Module 5 • Quotas/targets 2.3 To motivate desired performance


Quotas motivate sales personnel and different branches of a business to achieve assigned performance levels. Some managers use quotas solely for inspirational purposes, basing them almost entirely upon what they think individuals can be inspired to achieve. Because of the high degree of subjectivity in such quotas, they frequently are too high to inspire salespeople. Most sales managers agree that quotas should be attainable goals. Salespeople should believe so strongly in the quota’s attainability that they will not give up with the excuse that it cannot be reached. Sales personnel should feel that they can reach assigned quotas and they should be confident that management will recognise their achievements.


For maximum effectiveness in motivating desired performance, quotas cannot be based solely on judgement or on sales potentials. Past sales and analysis of the sales potentials in a territory, for example, may indicate that the sales volume quota of the salesperson responsible for that territory should be increased by 50%. Most salespeople are discouraged by this increase. Management should rather raise the quota with a small percentage each year until it is brought up to a certain level.


2.4 To use in connection with sales contests/competitions


Businesses usually use “performance against quota” as the main basis for making awards in sales contests. Sales contests are stronger incentives if all salespeople feel they have an equal chance of winning. By basing awards on percentage of quota fulfilment, the desired common denominator feature is built into the contest. Adjustments are made for differences among territories (as in coverage difficulty and competitive position) and for differences among salespeople (as in experience with the business and in the territory). Contest quotas are designed solely for contest use to stimulate special effort, causing average sales personnel to turn in above-average performances.


Activity 1 Find out how top sales businesses award their salespeople. Share your examples with the class.


3.


Types of quotas and quota-setting procedures


There are four types of quotas: • Sales volume quotas • Budget quotas • Activity quotas • Combination and point system quotas.


3.1 Sales volume quotas


It is an important standard for appraising the performances of individual sales personnel, territories and branches. These quotas indicate the sales management expectations for a given period. Sales volume quotas are set for geographical areas, product lines or distribution channels (wholesalers, retailers, agents etc.) or for one or more of these in combination with any unit of the sales organisation. More control is also secured by setting quotas for individual products items rather than for entire product lines/ranges, and for shorter periods rather than for long.


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