methods and problems of setting sales quotas
TRANSCRIPT
Wednesday, November 5, 2014
Indian Institute of Tourism and Travel Management
Wednesday, November 5, 2014
Indian Institute of Tourism and Travel Management
•Sales Quota is the sales goal set for a product
line, company division or sales representative. It
helps the managers to define and stimulate sales
effort. Sales quota is the minimum sales goal for a
set time span.
•Generally sales quotas are set slightly higher
than the estimated sales so as to stretch the sales
force effort.
•Sales quotas are developed through the study of
annual territory marketing plan. In this the plan
for developing new accounts and expanding
existing accounts is given by the representatives.
Wednesday, November 5, 2014
Indian Institute of Tourism and Travel Management
Methods of Setting Sales Quota
• Flat Quotas
• Historic Quotas
• Market Potential Quotas
•Account Planning Quotas
• Full Time Equivalent Quotas
Wednesday, November 5, 2014
Indian Institute of Tourism and Travel Management
Flat Quotas
This method sets flat targets across the entire
sales team. It is company-centric and simple, but
it may create a “free ride” for representatives in
high-potential territories or impossible targets for
those in low-potential territories. Companies use
this methodology when little data is available and
a cost-of-sale approach is in place. It is most
common in transactional environments with
shorter sales cycles.
Wednesday, November 5, 2014
Indian Institute of Tourism and Travel Management
Historic Quotas
The assumption here is that history predicts the
future. Salespeople could deliberately reach a
certain point in their compensation plan where
they’re comfortable with the income. Historic
quotas are fairly good for early stage markets, or
for markets with high potential. But, it’s
important to protect salespeople in particularly
competitive or saturated markets.
Wednesday, November 5, 2014
Indian Institute of Tourism and Travel Management
Market Potential Quotas
This method is simple and use specific
information to understand the market. You can
combine this with a historic process and use
market opportunities as a modifier, or you can use
an approach like this completely on its own. It
typically creates equitable objectives and is easy
to administer. It can work well for organizations
that have accurate market data and in markets
with considerable uncertainty.
Wednesday, November 5, 2014
Indian Institute of Tourism and Travel Management
Account Planning Quotas
This method evaluates account opportunity and
assigns the corresponding target to the
representative that owns it. It is most effective for
territories or regions with a small number of large
accounts per representative. Account planning can
be difficult in organizations with a large number
of accounts in which the potential for sales
opportunities is unknown.
Wednesday, November 5, 2014
Indian Institute of Tourism and Travel Management
Fulltime Equivalent Quotas
Count how many full time equivalent people are
working in your business. Multiply that number
by your breakeven point per person. This gives
you a guesstimate of your breakeven point. Add a
profit target to determine your measurable goal.
Wednesday, November 5, 2014
Indian Institute of Tourism and Travel Management
Problems of Setting Sales Quota
• Improving Company Profits
• Incentives to Sales Force
• Lack of Formal Process
• Lack of Clarity and Coordination
• Limited Monitoring and Inventory
Wednesday, November 5, 2014
Indian Institute of Tourism and Travel Management
Insight into Setting & Administration of Sales Quotas
•Set realistic quotas
•Understand problems in setting quotas
•Ensure salespeople understand quotas
•By allowing salespeople to participate in theprocess
•By continuous feedback to salespeople on theirperformance compared to quotas
•Have flexibility in administering quotas
•Use monthly or quarterly quotas for incentives andannual quotas for performance evaluation