Professional Documents
Culture Documents
SALES QUOTA
It may be defined as the Individual sales target figure assigned to each sales unit as a required minimum for a specified period (month, quarter, year). Sales Unit may be such as a sales person, dealer, distributor, region, or territory. Sales quotas may be expressed either in dollar figures (monetary terms) or in number of goods or services sold (volume terms).
Territory Potential :
This method is mainly used in large organizations for setting sales quota. First step- Estimation of market potential for a product line over a geographical area.
Second step- Estimation of multiple factor index, for each sales territory.
Third step- The expected industry sales in each territory obtained by multiplying the industry sales forecast by multiple factor index. Fourth step- The companys estimated market share in the territory is considered out of the territory market potential in order to come up with sales volume quota for the territory.
Executive Judgment :
Under this, quotas are decided on the basis of judgment made by the top officials. It is generally used by new business units or by those organizations that are entering new sales territories. This method is justified when there is absolutely no record of past sales. Most importantly, when the product is new and its rate of market acceptance is unknown, then sales quota is determined and set through this method.
The sales force may set their sales quota at low level to avoid work.
Compensation Plan :
Some companies set quotas to fit their sales compensation plan. For an instance if the sales quota of a company for the current year is x then for the next year the sales quota is also set to x. Employees have a target to achieve now and whatever they achieve further the decided quota they get a commission over each sale. Most companies have a salary + commission plan in India. Salary plan is a fixed compensation plan and Commission plan is a Variable compensation plan. It increases efficiency in the sales force as the employees struggler to achieve the highest commission. The effects are almost instantly reflect in the sales chart and thus benefit the employees greatly.
THE END