Combination Quotas

Companies that are not satisfied with any single type of quota may combine two or more types. As an example, a firm may want to establish a quota based on three activities, plus gross margin on the products sold. The results for one rep may come out as follows for the January-March quarter:

	Quota	Actual	Percentage of   quota obtained
Gross margin, all products           $ 30,000                 $25,000                       83   Product demonstrations made           120                     135                               117 Orders from new accounts                15                     17                                 113 Window displays obtained                 20                     19                                 95   Average = 102%

The salesperson in this example reached a little over 102 percent of her combined quota. The four components were weighted equally, but management may want to assign more value to some elements than others.

A combination quota seeks to use the strong points of several types of quotas, but frequently such a plan is limited by its complexity. In many cases, combination quota structures are so complicated that they are not easily understood by the reps: Then the quota becomes a source of dissatisfaction rather than an incentive. Also, a sales rep may overemphasize one element in the quota plan. In this illustration, for example, the rep may reach 200 percent of the quota for product demonstrations and do virtually nothing to secure orders from new accounts.