Sales Quota

SALES QUOTAS

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LEARNING OBJECTIVES Quotas are fundamental parts of a company, because they provide the sales force with direction and goals. What is a Quotas Why quotas are important. Principles of Sales Quotas. The various types of quotas. The methods for setting quotas. Selling by objectives sets future targets. Procedure for setting quotas with salesperson. A good sales quota is SMART UBS, Ludhiana Copyright © 2001 by Harcourt, Inc. All rights reserved.

WHAT IS A QUOTA? A quota refers to an expected performance objective. Quotas are sales assignments, or goals and expectations of the top management expressed in volume or rupee sales for a specified future period UBS, Ludhiana Copyright © 2001 by Harcourt, Inc. All rights reserved.

WHY ARE QUOTAS IMPORTANT? • Quotas provide performance targets.

• Quotas provide standards for self-supervisory. • Quotas provide change of direction & control. (MBE) • Quotas are motivational. UBS, Ludhiana Copyright © 2001 by Harcourt, Inc. All rights reserved.

Principles of Sales Quotas • • • • • •

No specific method or formula Complex procedure should not be followed Uniform allotment Should be achievable Should be flexible Procedure should not change very often

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TYPES OF QUOTAS • Sales volume quotas.

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Sales volume quotas includes dollar or product unit objectives for a specific period of time.

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TYPES OF QUOTAS • Sales volume quotas. Monetary sales Volume Quota (Torrent Pharmaceuticals) Unit sales volume Quota (General Motors) Point sales volume Quota

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TYPES OF QUOTAS • Sales volume quotas. Monetary sales Volume Quota (Torrent Pharmaceuticals) Unit sales volume Quota (General Motors) Point sales volume Quota

• Break down total sales volume.

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TYPES OF QUOTAS • Sales volume quotas. Monetary sales Volume Quota (Torrent Pharmaceuticals) Unit sales volume Quota (General Motors) Point sales volume Quota

• Break down total sales volume.

• Profit quotas. UBS, Ludhiana Copyright © 2001 by Harcourt, Inc. All rights reserved.

The 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 salespeople’s direct selling expense from sales volume.

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TYPES OF QUOTAS • Sales volume quotas. Monetary sales Volume Quota (Torrent Pharmaceuticals) Unit sales volume Quota (General Motors) Point sales volume Quota

• Break down total sales volume.

• Profit quotas. • Expense quotas. UBS, Ludhiana Copyright © 2001 by Harcourt, Inc. All rights reserved.

Expense quotas are aimed at controlling costs of sales units. Often expenses are related to sales volume or to the compensation plan.

UBS, Ludhiana Copyright © 2001 by Harcourt, Inc. All rights reserved.

TYPES OF QUOTAS • Sales volume quotas. Monetary sales Volume Quota (Torrent Pharmaceuticals) Unit sales volume Quota (General Motors) Point sales volume Quota

• Break down total sales volume.

• Profit quotas. • Expense quotas. UBS, Ludhiana • Activity Copyright © 2001 by Harcourt, Inc. All rights reserved. quotas.

Activity quotas set objectives for job-related duties useful toward reaching salespeople’s performance targets.

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Customer satisfaction refers to feelings about any differences between what is expected and actual experiences with the purchase.

UBS, Ludhiana Copyright © 2001 by Harcourt, Inc. All rights reserved.

TYPES OF QUOTAS • Sales volume quotas. Monetary sales Volume Quota (Torrent Pharmaceuticals) Unit sales volume Quota (General Motors) Point sales volume Quota

• Breakdown total sales volume.

• Profit quotas. • Expense quotas. • Activity quotas. UBS, Ludhiana Copyright © 2001 by Harcourt, Inc. All rights reserved.

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. UBS, Ludhiana Copyright © 2001 by Harcourt, Inc. All rights reserved.

TABLE 7.4 LEVELS OF ORGANIZATIONAL SALES PLANNING

LEVEL

PURPOSE: WHAT IS PLANNED

1. Marketing

•Organizational goals Upper management and (increase in market share or sales and marketing penetration, increase in executives customers, increase in sales dollars and units sold)

2. Regional plan

•Priorities (which regions, markets, and products to emphasize)

Regional and district sales managers (which input from sales reps)

3. District plan

•Dollar allotment (for promotion, advertising, new employees, sales incentives, and so on)

District managers and sales representatives

4. Territorial plan

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

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WHO (USUALLY) IS INVOLVED

SELLING BY OBJECTIVES SETS FUTURE TARGETS Two basic steps to implementing sales strategies: Step 1:

Organize the jobs.

Step 2:

Define annual objectives in important areas.

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FIGURE 7.2 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

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

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Self-Management • Appearance • Manner • Communication Skills • Abilities • Attitudes • Selling Abilities

THE PROCEDURES FOR SETTING QUOTAS WITH SALESPEOPLE • Schedule Planning. • Conferencing with each salesperson. • Prepare a written summary of goals agreed upon. (a summarized quota statement) • Optional group meeting to share objectives. UBS, Ludhiana Copyright © 2001 by Harcourt, Inc. All rights reserved.

FIGURE 7.3 INDIVIDUAL GOAL SETTING FORM N am e F o r Y ear L is t Y o u r R e s p o n s ib ility A r e a R e s u lts E x p e c te d O u tp u t

P e s s im is tic

R e a li s t i c

O p tim is tic

R e s u lts

1 . $ V o lu m e / m o n th 2 . $ E x p e n se/ m o n th 3 . G r o ss m a rg in / m o n th 4. 5. 6. 7. 8. 9. 10. 11. 12. O th er I n s tr u c tio n : L is t th e r e g u la r, o n g o in g , r e c u r r in g o b je c tiv e s. C o v e r th e te n m a jo r r e s p o n s i b i l i t i e s o f y o u r j o b n e x t y e a r t o m a n a g e t e r r i t o r y, a c c o u n t s , c a l l s , a n d y o u r s e l f . UBS, Ludhiana Copyright © 2001 by Harcourt, Inc. All rights reserved.

How Does Value Forward Network (Research Firm) Calculate Sales Quotas? •

Step One: First, analyze firm's current sales model metrics and corporate revenue objectives and growth goals. • Step Two: Then research and review the current market's size and growth potential nationally to understand industry's market demand. • Step Three: After this process is completed, then investigate and analyze the market potential of product or service in each salesperson's territory. • Step Four: Lastly, integrate the data into an operating model where we then calculate each salesperson's sales quota as well as a cumulative sales quota for your whole sales team. UBS, Ludhiana Copyright © 2001 by Harcourt, Inc. All rights reserved.

A GOOD QUOTA PLAN IS SMART Specific Measurable Attainable Realistic UBS, Ludhiana Copyright © 2001 by Harcourt, Inc. All rights reserved.

THANK YOU

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