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Sales Forecast & Sales Quota

The document discusses sales forecasting, quotas, and targets. It defines key terms like market potential, sales potential, and sales forecast. Quotas are assigned to sales units for a given period and help with planning, control, and compensation systems. Targets should be based on past performance, market share, and input from salespeople. Setting accurate and achievable targets that are communicated in advance can motivate employees and optimize resource use, while unrealistic targets may lead to unwanted inventory, pressure, and attrition. The document also addresses managing the forecasting function through assigning roles, choosing methods, setting timeframes, and regularly evaluating forecasts against results.

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Subhadeep Paul
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48 views15 pages

Sales Forecast & Sales Quota

The document discusses sales forecasting, quotas, and targets. It defines key terms like market potential, sales potential, and sales forecast. Quotas are assigned to sales units for a given period and help with planning, control, and compensation systems. Targets should be based on past performance, market share, and input from salespeople. Setting accurate and achievable targets that are communicated in advance can motivate employees and optimize resource use, while unrealistic targets may lead to unwanted inventory, pressure, and attrition. The document also addresses managing the forecasting function through assigning roles, choosing methods, setting timeframes, and regularly evaluating forecasts against results.

Uploaded by

Subhadeep Paul
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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Sales Forecast

&
Sales Quota

Session VII
8th September 2008

1
Understanding of 
 Market Potential
 Sales Potential

 Sales Forecast

 Sales Budget

 Sales Quota

2
Understanding of 
Market Potential Highest possible expected


Industry sales for a specified
market & given time period
 Sales Potential  Share of a market potential that
an Organization wish to achieve
over a given time frame
 Sales Forecast  Sales estimate that an
organization expects to meet over
a given period
 Sales Budget  It is the quantity sales that the
management expects to raise
from the area assigned
 Sales Quota
 Sales goal assigned to specific
marketing unit for a given period

3
Why fix Targets ?
 Planning & Control
 Contractual Obligations

 Quantification of Salesman Job

 To workout sound Compensation

system
 Cost effectiveness

 Comparative study of territories

 To raise motivational level

4
How do one fix targets ?
 Past sales performance records
 Market share participation base

 Sales forecast by territory salesman

 Production downwards

5
Comprehensive target fixation exercise
 Objectives of the organisation
 Constraints of capacity production

 Current participation level / Market

share
 Financial constraints & / or

advantages
 Opinion of

• Salesman
• Sales Executive
• Area / Regional Managers
6
Prerequisites of Sales targets
 Objective mindset
 Target must be Accurate, Fair & within

reach
 Participative Targets get better

acceptance
 Establish midway review and self

corrective system
 Targets must be specific and measurable

7
Prerequisites of Sales targets
 Target system established must be
continuously appraised
 Managerial control

 Target must be informed well in

advance

8
Positives of sales targets
 Optimum utilization of resources
 Establishment of Unbiased Appraisal

System
 Comparisons, Contests &

Competitive spirit is promoted


 Achievement of additional sales &

profits

9
Negative features of Sales targets
 Leads to bad debits
 Lead to unwanted Mental and

Psychological pressures
 May result in unwanted inventories

 Point of discord between the sales

manager and the field salesman


 Too many resignations  Attritions

 Investment levels will go up

10
Managing Forecasting function
 Who should be responsible for
forecasting?
 Which forecast method should be

used ?
 What should be the length of the

forecast?
 How should the forecast be

evaluated ?

11
Who should be responsible for
forecasting
 Pinpoint responsibility period-wise

 Understand the limitation of the


forecast

 Involvement of the product


management group

12
Which forecast method should be
used
 Keeping in mind the
• Cost factor
• Time factor
• Accuracy factor

13
What should be the length of the
forecast
 Requirement at operating level
• Weekly
• Monthly
• Quarterly
• Yearly
 Requirement at the CEO level
• Five years projection also

14
How should the forecast be
evaluated
 Evaluation of actual results
• Weekly
• Monthly
• Quarterly
 Periodicity of evaluation and distance
from the year end targets

15

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