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In some companies, sales management sets quotas for middleman such as agents, wholesalers and retailers.
Quotas set for sales region or other marketing units on higher organizational levels, are customarily
broken down and reassigned to lower level units like sales districts or individual sales personnel.
All quotas have a time dimension; they quantify what management expects within a given period.
OBJECTIVES IN USING QUOTAS
The main objective that sales management has in mind in using quotas is to control the sales effort.
These objectives can be achieved by these provisions:
- QUANTITATIVE PERFORMANCE CONTROL:
Quotas provide a means for determining which sales personnel, other units of the sales
department or distributive outlets are doing an average, below average or above average job
Territorial Sales volume quotas, as yardsticks for measuring territorial sales performance. - TO OBTAIN TIGHTER SALES AND EXPENSES CONTROL:
Control over expenses and profitability is tightened through quotas. Some companies
reimburse sales expenses only up to a certain percentage of sales volume. The expenses
quotas is being expressed as a percentage of sales. - TO MOTIVATE DESIRED PERFORMANCE:
Quotas motivate sales personnel, distributive outlets, and others engaged in the sales
operation to achieve performance levels. Some managements use quotas solely for
inspirational purposes, basing them, almost entirely, upon what they think individuals can
be inspired to achieve. - TO USE IN CONNECTION WITH SALES CONTESTS:
Firms often use performance against quotas as the main basis for making awards in sales
contests. Sale contests are strong incentives if all participants feel they have equal chance of
winning. Awards are usually based on the fulfillment of a per cent of the quota.
TYPES OF QUOTAS
There are five categories of quotas.
- SALES VOLUME QUOTAS: This is the commonest in terms of usage by management. It
could cover geographical areas, product lines or marketing channels. Many management
derive sales volume quotas from sales potentials. This procedure is more appropriate when:
• Territorial Sales potentials are determined in conjunction with territorial design.
• Bottom-up planning and forecasting procedures are used in obtaining the sales estimate
in the sales forecast.