Module 5 • Quotas/targets


Management must exercise care in appraising variations from the quota, for example to what extent are they attributable to quota inaccuracies and to what extent to salesperson’s inadequacies.


If management believes that its quota-setting procedure produces accurate quotas and is confident that fair quotas are being designed, then they should be attainable. Most quota-setting errors are those of judgement, setting quotas above each salesperson’s expected performance to provide an incentive for improvement. Quotas that some sales personnel fail to attain are not necessarily unfair – whether they are or not depends on who fails to attain them. Fair quotas are quotas which weaker salespeople fail to attain, and which better salespeople either reach or slightly exceed.


4.2 Securing and maintaining sales personnel’s acceptance of quotas


Management must ensure that sales personnel understand quotas and the quota-setting procedure; this is important to secure staff acceptance of quotas.


If sales personnel do not understand the procedure used in establishing quotas, they may suspect that quotas are used only to obtain extra effort from them at no extra cost to the business. This attitude destroys the quota’s effectiveness as an incentive. It is important that sales personnel understand the significance of quotas as indicators of how much for what period, but if they also understand the quota-setting procedure, they are more likely to consider them to be accurate, fair and attainable. The quota-setting method should be simple enough for sales personnel to understand, yet sufficiently sophisticated to permit acceptable accuracy.


4.2.1 Participation by sales personnel in quota-setting


If sales personnel participate in quota-setting: • The task of explaining quotas and how they are determined is simplified. • Sales personnel have some information about their territories that management does not have, and it can contribute to quota accuracy. • They are more easily convinced of their accuracy.


The extent of staff participation depends upon management philosophy, types of quota, information available and the calibre of the sales force. It is not advisable to turn the whole quota-setting procedure over to the sales personnel, but some sales force participation can create more accurate and realistic quotas.


4.2.2 Keeping sales personnel informed


Effective sales management keeps sales personnel informed on their progress relative to quotas. Sales personnel receive frequent reports detailing their performance to date. This allows them to analyse their own strong and weak points and take corrective action.


4.2.3 Need for continuous managerial control


In administering any quota system, there is a need for continuous monitoring of performance. Performance data should be collected and analysed on a continuous basis. Charts recording each salesperson’s performance against quota on a monthly, or even weekly basis facilitates this analysis. Continuous managerial review and appraisal are required, since a quota that was accurate, fair and attainable at the beginning of a period can prove totally unrealistic in view of changing selling conditions, for example higher interest rates. Flexibility in administering the system is important, for example if a quota is proving unrealistic, it should be adjusted.


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