SALES QUOTAS

SQ, are quantitative objectives assigned to specific sales organisation unit as std.
for evaluation, to specify desired perf. Level for prod. Items, expenses, profits,
selling and non-selling activities or combinations
Obj. Sales Vol, expenses, Grossprofit, non-selling activities
Sales orgn Unit branch, district or individual smen tt, distributor, retailers
All Q have time dimension- what mgt. expects within a specified period of time
Q is basically device for directing & controlling sales efforts
Effectiveness of Q depends upon- amount, kind and accuracy of inf. Used in setting
them & mgt;s skill in its adminatration
Indicates strong/weak pts in selling strategy
General Obj of SQ
-

To provide quantitative performance standars furnish goal and incentive to

Smen
To obtain more effective budgetary control-control and reduce selling
expenses through expense quota
To contro Smens activities-by appropriate type & design of Q
Evaluate productivity & effectiveness of Smen
Improve effectiveness of compensation plan
To conduct sales contests
Type of SQ & Q

Setting procedure

Depends upon mgt philosophy of sales forecasting, executive judgement, selling

problems, type of product, type of customers, distribution channel etc. Q. types
differ from firm to firm & broadly fall in 4 categories-(when small differences are
ignored)
Customer wise large customer
Product wise large inventory
Activity wise develop new territory
Sales Vol O Oldest and most common type
How much for what period. Unit could be geographical unit, e.g. branch, district,
product line, smaller is the unit more effective is the Q

Sales region tt
Product line - each product
Long term short term
Tpes of Sales Vol Q
-Dollar Sales Vol Broad product line (e.g. grocery, drug, hardware), Smen have
discretion to cut the price of product to make sale, mgt can relate it easily to
expenses, profit, compensation strategy
Unit sales Vol. Q Narrow product line, high unit prices of the products are expected
to fluctuate, easy to compare the performance ever diff. time period
-Point Sales Vol.Q
Both dollars/units could be converted
Product A = 5 pts
Product B 1 pt or
Sale of Rs.100/- 1 pt
Budget Q
High volume may not be best salesman small cost, low margin product, high
expenses
For more efficiently used as supplemental stds
Obj. is to keep expenses in line with sales vol, used in combination with other Q. No
std. expense quota for all the Smen consider territorial differences
competition, potential, type of product wise different sales vol. level i.e. expenses
do not vary in direct proportion to sales vol.
a) Gross margin Q
()appropriate where product line contains both high
& low margin
b) Net profi Q
()products
c) Contribution margin Q
d) Complex No. of other factors, out of control of Smen
Activity Quota
i)
ii)
iii)
iv)

To direct & control how Smen allocate their time and effort among
different activities
To give recognition to non activities
Define the various imp, activities, a smen has to perform
Determine their relative importance

v)

E.g. calls on particular class of custormers

Calls on prospects, new a/c, orders, calls, demonstration display, try

combination/ point system quota
Product demonstrations
Visits on prospects
Orders from new accounts
Activity Q permits the mgt. to give recognition to Smen for performing non selling
activities problem difficult to determine the quality of some of the activities.
Combination/Point system Q

To control both Selling

Non selling activities, to get desired balance among diff activities
Single quantitative measure of overall performance.
Activity

Actual Weight

% of Q achieved

% X weight

The system has its design imperfections-Smen may achieve more than double the Q
for one activity & very little of Q for another activity.
Smen require additional motivation:
-

Nature of job
Salespersons boundary position & role conflict
Tendency towards apathy
Maintaining a feeling of group identity is more difficult need gratification &
motivation : Mgr can influence the behavioural pattern through right type of
incentives.
Money- Physiological needs.
Retirement plans, fringe benefits-security needs
Meeting, conferences-sense of belongingness
Promtions, exculusive club membership system needs
Horzberg;s & Factor Theory

Present job dissatisfaction- Work envirsonment interpersonal relation fair

remuneration, fair & adequate supervision, reasonable fringe benefits, job security
Increase job satisfaction by providing opportunities for authority to reduce prices
to make sales profits etc. e.g. giving them authority to reduce prices to make sales
but holding them responsible for the profits.

Give them responsibility for developing sales approach for new product, for
forecasting sales.
Miclellands Avhievement motivation therapy
Personal selling job involves opportunity to influence results through personal
efforts, challenging risks, repaid feedback on results.
Sales Managers target should be to recruit people with right high need for
achievement & to provide environment for them to flourish.
Vrooms Expectancy/valence theorys
Expectancies concerning these outcomes x values of these outcomes. Does the
Cos reward str provide-what smen want.
Do smen perceive clearly the type and amount of efforts expected. How convinced
are the smen about getting rewards for particular levels of performance.
Smgr should try to increase the valenco of reward attractiveness by giving them
rewards in the right form money, recognition, honour, contest prize etc.
Individua needs/goals - porceived effort performance relationship percieved
performance reward
Individual performance
Interdependence & Motivation
Appropriatoness of Authority varies as function of dependence
Fully dependent fully independent
Blind obodience No use of authority (Ideal)
Zone of acceptance & degree of Acceptance Manager should try to increase the
value of both through effective supervision, through satisfying their needs,
convincing them of importance of their job, effective leadership, recognition, praise
social approval self respect.
Communication & Motivation
Interpersonal Contact
Written communication- letters & newsletter,bulletin board etc.
Non-monetary motivation
Authority, responsibility, recognition, opportunities for advancement.

Recognition
Find something worth recognising in each smen
Recognise publicly
Record the recognition
Involve top mgt
Make it personal one smen to be recognised at a time
Put the winner in the centre- dramatize it recognise through bulletin board,
COs newsletter telephone call by top executive
Special assignment to develop sales approach for new type of project train new
smen
Membership in an elite club, or committee
Honorary job titles
Job Design & Motivation job enlargement, job enrichment