15 Major Principles of Sales Quota Setting (With Examples)

The setting of sales quota is a complex and skillful activity. Certain principles must be followed for setting sales quotas.

Principles of sales quota setting
Principles of sales quota setting

This is essential to obtain the full benefit of sales quotas.

It is also necessary for securing and maintaining acceptance of the quota by those to whom they are assigned.

Principles of Sales Quota Setting

These principles or essentials of sales quota setting are described below:

1. Accuracy

Good sales quotas are accurate. Accuracy must be maintained while setting sales quotas.

The more closely sales quotas are related to territorial potentials, the greater the chances for accuracy.

An accurate sales quota result from the skillful blending of planning and operating information with sound judgment.

2. Fairness

There should be fairness in allocating sales quotas.

There should be uniformity in allotment between salesmen.

The various factor like the nature of territory, competition and the ability of the salesmen must be considered.

Setting a fair sales quota involves determining the proper blend of sales potential and previous experience.

Related: Top 10 Key Objectives of Pricing (With Examples).

3. Attainable

The sales quotas must be achievable without must difficulty.

These should be set at the optimum level. Too much higher quotas are not attainable. These can demotivate the salesmen.

These should be determined after appraising changes in personnel capabilities.

Setting unrealistic quotas that can not be met only results nm a morale problem and serve no useful purpose.

Too often, management is guilty of fooling itself in putting down figures that are no more than wishful thinking.

4. Objectivity

Sales quotas should be set on the basis of facts and figures.

These should be supported by proper data and information.

5. Simplicity

The method of sales quota setting should be simple and easy to understand.

An imperfect, but simple sales quota system is likely to work better than an accurate, but a complicated one.

Related: Top 20 Benefits and Features of Supermarkets (With Example).

6. High Quota Levels

Many salespeople are quota achievers and that their motivation decreases if they are given quotas that are too easy to reach.

Experts also suggest that management should use a highly centralized quota with high quota levels for maximum effectiveness in motivating and channeling salesperson effort.

7. Flexibility

The sales quotas must be flexible to some extent.

They should be adjusted with market share, market potential, and salesmen’s skills.

No sales quota can be good so far as it has no quality of flexibility. 22 Objectives and Importance of Sales Quota (With Examples).

8. Definiteness

The quotas must have a fixed basis.

These may be fixed on a geographical basis, or on money value, or on units of product.

9. Stability

Stability should be maintained in a sales quota setting.

reasons for setting sales quotas
reasons for setting sales quotas

The basis and method of quota setting should not be changed frequently.

Too many changes create confusion among the salesmen and reduce the goodwill of managers.

Related: 6 Powerful Methods of Setting Sales Quota (Step by Step).

10. Feedback

Feedback, or knowledge of results, is necessary for goals to improve performance.

Sales manager feedback is a very powerful force in shaping salespeople’s performance.

This suggests that management should give salespeople frequent feedback on their level of sales relative to the quota.

11. Global Commitment

Salespeople must consider the goal to be their own.

This is what is meant by goal commitment that is, a person’s determination to attain a goal or quota.

12. Building Self Confidence

How people feel about their ability to perform certain behaviors successfully is very important to high performance.

Recent research results indicate that’s salespeople who are confident in their sales ability set higher performance goals and perform better than those who are less confident.

Related: 21 Benefits and Limitations of E-Commerce Businesses.

13. Participation

Participation in all the salespersons is needed to achieve sales quotas successfully.

Its sales personnel participate in the sales quota setting, the task of explaining quotas and how they are determined is simplified.

14. Monitoring of Performance

In administering any quota system, there is a need for continuous monitoring of performance.

Arrangements must be made to gather and analyze performance statices with minimum delay.

Charts recording each salesperson’s performance against quota on a monthly, or even weekly, basis facilities this analysis.

15. Motivational

The sales quota should have a motivating effect on the salesmen.

Those who achieve sales quota should be given incentives to encourage them.

Sales Quotas must cause the entire sales team to turn their efforts to achieve them. One executive concludes. 14 Limitations or Problems in Setting Sales Quota.

Set quotas people believe in and promise them a reward for attaining quota.

Thus, now you know all the important principles of the sales quota setting.


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