There are different methods of setting sales quota in an organisation and some of the important methods are as follows:
1. Top Management Downward:
Under this method, the management and the executives estimate the total sales for the coming year based on their experience and judgement and divide this total sales according to district, branch and individual salesman.
Usually, the executives having enough experience in the sales field are given the responsibility of setting such sales quota. This method is sometimes called as gdess-work quota method because it is estimated on the basis of guess-work of the executives, and without any scientific base.
2. Territorial Estimate Upward:
This method is also known as grassroot approach. In this method, the salesmen are asked to make estimation of sales of their territories for the coming year. By using their own method the sales manager makes some adjustments in the estimation provided by the respective salesman. The district and the divisional sales managers make further adjustments of the sales estimates with the cooperation of the sales people.
Finally, all such sales estimates are grouped and the sales estimate of the entire sales field is prepared. The sales forces, under this method, are allowed to make their own estimates. This method assures the management regarding the achievement of sales quotas by the sales people as they actively participate in quota setting.
3. Combination of Top Management Downward and Territorial Estimate Upward:
Under this method, the above two methods of estimating sales quota are combined and used. At the headquarters, the management, by virtue of their past experience and judgement, estimate the sales quota. At the grass root level, the salesmen are asked to make their own separate sales estimates.
After getting both the sales estimates the management puts them together, makes some adjustments, and makes a final estimation of the sales quota to be achieved by the salesmen. Under this method, the final sales estimate for the entire sales field is prepared based upon both the estimates. Then the estimate is divided into territories, products and salesman-wise.
4. past Performance Method:
Under this method, sales estimates are made keeping in view the past sales records taken as the basis and the total sales estimate for the future is made by increasing the sales by a certain percent.
The increase is also made keeping in view the competition, advertisement, economic condition, price of the product, etc. Then, this total estimate is divided into sales quota for each division, district branch and individual salesman.
Besides the above methods, there are several other methods of estimating sales quotas like survey of buyer’s intention, industry forecast and share of the market percentage and so on. However, the most suitable method of setting the sales quota for a particular organisation can be judged by the organisation itself. The basic criterion for choosing a particular method of sales quota estimation is that the method should be less expensive and more accurate.