We have thus far examined elements of sales management that encompass recruitment, selection and training of sales personnel. Additionally, we have looked at the important area of organizing and structuring the sales force, specifically looking at such factors as territory design, journey planning and bases for structuring a sales force. Finally we have examined the sales sequence. We now examine the remaining elements of sales management, including setting sales quotas, evaluating and controlling sales effort and design of remuneration systems.
Setting sales quotas
‘Sales targets’ and ‘sales quotas’ are terms that are often interchanged. The target which is given to a salesperson is, strictly speaking, something that should be aimed for. A sales quota is something that should be achieved, but the difference is semantic. Whatever term is used, the salesperson should be given a clear indication of the level of performance that is expected to be achieved. If a salesperson’s quota is fixed on a co-operative basis rather than being imposed, there is more likelihood of it being acceptable. It also raises the salesperson’s level of confidence in management. An imposed quota may result in resentment and unwillingness to co-operate with management that fails to consult its salespeople on such important matters. Salespeople, after all, are the ones expected to meet quotas that are set so there is a need for joint consultation. The individual salesperson is best placed to help in setting realistic estimates of what can be achieved. It is helpful for both parties if the area, branch or regional manager consults with the salesperson, and by the process of consulting customers more realistic estimates of sales can be ascertained for each customer. There are other means of forecasting sales that are dealt with in Chapter 11. This not only applies to fixing new quotas, but also to changes in quotas. The salesperson needs to appreciate why changes are necessary; the arbitrary raising of quotas might be seen as being unjustified to the salesperson and can lead to mistrust of sales management, and a cut in earnings resulting from arbitrary alterations is not appreciated.
Sales volume achieved in the previous period is a good starting point when setting quotas. However, other factors may influence future sales such as changes in demand, business conditions, marketing and sales policies, territory potential and competitive actions. The sales quota should be an accurate measure of market potential, tempered by workload and experience factors. Territories are differentiated by the density of the market. A rural area will involve salespersons in more travelling between calls than an urban area. The amount of physical effort and time involved, or the workload factor, should be considered when setting quotas.
The experience of individual salespersons and that of the company makes up what is termed the experience factor. Higher sales targets will be expected from experienced salespersons, and inexperienced salespersons will find sales easier if the company is well established in the market area. Sales quotas stem from the sales forecast and are used to:
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