Page 101 - DMGT507_SALES AND PROMOTIONS MANAGEMENT

Unit 5: Organising Sales Effort

Expense Quota Notes

Expense quotas are related to selling costs within reasonable limits. Some companies set quotas
for expenses linked to different levels of sales attained by their sales force.
Salespeople may receive an expense budget that is a percentage of the territory’s sales volume.
The salesperson must spend only this amount as expenditure.
Activity Quotas

These quotas set objectives for job-related duties useful for attaining salespeople’s performance
targets. Activity quotas are required to make the sales force perform other activities which have
long-term implications on the goodwill of the firm.

A sales organisation must set a target level of performance for salespersons. Some common
types of activity quotas prevalent in Indian companies are as follows:

Common Types of Activity Quotas

Number of sales presentations made
Number of service calls made
Number of dealers visited
Number of calls made for recovery
Number of new accounts opened

Activity quotas typically should not be a basis for rewards. Rather, their attachment helps the
manager better understand why salespeople do or do not meet their sales volume quota.

Quota Combinations

Many companies use a combination of these quotas. The two most commonly combined are
sales volume and activity quotas. These quotas influence selling and non-selling activities.
It is also important not to have too many quotas; otherwise, the salespeople may become
confused as to what is expected of them. Several quotas can be used but they should be on the
most important activities — total sales volume and the products — that result in the most sales.

5.1.2 Quota Setting Procedure

Sales quotas are tricky to set because they can be affected by so many factors. It is not an easy task
to predict how much a sales force will sell before the start of the year. In most cases, quotas are
set based on last year’s performance, growth forecasts, industry trends, and by what the
competitors are doing. It happens in many cases that the companies have to adjust quotas mid-
year to ensure that the salesmen don’t get demotivated if a majority does not reach their quota
or in rare cases, the sales exceed the quota and puts pressure on production. The sales managers
follow a simple procedure to set the quotas. We will discuss them one by one:
1. Set the parameters for developing quotas: The quota setting procedure starts by looking at
the previous performances of the ales team. Based on that, the sales managers try to set the
kind of performance expected in future. Some common parameters that are used by the
sales managers to develop quotas are:
(a) Past trends: the quantity of specific product lines that were sold in various sales
territories over time

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