SALES Budget & sales QUOTA
Free template from www.brainybetty.com BASIC TERMS 21-04-2017 Free template from www.brainybetty.com
POTENTIAL This refers to the highest possible level of achievement, whether at the company level or at the industry . In practice, full potential is almost never reached, so actual sales are typically somewhat less than potential. 21-04-2017
Market potential it is the maximum market ( industry) demand, resulting from a very high level of industry marketing expenditure, where further increases in expenditure would have little effect on increase in demand
Company sales potential is the maximum estimated company sales of a product or service, based on maximum share (or percentage) of market potential expected by the company
sales forecast A sales forecast is a projection of the expected customer demand for products or services at a specific company, for a specific time horizon, and with certain underlying assumptions. 21-04-2017
Forecasting Approaches Top-down or Break-down approach Bottom-up or Build-up approach companies usually use both approaches to increase their confidence in the forecast
Steps followed in Top-down / Break-down Approach Estimate industry sales or market potential Calculate company sales potential {market potential x company share} Decide company sales forecast (lower than company sales potential because sales potential is maximum estimated sales, without any constraints) 21-04-2017
Steps followed in Bottom-up / Build-up Salespersons estimate sales expected from their customers Area / Branch managers combine sales forecasts received from salespersons Regional / Zonal managers combine sales forecasts received from area / branch managers Sales / marketing head combines sales forecasts received from regional / zonal managers into company sales forecast, which is presented to CEO for discussion and approval 21-04-2017
Sales budget Sales budget is the estimate of expected sales volume in units or revenues from the company’s products and services, and the selling expenses.
Purposes of the Sales Budget Planning Coordination Control 21-04-2017
Requirement of a successful budget Support, interest and involvement of top management Flexible budgeting 21-04-2017
Free template from www.brainybetty.com SALES QUOTA IS…… Sales quotas are sales goals or targets (quantitative objectives) set by a company for its sales units for a time period sales units are regions, branches, territories, salespeople, and intermediaries Generally, company sales budget is broken down to sales quota. 21-04-2017 Free template from www.brainybetty.com
IMPOTANCE OF QUOTAS ACHIEVE ORGANIZATIONAL TARGET PROVIDE PERFORMANCE TARGET PROVIDE STANDARD PROVIDE CONTROL PROVIDE DIRECTION TOOL FOR MOTIVATION 21-04-2017
CHARACTERISTIC OF GOOD SALES QUOTA Fair Challenging Flexible Easy understandable 21-04-2017
Types of Quotas Organizations set many types of sales quotas: sales volume units activity combination