Page 175 - DMGT205_SALES_MANAGEMENT

Unit 11: Controlling the Sales Effort

various products and in various territories. A salesman may perform differently but to the Notes
satisfaction of the sales executive. If a sales person is below average in many ways then there is
food for thought and some action is required by the executive.

Controlling Selling Expenses

It is the duty of the sales person to keep the sales expenses within limits. Expense quotas help
the companies to set profit quotas. Expenses are also tied to compensation. Usually a limit is
fixed for external factors. These are-type of the city, type of work, type of terrain, type of
product, etc. These are fixed after discussions with the salesman so that they are aware of the
same.

Make Effective Compensation Plans

Proper compensation plans provide an incentive for the sales person and some Indian companies
only give compensation when the quotas are achieved or exceeded. Some use it as a basis for
bonus purposes and give bonus only when part or full quota is achieved.
Quotas should not be fixed arbitrarily or on the whims and fancies of the management. These
should be set on certain criteria like past experience, potential demand, market analysis,
competitive factors, quality and price. Once the quotas are fixed and seem all right, these can be
gradually increased to achieve greater sales. Sometimes sales quotas are used in various types of
sales contests. These motivate the salesman further and special prizes can be awarded for attaining
quotas in these contests. These are also known as "special quotas" and help the average sales
person to perform better.

11.8 Types of Sales Quotas

There are basically four types of sales quotas and different types or a combination of them can
be used depending upon their need, procedures, policies, selling problems and executive
judgement.
1. Sales Volume quotas

2. Financial quotas
3. Activities quotas
4. Combination of these Quotas.

11.8.1 Sales Volume Quotas

These are most commonly used and are based on sales volume. Sales volume can be measured
by:
1. Volume of sales made by an individual.
2. Volume of sales made in a geographical area.

3. Volume of sales made in a product line.
4. Volume of sales made in a distribution outlet.
Sales volume quotas are also set to balance the sales of slow moving products and fast moving
products. They may be set in terms of unit sales or rupee sales volume or both and on overall as
well as product wise basis. Some companies combine these two and set point wise basis, i.e.,

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