PRESENTATION ON SALES QUOTAS

Presented By:Kirti Gupta

MEANING OF SALES QUOTAS

Sales quota is the estimated or predetermined volume or valueof sales expected to be achieved by the sales force over a given period of time.

“Sales quotas are sales assignments or goals, they are management expectations in dollars or units for a specific future period.”-Professor Kirkpatric

WHY TO FIX SALES QUOTAS ?There are certain basic reasons for setting sales quotas to sales people. Some of them given by Professor RR. Still, Professor E.W. Cundiff and Professor N.A.D. Govani. These are:(a) To provide quantitative performance

standards(b) To motivate desired performance(c) To get more effective cost control(d) To use in sales contests

FACTORS CONSIDERED WHILE SETTING SALES QUOTAS

2. Study the past

sales

3. Consults facts and opinions

4. Investigate

sales policies

5. Guage the nature and extent

of competitio

n

1. Estimate purchasing power

METHODS OF SETTING THE SALES QUOTAS

Guess–work method

Composite method

Performance method

1. Guess-work method: Under this method, sales executive or the managers

combine their rich and varied experiences and sound judgements to find out the sales quotas for salesman. Since this method relics on the guess work- thinking and judgement of the executives.

2. Composite Method: Normally, a conference of sales executives and sales-

force is called where the sales people are to present their individual sales forecasts, express their opinions about the likely sales quotas. It is a grass- root type of method of fixing sales quotas because, it involves the participation of those who are expected to work on these targets that are to be set.

3. Performance Method: Under this method, the sales of the past are taken as

the base for fixation of quota for the coming period with due increase or decrease as warranted by the prevailing market conditions.

TYPES OF SALES QUOTAS

Sales Volume Budget Activity Combinatio

n

1. Territorial based sales potentials

2. Total market esstimates

3. Past sales experience etc.

1. Expense2. Gross

margin or profit

Nature of activity

Combination of two or more bases

A. SALES VOLUME QUOTAS: Sales Volume Quotas as fixed per individual or other units in sales

organisational level and distributive outlets. These are fixed for the geographical areas, product-lines or market channels or one or more of these combination with any unit of sales organisation. These sales volume quotas may be:

1. Total Market Estimates2. Territorial based sales potentials3. Past Sales Experience4. Executive Judgement5. Compensation Plan6. Sales Personnel

B. BUDGET QUOTAS: Budget quotas are set for various units in the sales

organisation to control selling expenses and gross margin or net margin or profit. The idea underlying budget quotas is to make the sales personnel inform that their job is not merely to attain sales volume above. Budget is of two types:

1. Expense Quotas2. Gross Margin or Net Profit Quotas

C. ACTIVITY QUOTAS Some companies set quotas for the activities of their sales

people, in order to control and allocate the time of such sales-force. A company using such quotas defines the different activities which are commonly or generally performed by the sales people and also sets the target performance frequencies. Activity quotas are appropriate when the sales people also perform important non- selling activities.

ADVANTAGES OF SALES QUOTAS

Adjustment of

sales and output

Quotas acts

motivator

Useful in sales

contests

Appraisal of

performance

Sizing up the

market

DISADVANTAGE OF SALES QUOTAS

Danger of

increased Bad

debts

Warrants huge

finance

Apple of discord

Possibility of

ineffectiveness

Problem of quota

monitoring