The sales quota is the sales target or number of sales for a product line, a division or a sales representative. It helps managers define and stimulate sales activities.
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Definition of sales quota
Sales quotas are the minimum sales target for a set period of time. The sales quota can be individual or group-based, e.g. B. for a business unit or a team.
The sales quota is a way or a parameter to get the sales organization to achieve its goals in advance. It also helps with growth and the investment required.
In general, sales quotas are set slightly higher than estimated sales to increase sales power. Sales quotas are developed by studying the annual territorial marketing plan.
Types of sales quotas
Sales quotas mainly consist of the following types:
Volume dependent: Is determined by the number / units of products or services sold.
Sales-based: Is determined by sales generated by products or services sold.
Profit Based: Is determined by the profit made from the sale.
Importance of the sales quota
The sales quota is a very important driver for a sales-oriented organization or company. Many companies depend on the efficiency and desires of the sales force. Selling quotas lead to a pooling of efforts and accountability. A multiple percentage of the quota determines the variable compensation you would earn in a year.
The sales quota also determines the overall performance of a company. The company can significantly influence the aggregation of all sales quotas.
How can you set a sales quota?
Sales quotas can be set in many ways. Common methods, depending on the company or the person used, are:
Strategic estimate: With this method, after estimating and planning for future sales, the individual sales quota for individuals or smaller groups is determined.
Individual skills: This method takes into account the skills of the field service and the previous performance of the team. This will help set the sales quota for the next year.
Example of a sales quota
New business target: EUR 1,000,000
Average sales size: 50,000 EUR
The total sales required to achieve the goal: 20