What is a Sales Quota?

A sales quota is something used in many environments where goods or services are sold. It is essentially a target amount of sales that 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, as are individual salespeople. One means of assessing a salesperson's performance is by looking at his or her ability to hit the target on a regular basis or to exceed it.

When people talk of the high-pressure atmosphere of employment in sales, it is often due to this sales quota. The salesperson may know or feel that a job is constantly on the line if he or she doesn’t sell a certain amount of product or a specific dollar amount each month. Some also work on commission only, which means they don’t get paid if they don’t sell, while others 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 salespeople, 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 sales staff would lose their jobs.

This is sometimes unfortunate, since not every quota is set realistically or judiciously. For example, many retail stores set quotas for each salesperson, but jobs in retail might require more than being on the floor assisting customers. The retail worker who gets in trouble with a manager for failing to meet a quota after having spent a week stocking new clothing can really hardly be blamed. Target sales amounts should be set at what is realistic for the salesperson, and requests to do work unrelated to sales ought to correspond to an adjustment in the quota.

In similar fashion, a sales quota may not be realistic if it ignores economic trends. Downtrends in the economy that are significant may change the way the normal buyer behaves and might even result in far less foot traffic. The car salesman may not meet a quota of selling X amount of cars per month if no one visits the dealership, and this may not be his fault. Realistic nature of the target is important and, while inspiring people to meet goals, it may be ineffective when people’s target sales are set too high.

On the other side of the coin, a quota can mean very little if there are no rewards for meeting it or consequences when it is never met. When managers or owners set sales targets but fail to follow up with employees, they’ve given the employee nothing to aim for in daily or monthly work. Even if quotas aren’t rigidly enforced as a condition upon which further employment takes place, they do need to be talked about, and employees can benefit from review of their ability to meet them. In sales, there is always room for improvement and a review of sales targets may greatly help employee development.