Page 177 - DMGT205_SALES_MANAGEMENT

Unit 11: Controlling the Sales Effort

compensation-to-sales ratio to 5 per cent. Note that A is really paid on a straight commission Notes
plan, even though it is labelled "salary and commission".
.

Notes Sales forecasting is an important task for the sales planning department of an
organisation. Accurate forecasting requires market knowledge and the existence of a
comprehensive marketing information system. Sales quotas are of major importance
because they establish the 'end state'—the bottom line sought by the sales force. They are
not static but dynamic guides to sales force behaviour. Quotas are constantly changing
due to experience, feedback and internal and external forces related to the organisation.

11.9 Limitations of Sales Quotas

1. In situations where goods are in short supply the quotas do not serve any purpose. These
can only be used in buyers' market where goods are available in plenty and enough
competition is in existence.
2. Generally quotas are set at a high level which creates frustration in sales persons.
3. It is not easy to get reliable sales estimates from the market. The collection of data is also
very expensive therefore many quotas are set on past performance and by guess.
4. Some sales quotas are complicated and aren't understood by salesman and hence are
opposed by them.

Self Assessment

State Whether True or False:
8. Management must make certain that sales personnel understand quotas and the setting
procedure.

9. Effective sales management keeps sales personnel informed of their progress relative to
quotas.
10. Sales people are not only responsible for multiple accounts but for a group of
accounts.
11. An CSA is a geographic area with adjacent communities that have a high degree of economic
and social integration with that nucleus.
12. Well designed territories improve buyer-seller contacts and better managing by the sales
person.

11.10 Administration of Quota System

The skills in administering the quota system are of a basic nature, they help not only to realise
the full benefit for control purpose but also to secure cooperation among staff in making the
system work. It is most critical to secure and maintain acceptance of those to whom quotas are
assigned.
Some sales people oppose the sales quota and anything that makes them doubt the accuracy,
fairness or attainability of sales quotas, leads to reducing the system's effectiveness.

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