A number of factors are used for establishing sales quota for salesmen. The quota may be based on past sales records, buying power of customers, company policies, total production for the year, competition, etc.
1. Past sales records:
Past sales of established organisations form a good index for future performance. Thus, while setting sales quota, past sales may be taken into account. Otherwise stated, the future sales quota is fixed keeping in view the past sales. New companies can fix their sales quota by observing and going through the past sales of the competing firms.
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2. Buying power of customers:
A manufacturer can have a rough estimate of the buying powers of customers of a particular area. The buying power of a particular area can be known by the economic status, income of the customers living in the area, living habits, etc. Accordingly, the manufacturer can estimate sales quota for that particular area.
3. Company’s policies:
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Company’s policies regarding credit, quality of goods, discount, selling terms have a direct impact while estimating sales quota for the salesman. In case the company has a liberal credit policy, high quality goods, offers higher rate of discount and facilitates installment selling, larger sales quota can be set for the individual salesman. These policies help to increase the demand for goods and services and as such increase the sales quota of each salesman.
4. Total production for the year:
A company’s total production in a particular year also plays an important role in determining the size of the sales quota. If, in a particular year, the production is high then higher sales quota can be set for the salesmen because goods which are produced need to be sold. On the other hand, if the production is normal in a particular year, moderate sales quota for each salesman is fixed.
5. Extent of competition:
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If the company in question is facing higher competition, the sales quota fixed is usually lower. In other words, the intensity of competition is inversely proportional to the size of the sales quota. It means that companies enjoying lesser competition or near monopoly can have larger sales quota fixed for each salesman as there is every possibility of larger volume of sales.
6. Opinions of experts:
Experts in the sales field are of immense help in determining the sales quota. Dealers, agents, consultancy firms and other agencies which are closer to the market are in a position to know the kind and quantity of goods that can be sold in a particular area. Companies can take the help of such agencies or persons in fixing sales quota for each salesman.