SALES OBJECTIVES AND QUOTAS

What is quota? Is it an expected behavior? A quota refers to an expected performance objective.

Cont..

Quotas are tactical in nature and thus derived from the sales forces strategic objectives. They are routinely assigned to sales unit such as regions and districts. Quotas are also assigned to individual sales person.

Need for quotas

Quotas Quotas Quotas Quotas Quotas

provide performance targets. provide standards. provide control. provide change of direction. are motivational.

Types of Quotas

Sales volume quotas. Breakdown total sales volume. Profit quotas. Expense quotas. Activity quotas. Quota combinations.

Sales volume quotas.

Sales volume quotas includes Rupee or product unit objectives for a specific period of time. What amount of sales( Rs or Units) in what period? Companies who carry few items which carry high prices like cars, often use units.

What if the prices are not stable?

By volumes

Breakdown total sales volume.

Break up according to Product lines. Individual established and new products. Geographic areas based on how the sales organization is designed, which would include: Sales division. Sales regions. Sales districts. Individual sales territories.

Profit quotas.

Along with volumes margins are also set Two types Gross margin quota: determined by subtracting cost of goods sold from sales volume. Net profit quota: determined by subtracting cost of goods sold and salespeoples direct selling expense from sales volume.

Expense quotas.

Expense quotas are aimed at controlling costs of sales units. Often expenses are related to sales volume or to the compensation plan. Lesser expenses in realizing sales Types Expense budget based on percentage territory volume of sales. Upper limits for expenses, like lodging, meals etc..

Activity quotas.

Activity quotas set objectives for jobrelated duties useful toward reaching salespeoples performance targets. Sales people have their own perception of activities leading to sales, hence they either do it very infrequently or at very low level of commitment.

Quota combinations.

More than one type Most common sales volume and activity.

Methods for setting sales quotas

Quotas based on forecasts and sales potentials.

Quotas Quotas Quotas Quotas Quotas

based on forecasts only. based on past experience. based on executive judgments. salespeople set. related to compensation.

Quotas based on forecasts and sales potentials.

Sales forecasts Market and territory potentials Firstly sales is forecasted for the entire market than broken down territory and individual sales person level

Quotas based on forecasts only.

Since it is difficult to estimate potentials for smaller companies they just go by forecast from past performance.

Quotas based on past experience.

Simply taking past data and adding a arbitrary percentage Consider two sales territories have 5 lakh potential, one achieved 100% other achieved only 80%. Next year both of them have been added 20% to their previous performance.

Quotas based on executive judgments.

Usually when little information exists Its not recommended

Quotas salespeople set.

For new territories For new product, where acceptance is not known Fundamental idea being because of their acquaintance with the region they will set more realistically. And achieving quotas is higher here

Quotas related to compensation.

Salary plus commission Meeting quota is a way of salespersons life.

SBO

Selling by objectives manager and sales person jointly identify common goals, define major areas of responsibilities, and agree upon results expected

THE FOUR MAJOR AREAS TO ESTABLISH OBJECTIVES WITH EACH SALESPERSON

Step 1: Organizing the Job SALES MANAGEMENT

Salesperson

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

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

Call Management Preparation Selling Technique Training Communication Buyer Behavior Impact Handling Resistance

Self-Management Appearance Manner Communication Skills Abilities Attitudes Selling Abilities

Step 2: Defining Annual Objectives 1. Regular 2. Problem Solving 3. Innovative