Individual sales target figure assigned to each sales unit such a sales person, dealer, distributor, region,

or territory, as a required minimum for a specified period (month, quarter, year). Sales quotas may be expressed
either in dollar figures (monetary terms) or in number of goods or services sold (volume terms).

The sales quota is something used in many environments where goods or services are sold. It is
essentially a target amount of salesthat could be assessed on a daily, weekly or monthly level.
Whole selling units (like stores) may have a quota they must try to meet each month and
individual salespeople are also likely to have a salesquota. One means of assessing performance
in the salesperson is by looking at their ability to hit the target on a regular basis or to exceed it.

When people talk of the high-pressure atmosphere of employment insales, it is often due to
this sales quota. The salesperson may know or feel that a job is constantly on the line if they don’t
sell a certain amount of product or a specific dollar amount each month. Some salespeople
additionally work on commission only, which means they don’t get paid if they don’t sell, or others
may work on a draw versus commission basis, where their salary increases if they meet certain
quotas. It is certainly true that quotas are used to motivate the salesperson, and actually a whole
selling unit, since a store of any kind may have to meet monthly quotas. Failure of one or more
people to meet quotas could threaten the jobs of managers in addition to increasing likelihood
that salespeople would lose their jobs.

Sales teritory
Geographical area or type of customers assigned to a sales unit such
as salesperson, sales manager, franchisee, distributor, or agent.

segment of the market for which a salesperson is responsible. Territory assignments may be exclusive,
meaning no other salesperson can sell in that territory, or nonexclusive. Territories may be defined in terms
of geographic or market segments, product or product lines, size of customer or by specific customers or
prospects. The best territories with the greatest revenue potential are usually assigned to the best
salespeople. The individual talents or characteristics of the salespeople can also be used to determine
territory assignments. It takes a different skill set to make sales to large corporations than to small retailers.
Geographic territory assignments should be made so as to minimize the travel expenses incurred by any
one salesperson. When creating geographic territories, the density of the prospect base will determine the
size of the territory. For example, New York City alone may offer as many prospects as several
Northwestern states combined.
Hand in hand

Sales quotas should not be mystical numbers made-up in the backroom and then sold to the sales team.
The best way to determine an accurate sales forecast is based on market potential by "territory" for your
service or application. For example, a territory's potential for CRM system sales to advertising agencies in
Boston is totally different than New York City. Yet, in most firms, the reps would have the same quota.
We define the term "territory" as the area in which your sales account executives are assigned. Territories
can be regional, national, or vertical based on how your firm markets, but the sales quota is assigned to
an individual based on the market opportunity for their "territory" only. The idea of taking a national sales
force quota and dividing it up by the number of salespeople to come up with "individual" quotas makes no
business sense. And worse, it just frustrates salespeople.

So, who is responsible for the determination of territory potential for product and application? The
marketing department. They are the key to the first step of accurate sales quota determination. They
should have the ability to go out and evaluate sales staff territories to determine market potential,
competitive analysis, regional economies and how many target prospects are in a particular region. With
this data, the marketing department can then calculate the TOTAL amount of possible sales IN DOLLARS
in the territory if ALL prospects are sold. Once, you have this territory potential dollar assessment in
hand, you then calculate the forecasts by backing in your closing ratios, your lead conversion ratio and
your average sale. Now you have one person's territory quota based on a percentage of the total market
potential. From here, the VP of Sales can just combine the individual quotas for all reps and get their
national sales forecast.