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Chapter 8
Management of SalesQuota
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Sales quota
a quota is an expected performance objective
It is a sales assignments or goal to be achieved in a specific period
of time
it is routinely assigned to the sales units (e.g. departments,divisions, and individuals)
sales units proceed to reach quotas in their respective domains
A sales quota is the sales goal set for a product line, company division, or sales
representative. It is primarily a managerial device for defining and stimulating the sales
effort.. Kotler
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Principles of quota setting
Setting of sales quotas is a challenge to the sales manager and
should be handled with precision and adequate skill.
Objectivity to be observed while fixing quotas and should be
based on facts and figures drawn from the market.
It must be simple to understand both to the manager and the
sales people.
Quotas set above the achievable limit often demotivate and
result in high turnover in the organization
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Principles of quota setting
flexible to the prevailing and emerging market conditions
there should be a level of definiteness in the quota set for a
salesperson
it should be fixed either in terms of geographic territory, onmoney value, or on the basis of units of product(s)
a participatory quota setting procedure followed jointly by the
sales manager and sales people together serves as a tool of
motivation and leads to the realization of the organizational sales
goals
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The Concept of SMART
S M A R TP
E
CIFI
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E
A
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U
R
A
BL
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T
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A
I
N
A
B
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ESPECIFIC
SBO
MBO in the Sales
domain?
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Organization of the Sales JobDefining annual objectives
Procedure for setting sales quota
IndividualGoalsettin
gform
Conferencing with each sales person
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Types of sales quota
Sales Volume Quota
Sales Budget Quota
Sales Activity Quota
Combination Quota
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Methods of Setting Sales Quota
Quotas are based on
sales forecasts and potentials
forecast
past sales and experience
executive judgment
sales people judgment
compensation
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Problems in Setting Sales Quota
1. There is a high level of individual difference in every organization
2. A perfect quota is a combination of selling and non-selling
activities
3. Often sales people do not give proper attention to the non-selling
activities (e.g. searching for prospects, handling customer
objections, and creating market for probable entry of new
products)
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