Sales Quota-sani gandhi

Meaning of sales Quota • Quotas are quantitative objectives assigned to sales

organisation unit- sales personnel.• Quotas specifies the desired level of performance level for

sales volume.• Sales management sets Quotas for organisational units such as

individual sales districts and sales personnel.• May be for middlemen also.• Time dimensions. • Device for directing and controlling sales operation.

Objective of using sales QuotaQuantitative performance standard.

Sales and expanse control.

Motivate desired performance.

Connection with sales contests.

Types of Quotas

Sales volume Quota

Budget

Activity Quota

Combination Quota

Sales volume Quota• How much for how much

period.• Set for geographical areas,

product line, marketing channels, or combination of this.

• Smaller is-more effective. • For Example: one product vs

whole product line.

Types of Sales volume Quota1. Rupee sales volume quota.2. Unit sales volume Quota3. Point sales volume Quota

Rupee sales volume quotaFor broad product line.

Rupee terms rather then Unit values

Easy to relate performance data like expanse through percentage.

For products having no established price and sales person has discretion of cutting the price .

Requires assurance that sales personnel don’t cut prices too deeply to build sales.

Unit sales volume QuotaWhen price of the products are fluctuating.

For example, if product ABC Is sold at 80 rs and 50 units are sold and hence total 4000 rs is revenue and if price is not 100 rs then only 40 units will be sold and hence rupee quota will bring down total sales volume.

Narrow product line at stable price.

Point sales volume quotaFor example 100rs= 1 point.

For avoiding problem of sales of those products which are easy to sale which are followed by sales person to attain their sales Quota.

Performance standard can be set as minimum points in each product or product line.

Procedure of setting sale volume Quota

Budget Quota• Set for controlling expenses, gross margin or profit.• Objective of using sales quota is to make clear to sales

person that their job consist of something more than obtaining sales volume.

• Two types of budget Quota:1) Expense Quota2) Gross margin or net profit Quota

Expense Quota• Mainly used in combination with other Quotas mainly with sales

volume Quota.• Supplement standards for keeping expense in line with sales volume.• Financial incentives to sales personnel to control their own expanses

which is done in two ways:1) Using directly with compensation plan.2) Expanse bonus for those expense which are lower than the quata.

• They are generally used in percentage to sales term, because in rupee term it leads to increased administrative burden and misunderstandings.

Gross margin or Net profit Quota• The rationale behind this Quota is that sales personnel work

more efficiently if they recognize that sales increases, expense reduction or both are important only if Gross margin or net profit are increasing.

• Useful when product line has both high and low margin items.

Activity Quota• Used to know and control how sales person allocate their

time to various activity.• For example time on total sales calls, number of new

accounts or missionary phone calls.• Activity Quotas are appropriate when sales personnel perform

important nonselling activity.• For an insurance agent must continuously develop new

contacts or customers.

Combination Quota• Combination quota control performance of both selling and

nonselling activities.• Problem here is that it is difficult for sales personnel to

understand this and appraising their own performance.• Design imperfection leads to more emphasis on mainly one

aspect of quota only.

Administrating sales Quota•Accurate, fair and attainable Quotas.

•Securing and maintaining sales personnel’s acceptance of Quota.

•Participation of sales personnel in setting Quota.•Keeping sales personnel informed.•Need for continues managerial control

Reasons for not using Quota 1. When it is difficult to estimate accurate sales.2. Emphasis on sales only not on relationship selling.

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