N5 Sales Management 1. Introduction


Quotas/targets are quantitative (set in terms of figures) objectives assigned to sales organisational units, for example individual sales personnel. As standards for appraising selling effectiveness, quotas specify desired performance levels for sales volume, such budgeted items as expenses, gross margin, net profit, return on investment, selling- and non-selling related activities or some combination of these items. Sales management sets quotas for individual sales territories and sales personnel. In some businesses, sales management sets quotas for middlemen. Quotas set for sales regions are broken down and assigned to sales districts or individual sales personnel. All quotas have a time dimension; they quantify what management expects within a given period.


Quotas are devices for directing and controlling sales operations. Their effectiveness depends upon the type, amount and accuracy of marketing information used in setting them and upon management’s skill in administering the quota system. Quotas are based on information derived from sales forecasts, studies of market, sales potentials and cost estimates.


2. Objectives in using quotas


The general objective of quotas is to control the sales effort. Sales control is facilitated through setting quotas to use in appraising performances of sales territories and individual salespeople. Sales control is tightened through setting of quotas on expenses and profitability of sales volume. Sales management uses quotas to motivate personnel to achieve desired performance levels.


2.1 To provide quantitative performance standards


Quotas provide a means for determining which sales personnel, territories or branches are performing on average, below-average or above-average. Territorial sales volume quotas, for instance, are yardsticks for measuring territorial sales performance. Comparisons of quotas with sales performance identify weak and strong points, but management must determine the reasons for variations. A well-designed quota system combined with sales analysis helps in assuring that a bad showing in selling one product line in a territory is not hidden by good showings in selling other product lines: the so-called Iceberg Principle.


Sales performances vary product by product, territory by territory and salesperson by salesperson. Quotas identify the strong and weak points, additional analysis of performance data uncovers reasons for performance differentials/deviations.


2.2 To obtain tighter sales and expense control


Control over expenses and profitability is tightened through quotas. Some businesses reimburse sales expenses only up to a certain percentage of sales volume, the expense quota being expressed as a percentage of sales. The rep must keep his selling expenses – travel, overnight, entertaining – as low as say 2% of his sales figures. Other businesses set expense quotas and appraise sales personnel by their success in staying within assigned expense limits. Other businesses establish quotas in terms of a certain percentage profit or a certain percentage profit of sales. These budget quotas shift the emphasis from making sales to increasing profitability.


40


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52  |  Page 53  |  Page 54  |  Page 55  |  Page 56  |  Page 57  |  Page 58  |  Page 59  |  Page 60  |  Page 61  |  Page 62  |  Page 63  |  Page 64  |  Page 65  |  Page 66  |  Page 67  |  Page 68  |  Page 69  |  Page 70  |  Page 71  |  Page 72  |  Page 73  |  Page 74  |  Page 75  |  Page 76  |  Page 77  |  Page 78  |  Page 79  |  Page 80  |  Page 81  |  Page 82  |  Page 83  |  Page 84  |  Page 85  |  Page 86  |  Page 87  |  Page 88  |  Page 89  |  Page 90  |  Page 91  |  Page 92  |  Page 93  |  Page 94  |  Page 95  |  Page 96  |  Page 97  |  Page 98  |  Page 99  |  Page 100  |  Page 101  |  Page 102  |  Page 103  |  Page 104  |  Page 105  |  Page 106  |  Page 107  |  Page 108  |  Page 109  |  Page 110  |  Page 111  |  Page 112  |  Page 113  |  Page 114  |  Page 115  |  Page 116  |  Page 117  |  Page 118  |  Page 119  |  Page 120  |  Page 121  |  Page 122  |  Page 123  |  Page 124  |  Page 125  |  Page 126  |  Page 127  |  Page 128  |  Page 129  |  Page 130