# What Is a Sales Quota? Definition, Types and Examples

## Common types of sales quotas

Your employer may use a variety of sales quotas. While each has a unique method of measurement, the majority place special emphasis on activity, profit, volume, and cost Your business may use a single kind of quota or a combination of several.

### 1. Revenue or profit quotas

A common sales quota used to track progress toward a set total revenue objective is called a revenue quota.

A furniture company has set a monthly revenue target of \$20,000 for each sales representative. Denise has a list of potential new homeowners who might require a variety of furniture pieces. She needs to sell furniture to about 10 customers in order to meet her monthly quota since her average sale is \$2,000 per client. DeAndre works at the furniture showroom. Typically, his primary clientele is only interested in purchasing a single piece of furniture. His average sale is \$500, so in order to meet his quota, he must close deals with at least 40 clients.

### 2. Activity quotas

Activity quotas specify how many sales a salesperson must make in a given time frame. It includes sales-related activities like making a certain number of phone calls, meeting with a certain number of clients, or sending out a certain amount of mail.

An illustration would be a roofing company that told its salespeople to call 20 potential customers each day. At a nearby trade show, Arnetta calls those who filled out a raffle entry form. This method results in one sale for every 10 calls. Mary needs to call a bunch of random names and numbers. For every 50 calls she makes using this strategy, she makes one sale. No matter how many sales Arnetta and Mary make, as long as they make at least 20 calls each day, they have met their activity quota.

### 3. Volume quotas

Volume quotas mandate that you sell a predetermined number of goods each time. Volume quotas prioritize the quantity of goods rather than the dollar amount of sales.

An auto dealer, for instance, told its salespeople to move 10 vehicles each month. Julio works in the used car department. He has sold ten cars, each costing between \$2,000 and \$10,000. Working in the new car showroom, Taryn has made sales to 10 clients. The new cars’ prices range from \$15,000 to \$40,000. Taryn made more money, but she and Julio both sold 10 cars to meet their volume quota.

### 4. Cost-based quotas

Cost-based quotas put less emphasis on revenue and more on the resources (such as time and money) needed to make a sale.

An electronic store, for instance, has told its salespeople to focus on a sale for no more than 20 minutes. Shamara works in the laptop department. She has 20 minutes to convince a customer of the features and advantages of several laptops in order to close the sale and move on to the following customer.

### 5. Forecast quotas

The historical performance of a salesperson or a team determines forecast quotas. These are often assigned to a team, department or territory.

The net sales of a clothing store for the fourth quarter were \$50,000, for instance. They set a quota of \$55,000 because they want to increase sales by 10% in the upcoming quarter.

### 6. Combination quotas

Based on the requirements of the company, a combination quota combines a number of quotas.

Example: A dealership for recreational vehicles has set a variety of quotas that its salespeople must meet. Jaquira will need to contact 15 people daily whose information was submitted on the dealership’s website. In addition, she must sell four RVs each week. Additionally, she anticipates making \$150,000 in sales of RVs and camping gear in May.

## What is a quota?

A quota is a predetermined number of sales or other actions you must complete within a specific time frame. For instance, to meet their quota, a woodworker might have to produce 12 tables in a single month.

Sales quotas may be established by your manager for you individually or as a team. Some sales quotas are based on set territories. You might have quotas that are daily, weekly, quarterly, or occasionally a mix of those times.

## Tips for achieving your sales quotas

To make sure you achieve your sales targets, consider the following advice:

## FAQ

What are sales quota?

The performance benchmark that sellers must meet within a predetermined time frame in order to receive their target incentive pay is known as a sales quota. Goals or targets, also known as quotas, can motivate sellers more when opportunity differs by territory.

Which is an example of a sales quota?

These are often assigned to a team, department or territory. The net sales of a clothing store for the fourth quarter were \$50,000, for instance. They set a quota of \$55,000 because they want to increase sales by 10% in the upcoming quarter.

What is sales quota and its types?

Sales quotas are any kind of sales metrics assigned to a specific person, area, or distributor. It can be calculated using either the stock of sold goods or money. Particularly, a daily or monthly assessment of the target sales amount is involved.

Why is sales quota important?

The Importance Of Sales Quota. The sales representatives are encouraged by quotas to create plans that will allow them to perform at the desired goal level. When these quotas are met, it can result in fulfillment and increased motivation, or disappointment and decreased motivation, depending on whether the goal was attained.