Subject: Sales and Distribution Management

Courses: I.B. and

Sales Quota
Subject Instructor: Prof. (Dr.) Ashish Chandra Professor Marketing Asia-Pacific Institute of Management

Objectives of the Session

WHAT IS A QUOTA?
A quota refers to an expected performance
objective.

Quotas are tactical in nature and thus derived from the sales forces strategic objectives.

WHY ARE QUOTAS IMPORTANT ?

Quotas provide performance targets. Quotas provide standards.

Quotas provide control.

Quotas provide change of direction. Quotas 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 amount of money or product units for a specific period of time.

Breakdown total sales volume

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
There are two types of profit quotas:
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.

Activity quotas

Activity quotas are set objectives for job-related duties useful toward reaching salespeoples

performance targets.

Quota Combinations

Quota

Combination

means

combining of two or more quota

methods.

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.

LEVELS OF ORGANIZATIONAL SALES PLANNING

LEVEL PURPOSE: WHAT IS PLANNED

WHO (USUALLY) IS INVOLVED

1. Marketing

Organizational goals Upper management (increase in market share or and sales and penetration, increase in marketing executives customers, increase in sales dollars and units sold) Priorities (which regions, Regional and district markets, and products to sales managers emphasize) (which input from sales reps)

2. Regional plan

3. District plan

Dollar allotment (for District managers and promotion, advertising, new sales representatives employees, sales incentives, and so on)

4. Territorial plan

Goals for number of new Sales representatives customers and for increased business with old customers in each region and territory

SELLING BY OBJECTIVES SETS FUTURE TARGETS

Two basic steps to implementing sales strategies:

Step 1: Step 2: Organize the jobs. Define annual objectives in

important areas.

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

SELLING BY OBJECTIVES SETS FUTURE TARGETS

Treating the territory as a business.

Managing each account.

Managing each call. Managing oneself.

Tactical Plan for Managing Accounts

1. Build the stars.

2. Harvest the cash cows.

3. Fix the problems. 4. Divest the dogs.

Questions about the Content of Calls

Is the sales rep properly armed with information, leads, and materials before the call occurs?
Is the sales rep applying the major principles of selling technique during the presentation? Or is the sales rep inventing his or her own and perhaps making every mistake every salesperson in history has made? Has the salesperson planned some coherent attack for the sales presentation, and is it working well?

Questions about the Content of Calls

Does the sales rep have enough training in communication, in meeting sales resistance, in understanding buyer behavior, in improving call impact, in gaining greater account penetration, in follow-through methods to do the job?

Does the sales rep have enough knowledge of the product and its applications, service and system backup, and technical problems to handle the toughest calling situation?

SELF-MANAGEMENT IN SELLING
Since selling involves making contact with strangers, dress, style, conduct, and personal decorum are part of the salespersons tool kit.
Communication skills, memory, logical speaking habits,

and writing competence are vested in the person. Attitudes and outlook toward the job, the product, the company, and the customers all have an important bearing in the results to be achieved. The knowledge of selling techniques, what the various kinds are and how and when to use them, are personally vested in the sales rep and can be produced and polished by training.

BASIC LEVELS OF INDIVIDUAL OBJECTIVES

1. Regular, ongoing, and recurring objectives. 2. Problem-solving objectives. 3. Innovative or creative objectives.

The highest level of excellence is reserved for people who are attaining all three.

THE PROCEDURES FOR SETTING OBJECTIVES AND QUOTAS WITH SALESPEOPLE

Prepare the Procedure.
Schedule conferences with each salesperson. Prepare a written summary of goals agreed upon. Optional group meeting to share objectives.

SELLING BY OBJECTIVES FORM

Name For Year List Your Responsibility Area Results Expected Output 1. $ Volume/month 2. $ Expense/month 3. Gross margin/month 4. 5. 6. 7. 8. 9. 10. 11. 12. Other Instruction: List the regular, ongoing, recurring objectives. Cover the ten major responsibilities of your job next year to manage territory, accounts, calls, and yourself. Pessimistic Realistic Optimistic Results

A GOOD OBJECTIVE AND QUOTA PLAN IS SMART Specific Measurable Attainable Realistic Time specific

A simple three-way test to judge how well quotas and objectives are written
Test 1: Test 2: Does this quota state exactly what the intended result is? Does this quota specify when the intended result is to be accomplished? Can the intended result be measured?

Test 3:

SELLING-BY-OBJECTIVES MANAGEMENT
Selling by Objectives (SBO) is the process whereby the manager and salesperson jointly identify common goals, define major areas of responsibility, and agree on the results expected.

SETTING OBJECTIVES AND QUOTAS IS A TWO-WAY

PROCESS BETWEEN MANAGER AND SALESPERSON

Mutually Set Objectives and Quotas

Mu es r a e Pf r ac e om e r n

Eut vl a a e Pf r ac e om e r n
Publicize Performance Results

Ra e r wd o Pay re l nt

Thank You All!