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Ch 05- Sales Quotas

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Page 1: Ch 05- Sales Quotas

Toning Skills

www.beatonetraining.com

Page 2: Ch 05- Sales Quotas
Page 3: Ch 05- Sales Quotas

Prof. B. Raj

Sales Offic

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Sales Offic

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Dealer

Dealer

Dealer

Dealer

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AgentAgentAgentAgent

AgentAgentAgentAgent

RepRepRepRep

AgentAgentAgentAgent

Inside

Inside

Sales

Sales In

side

Inside

Sales

Sales

Sales Objectives & QuotasSales Objectives & Quotas

Page 4: Ch 05- Sales Quotas

What is a quota?

• A quota refers to an expected performance objective.

• Quotas are guides for what need to be done and a means of evaluating how well they were done.

• Quotas are performance expectation, standard, and control.

Page 5: Ch 05- Sales Quotas

Types of Quotas

• Sales Volume Quotas • Profit Quotas • Expense Quotas • Activity Quotas• Conversion Quotas

Page 6: Ch 05- Sales Quotas

Sales Volume Quotas • Value/Rupee Sales • Unit SalesTo achieve the quota, you need to get to the

specifics. 5 questions are usually asked:1. To whom we are going to sell?2. Where are they located geographically?3. Which products will be sold?4. Which products will sell the best?5. During what time will these sales occur?

Page 7: Ch 05- Sales Quotas

Sales Persons

Sales Quota

Actual Sales

Rupees Difference

Performance

Anil Rs.5,696 Rs.5,792 Rs. 96 101.7%

Mohan 5,584 4,842 -742 86.7%

Sachin 6,012 6,046 34 100.6%

Anand 4,310 4,334 24 100.6%

Total 21,602 21,014 -588 97.4%

Performance=(Actual Sales/Quota)*100%

Page 8: Ch 05- Sales Quotas

Potential Problems

1. Cutting price and no maximum profit

2. Large sales expenses

Page 9: Ch 05- Sales Quotas

Profit QuotasGross margin quotasNet profit quotas Gross Margin= Sales Volume – Cost of

Goods

Net Profit= Sales Volume – Cost of Goods – Direct Selling Expenses

Page 10: Ch 05- Sales Quotas

  Anil Manish Sunil Mohan

Sales 5,792,000 4,842,000 6,046,000 4,334,000

Cost of Sales

4,633,600 3,873,600 4,836,800 3,467,200

Gross Margin

1,153,400 968,400 1,209,200 866,800

Expenses 68,000 72,000 64,000 88,000

Net Profit 1,090,400 896,400 1,145,200 778,800

Sales/Net Profit Ratio

18.8% 18.5% 18.9% 18%

Page 11: Ch 05- Sales Quotas

Potential Problems

1. Sales personnel generally do not set prices and have no control over the cost. They are not responsible for the gross margin.

2. Salespeople may cut the sales expenses and therefore harm the sales when the net profit measure is used.

Page 12: Ch 05- Sales Quotas

Expense Quotas

A salesperson may receive an expense budget that is a percentage of the territory’s sales volume.

1. Other firms may set up rupee limits.2. Others may have limits on items

such as lodging, meals, and entertainment but pay all the expenses on cars and office expenses.

Page 13: Ch 05- Sales Quotas

Activity Quotas

Activity quota set objectives for job-related duties useful toward reaching the performance target.

 Examples are prospects, calls and

presentations. Activity Quotas typically are not the basis for reward. They are more for control and better customer service.

Page 14: Ch 05- Sales Quotas

Sales Persons

Number of Calls

Number of Presentati

ons

Number of Orders

Order/Call ratio

Actual Sales (000)

John 1,900 1,400 1,140 60% $5,792

Manish 1,500 1,220 1,000 66.7% 4,842

Sunil 1,400 890 700 50% 6,046

Fardeen 1,030 450 279 27.1% 4,334

Total 5,830 3,960 3,119 51.0% 21,014

Page 15: Ch 05- Sales Quotas

Conversion Quotas

E.g. Call/Presentation and Call/Sales Ratio

Quota Combinations The most common practice is to

combine the sales volume and activity quotas. These quotas influence both selling and non-selling activities.

Page 16: Ch 05- Sales Quotas

Methods for setting sales quotas

Sales quotas are breakdowns of the sales forecast.

Sales Quotas= Function (Past Experience, Market Capacity, Market Growth, Executive Judgment)

Page 17: Ch 05- Sales Quotas

Process of Setting Sales Quotas

The Unilever Example

Page 18: Ch 05- Sales Quotas
Page 19: Ch 05- Sales Quotas

VP, Marketing and Sales

Marketing Manager Sales Manager

Goals and PlanningMarket ShareSales (Dollar and Unit)Advertising and PromotionProduct Introduction and DevelopmentCustomer Research

Regional PlanningRegional QuotasNetwork PlanningMajor Account Management

District PlanningDistrict QuotasGoals to each customer

Territorial PlanningTerritorial Sales QuotasSales representative /Distributor ManagementCustomer Service

Page 20: Ch 05- Sales Quotas

What is a good quota?A good objective and quota plan is

SMARTQuotas should be• Specific,• Measurable,• Attainable,• Realistic, and • Time Specific.

Page 21: Ch 05- Sales Quotas

Selling-by-objective Management

Set Objectives and Quotas

Measure Performance

Evaluate Performance

Reward or Penalty

Publicize Performance Results

Page 22: Ch 05- Sales Quotas

Discussion and Questions

1. The selection on the different types of quota.

2. Discuss if the following is a good plan:

“Our objective is to increase sales in the territory next month by making more effective sales calls through improved customer relation and better communication skills.”


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