What Is The Purpose Of A Sales Quota? Find out more.

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For sales teams, sales quotas act as a benchmark and are able to provide the motivation that reps need in order to perform their best as well as support the business’ goals. Many sales teams flourish with the assistance of quotas. The important thing is to set quotas that are both challenging in addition to attainable.

What Is A Sales Quota?

The term ‘sales quota’ refers to a time-bound sales target that is set by management for a specific region, sales team, or individual sales rep.

Sales quotas are typically attached to a daily, monthly, or quarterly period. Not only do sales quotas play an important role in sales forecasting and monitoring rep activity, but they also set expectations and motivate sales reps to achieve a given level of activity.

Managers can also use sales quotas to learn more about their team’s productivity, success rate, and optimal sales processes.

Setting sales quotas allows one to:

  • Ensure compensation plans (including commissions) are fair and effective
  • Reveal weaknesses or bottlenecks in the sales pipeline
  • Highlight successful reps and replicate their sales techniques
  • Monitor and regulate selling expenses
  • Create achievable goals and benchmarks

What Are The Different Types Of Sales Quotas?

Sales Volume Quotas

It’s a common practice in order to found a sales quota on the volume of sales or sales revenue for a customer, line of products, region, period of time or some blend thereof. In many instances, a business that sells a product with a high unit price puts a sales volume quota into practice on a daily, monthly or quarterly basis.

If an organisation sells low-priced products, the company might put in place a sales revenue quota. Quotas may also can be set for a group of products, such as men’s clothing or computer products. Sales volume goals don’t measure the profit generated by a particular salesperson or his productivity.

Monetary-Sales-Volume Quotas

These are sales-volume quotas that are set in terms of revenue generated rather than the number of units sold. The advantage of using this type of quota is that it can be easily calculated and adjusted to provide more accurate quotas over time. It is also easier to relate monetary-sales-volume quotas to other types of performance data such as selling expenditure.

Unit-Sales-Volume Quotas

This is usually done to measure the salesperson performance according to the number of unit sold. This type of quota is useful when prices are inconsistent but the number of unit sold are constant regardless of the price fluctuations.

Sales quotas are a technique that is used in order to motivate sales reps.

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Find out what other techniques are used on our Sales Management Course. Follow this link for more information.

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