Budget Quotas

The intension in setting budget quotas is to make it clear to sales personnel that their jobs consist of some thing more than obtaining sales volume. Budget quotas make personnel more conscious that the company is in business to make profit. Budget quotas indirectly controlling gross margin and net profit contributions.

Types of Budget Quotas:
a) Expense Quotas
b) Gross margin or net profit quotas
c) Activity quotas
d) Combination quotas

A) Expense Quotas: Expense Quotas emphasize on expense and different types of expense quotas. Key man life insurance is included in expense quotas.

B) Gross Margin or net profit quotas: Gross margin or net profit quotas emphasize margin and profit contributions.

C) Activity: This type of quota desire to control how sales personnel allocate their time and efforts among different activities. A company using this type of quota system start by defining the important activities sales personnel perform, then it sets target performance frequencies. Activity quotas are appropriate when sales personnel perform important non-selling activities, normally in insurance selling, drug detailing etc. Sales personnel are part of keyman coverage.

D) Combination Quotas: Combination quotas are used to control performance of both selling and no-selling activities. These quotas overcome the difficulty of using different measurement units to appraise different aspects of performance, thus combination quotas summaries overall performance in a single measure.

Objective of Fixing Sales Quota

Sales force management is part of any sales force automation software with agency management software. We talked Sales Forecasts, Sales Budgets and Fixing Sales Quotas in our last post. Today we are going to talk about Objectives of Fixing Sales Quotas.

The basic objective is that a sales management has in mind in using quotas is to control the sales efforts. A skilled management uses quotas to motivate personnel to achieve desired performance levels, apart from these there are some other objectives also which are as follows:

• To provide quantitative standards
• To obtain tighter sales and expense control.
• To motivate desired performance.
• To use in connection with sales contents.

Types of sales quotas and quota setting procedures:
There are four types of sales categories. They are
1) Sales Volume
2) Budget Quotas
3) Activity
4) Combination
We will talk about Sales Categories in our next post.

ref: Agency Management Software, Insurance Software, Insurance CRM