Sales Quota

Copyright © 2001 by Harcourt, Inc. All rights reserved.

SALES QUOTAS

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What is a Quotas

Why quotas are important.

Principles of Sales Quotas.

The various types of quotas.

The methods for setting quotas.

Selling by objectives sets future targets.

Procedure for setting quotas with salesperson.

A good sales quota is SMART

LEARNING OBJECTIVES

Quotas are fundamental parts of a company, because they provide the sales force with direction and goals.

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WHAT IS A QUOTA?

A quota refers to an expected performance objective.

Quotas are sales assignments, or goals and expectations of the top management expressed in volume or rupee sales for a specified future period

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WHY ARE QUOTAS

IMPORTANT?

• Quotas provide performance targets.

• Quotas provide standards for self-supervisory.

• Quotas provide change of direction & control. (MBE)

• Quotas are motivational.

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Principles of Sales Quotas

• No specific method or formula• Complex procedure should not be followed• Uniform allotment• Should be achievable• Should be flexible• Procedure should not change very often

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TYPES OF QUOTAS

• Sales volume quotas.

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Sales volume quotas includes dollar or product unit objectives for a specific period of time.

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TYPES OF QUOTAS


Monetary sales Volume Quota (Torrent Pharmaceuticals)

Unit sales volume Quota (General Motors)

Point sales volume Quota

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TYPES OF QUOTAS





• Break down total sales volume.

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TYPES OF QUOTAS






• Profit quotas.

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• 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.

The two types of profit quotas:

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TYPES OF QUOTAS






• Profit quotas.

• Expense quotas.

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Expense quotas are aimed at controlling costs of sales units. Often expenses are related to sales volume or to the compensation plan.

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TYPES OF QUOTAS• Sales volume quotas.





• Profit quotas.

• Expense quotas.

• Activity quotas.UBS, Ludhiana


Activity quotas set objectives for job-related duties useful toward reaching salespeople’s performance targets.

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Customer satisfaction refers to feelings about any differences between what is expected and actual experiences with the purchase.

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TYPES OF QUOTAS• Sales volume quotas.




• Breakdown total sales volume.

• Profit quotas.

• Expense quotas.

• Activity quotas.

• Quota combinations.UBS, Ludhiana


METHODS FOR SETTING SALES

QUOTAS

• Quotas based on forecasts and potentials.

• Quotas based on forecasts only.

• Quotas based on past experience.

• Quotas based on executive judgments.

• Quotas salespeople set.

• Quotas related to compensation.

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TABLE 7.4 LEVELS OF ORGANIZATIONAL SALES PLANNING

LEVEL PURPOSE: WHAT IS PLANNED

WHO (USUALLY) IS INVOLVED

1. Marketing •Organizational goals (increase in market share or penetration, increase in customers, increase in sales dollars and units sold)

Upper management and sales and marketing executives

2. Regional plan •Priorities (which regions, markets, and products to emphasize)

Regional and district sales managers (which input from sales reps)

3. District plan •Dollar allotment (for promotion, advertising, new employees, sales incentives, and so on)

District managers and sales representatives

4. Territorial plan •Goals for number of new customers and for increased business with old customers in each region and territory

Sales representatives

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SELLING BY OBJECTIVES SETS

FUTURE TARGETS

Two basic steps to implementing sales strategies:

Step 1: Organize the jobs.

Step 2: Define annual objectives in important areas.

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FIGURE 7.2 THE FOUR MAJOR AREAS TO ESTABLISH OBJECTIVES WITH EACH SALESPERSON

Step 1: Organizing the Job

Step 2: Defining Annual Objectives

SALESMANAGEMENT

Salesperson

Account Management Call Management Self-ManagementTerritorial Management

1. Regular2. Problem Solving3. Innovative

• Portfolio of Accounts• Potentials• Coverage• Records• Order Size• Penetration• Reports• Customer Satisfaction

• Preparation• Selling Technique• Training• Communication• Buyer Behavior• Impact• Handling Resistance

• Appearance• Manner• Communication Skills• Abilities• Attitudes• Selling Abilities

• Limits• Potential Business• Size• Customer Base• Prospects• Leads• Market Share• Growth• Trade Relations• Dealer Relations

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THE PROCEDURES FOR

SETTING QUOTAS WITH

SALESPEOPLE

• Schedule Planning.

• Conferencing with each salesperson.

• Prepare a written summary of goals agreed upon. (a summarized quota

statement)

• Optional group meeting to share objectives.

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N am e Fo r Y ear

L ist Y o ur R esp o n sib ility A rea

R esults E x p ected

P essim isticO utp ut

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

10. 11. 12. O th er

$ V o lum e/ m o n th $ E xp en se/ m o n th G ro ss m argin / m o n th

O p tim isticR ealistic R esults

I n structio n : L ist the regu lar, o n go in g, recurrin g o b jectives. C o ver th e ten m ajo r resp o n - sib ilities o f yo ur jo b nex t year to m an age territo ry, acco un ts, calls, an d yo urself.

FIGURE 7.3 INDIVIDUAL GOAL SETTING FORM

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Copyright © 2001 by Harcourt, Inc. All rights reserved.UBS, Ludhiana

How Does Value Forward Network (Research Firm) Calculate Sales Quotas?

• Step One:

First, analyze firm's current sales model metrics and corporate revenue objectives and growth goals.

• Step Two:

Then research and review the current market's size and growth potential nationally to understand industry's market demand.

• Step Three:

After this process is completed, then investigate and analyze the market potential of product or service in each salesperson's territory.

• Step Four:

Lastly, integrate the data into an operating model where we then calculate each salesperson's sales quota as well as a cumulative sales quota for your whole sales team.


A GOOD QUOTA PLAN IS

SMART

Specific

Measurable

Attainable

Realistic

Time specific

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THANK YOU

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Sales Quota

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