Typical Administrative Weaknesses

Companies that do not use sales quotas may justify their position by citing various limitations in a sales quota system. Generally speaking, however, these limitations are not inherent in the system. Instead they are administrative weaknesses that reflect management’s failure to utilize of characteristics of a good quota plan.

Probably the major criticism of quotas is that it is difficult or even possible to set them accurately. This point may be justified in some cases. Perhaps a company sells a new product for which very little marketing formation is available. Or a firm sells a product that requires several quota periods to elapse before the sale is consummated. However, just because a company cannot set a goal that is 100 percent statistically correct is no reason for management to abandon the entire project.

In other instances, quotas are not used because management claims they lead to high-pressure selling and. generally emphasize some activities at the expense of others. These criticisms may well be justified if a sales volume’ quota is used alone. Or the compensation and quota plans may be linked to encourage a high volume of sales’, irrespective of the gross margin. A quota also may overstress a given selling or not selling activity.

However, these are indications of planning or operating weaknesses, they are not inherent disadvantages of quotas.