas or targets will be set as equal to the sales potential or for achievement of more than or less than the sales forecasts.
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Important reasons for fixing quotas

1.

As a motivating tool to get the best out of a salesperson Quotas lead organizations towards management by exception- management pays attention to those who excel in their performance as well as those who perform very poorly on the job. Sales quota help giving directions to the salespeoples efforts and resources for specific ends and targets the organizations considers as very important.
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2.

3.

Attainment of sales quota are hence tied to the incentives and financial rewards of the organization. Quotas ensure:

Performance targets Standards for sales performance Controls on individual performance Motivation to staff to achieve goals.
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Quotas should be fixed after taking into account various factors such as:

Conditions prevailing in the markets/territories The level of competition Experience and ability of the salespeople Should be achievable by an average sales person with optimum sales effort Should be flexible and consistent with the current and emerging market conditions Should be specific in terms of geographic territory, volume, and Rupees and the time period in which 4/19/12

SMART a quota setting mechanism

In order to ensure that the quotas fixed are acceptable, quotas set should be:

S- Specific M- Measurable A-Attainable R-Realistic T-Time specific

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Organization of the sales job

There are four areas in which responsibility can be defined for every salesperson.

Territory management: involves management of the revenues, expenses, key accounts, development of leads and prospects, market share and growth potential, and trade and dealer relations within the territory Account management: involves management of each account
depending on its size and revenue potential. Managers calculate the potential sales from each account, the procedure for generation of records about the trends and clients in the area, and procedures for coverage of all accounts

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Call management: The sales manager should have first hand knowledge about the content of the calls the salespersons are making Apply adequate selling techniques during customer contact and presentation

Self-management: Self-management issues involve dress, style, demeanor, and personal decorum of the salesperson. Communication skills, memory, logical speaking, writing competency, etc. also come under self-management.

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Defining Annual Objectives

Regular and recurring objectives: Related to sales volume, market share, expenses, frequency and number of calls, prospecting, growth in order size, market coverage, and reporting procedures. Firm commitments are sought from the salespersons on all these aspects. Problem solving objectives: individual salespersons goals involve deviations from standard and routine objectives when things have gone wrong and results are not satisfactory
Creative objectives: deals with new, challenging, creative, innovative, intelligent, and original in the territory. These goals relate to managing breakthroughs and quantum leaps to new levels of performance

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Procedures for setting quotas

Quotas are fixed on the result of one-to-one discussions between the salespersons in a specific territory and the sales manager.

Schedule planning: This involves orientation meetings in which goal setting sessions are planned with each salesperson. Herein systems and reasons and benefits and incentives for individual sales persons and organizational goals are explained. Salespeople raise all clarifications and doubts if any during these sessions. Sales manager asks the sales person to prepare a goal setting form.

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Confering with salespersons: One-to-one meeting with the sales manager and salesperson in which the filled up forms containing goals are threadbare discussed. The following are then discussed:

1. Volume per month 2. Expenses per month 3. Gross margin per month 4. Market share per month 5. Account coverage per month. All the three classes of objectives are covered. The purpose is to create a win-win situation for the firm and the employee. Arrival of summarized written statements of quotas: Prepare a written statement of the goals agreed upon. The objective or 4/19/12 goal setting form serves as a guide for the mutually agreed goals. It

Types of sales quotas

The method of fixing quotas largely depends on the business practice, the organizational structure, and the competition. Sales volume quota: Expectations in terms of what amount of sales in specific time periods. In terms of Rupees or the number/quantity of products per year and broken down to quarters, months and weeks for geographical territories, different product lines, different marketing channel members/intermediaries Firms that market a broad product line set volume quotas in monetary terms rather in 4/19/12

Sales budget quota: These are set by firms to have a control over expenses, gross margins, and net profits. The salesperson is to operate as a responsibility center as well as a profit center. A salesperson is given an expense budget covering al his expenses that sets the upper limits for the costs. Profit quotas can be set on gross margin or on net profits. Profitable sales are more important than mere sales.

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salesperson has

Sales Activity quota: The activity of a

direct bearing on the sales of the organization. Salespersons play different roles; some may only retail sale information, others may collect payments, others may do prospecting and provide promotional support to the intermediaries Activity quota is quite common in insurance selling and pharmaceutical selling. A lot of detailing required in these fields. Activity quota is set on the basis of:

Total sales calls

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Combination quota: Many firms use a combination of quotas such as sales volume and activity quota. This is to control sale performance based on the selling and non-selling activities. A combination quota can be achieving a sales target of 1000 units along with developing 20 new key accounts, identifying 100 prospects, and bringing back 50 lost customers.

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