S.Arul (10Ab05)

A.Balaji(10Ab07)

S.Sidharth(10Ab35)

Shano (10Ab12)

Sales Quota

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 salespeople’s direct selling expense from sales volume.

• Activity quotas set objectives for job-related duties useful toward reaching salespeople’s 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 expense

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

New customer

10 13 130 4 520 928

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 year’s 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

PessimisticOutput

1. 2. 3. 4. 5. 6. 7. 8. 9.

10. 11. 12. Other

$ Volume/month $ Expense/month Gross margin/month

OptimisticRealistic Results

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