Sales Quota and Quota
Setting Procedure
Dr. Gopal Thapa
Tribhuvan University
Email: thapazee@gmail.com

Sales Quotas
 A sales quota refers to an expected routine
assignment to sales units, such as territory,
districts and branches, etc.
 Sales quotas are also assigned to individual
salespeople over a particular time period and are
used to plan, control and evaluate the selling
activities of a company.
 Sales quotas serve several purposes.

Objectives of Setting Sales Quotas
 Quotas provide performance targets
 Quotas provide standard
 Quotas provide control
 Quotas are motivational

Types of Sales Quotas
 Sales Volume Quotas
 Product line
 Product range
 Sales division
 Sales Territories
 Sales districts
 Branch offices
 Sales force (individual
 Profit Quotas
 Expense Quota
 Activity Quotas

Types of activity quotas
 Number of sales presentations made
 Number of service calls made
 Number of dealers visited
 Number of calls made for recovery
 Number of new accounts opened

Quota Setting Procedure
 Set the parameters for developing quotas
 (a) Past trends: the quantity of specific product lines
that were sold in various sales territories over time
 (b) Previous year’s revenue: the total revenue
generated from sales of all products from various sales
territories
 (c) Industry standards: performance of the
competitors in the industry
 (d) Territory analysis: the quantity that a salesperson
thinks can be sold in his or her territory based on the
existing pipeline and recent successes

Quota Setting Procedure
 Add the percentage of growth expected:
 Allot individual quotas to each sales personnel:
 Experience of the salesmen:
 Assigned job
 Sales skills:
 Market potential:
 Competition

Quota Setting Procedure
 Make sure that the sales quotas are well
understood by your sales team
 Adapt quotas to market realities

Sales Territory Management
 A sales territory comprises of a group of customers or
a geographical area assigned to a sales unit.
 The territory may or may not have geographic
boundaries.
 A sales territory represents a group of customer
accounts, an industry, a market or a specific
geographical area.
 Territory management includes the market potential,
number of customer accounts, the firms experience
and market share in the territory, the capability of the
salesperson assigned and the frequency of sales calls
made.

Sales Territory
 A sales territory comprises a number of present
and potential customers, located within a given
geographical area and assigned to a salesperson,
branch, or intermediary (Sapiro, Stanton, & Rich,
2011).

Sales Territory
 A sales territory comprises a group of customers
or geographical area assigned to a salesperson.
 The territory may or may not have geographical
boundaries.
 Typically, however, a salesperson is assigned to a
geographical area containing present and potential
customers (Futrell, 2010).

Sales Territory
 A sales territory is usually a specific geographic
area that contains present and potential customers
and is assigned to a particular salesperson (Hair,
Anderson, Mehta, & Anderson, 2009)


Types of Sales Territory
 On the basis of geographical area
 On the basis of customers types
 On the basis of product types

Activities of Territory Management

Reasons for Setting Sales Territories
 To obtain entire coverage of the market
 To establish a salesperson’s responsibility
 To evaluate performance
 To improve customer relations
 To reduce sales expenses
 To allow better matching of salesperson to
customer
 To benefit salespeople and the company
 To coordinate personal selling and advertising

Procedure for Setting up Sales
Territories
 Selecting a basic geographical control unit
 Deciding on allocation criteria
 Estimating and evaluating sales and accounts
potential in each unit
 Analyzing the type of salespeople and their
workload in each control unit
 Selecting the starting points
 Assigning salespeople to identified territories

Elements of Territory Management
 Establishing sales quota
 Account analysis
 Account objectives and sales quotas
 Territory-time allocation
 Customer sales planning
 Scheduling and routing
 Territory and customer evaluation

Approaches used for designing sales
territories
 Market Build-up Approach
 The Workload Approach

Market Build-up Approach
 In this approach, an estimation of the present and
potential products/services demand is made by
looking at how the market is built up, who are its
present/potential users, how much do they
consume and at what frequency.
 In this approach, information from trade
directories, state publications, etc. is consolidated
and then aggregated to understand the market
potential for the product.

The Workload Approach
 Designed by WJ Talley on the basis of the
workload performed by salespersons
 Customers are grouped into class size according to the sales volume.
 Optimum call frequencies for each class of customers are estimated.
 Present and potential customers are then located geographically and
arranged volume wise and value-wise.
 The number of present and potential customers in each volume/value
group is then multiplied by the desired call frequency to get the total
number of planned calls required for each geographical control unit

Revising Sales Territories
 Situation I
Where sales potential of territories are equal but the salesman
differ in their abilities.
 Situation II
Where management designs sales territories in such a way that sales
potential of territories varies directly with the ability of the sales
person.

Reasons for Revising Sales Territories
 Customer Related Reasons
 Salesperson Related Reasons
 Management Misjudgement

Alignment of Sales Personnel to
Territories and Routing
 Straight Line Pattern
 Clover Leaf Pattern
 Hub and Spoke
 Circular

Scheduling of Sales Personnel
 Scheduling refers to establishing a fixed time
when the salesperson will be at a customer’s place
of business.
 It is planning a salesperson’s specific time of visits to customers
Proper routing and scheduling enables the salesperson to:
 Improve territorial coverage.
 Minimize wasted time.
 Establish communication between management and the sales force in
terms of the location and activities of individual salespeople

Thank you
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