MAR 4418 UCF Chapter 9

Sales Quota

A performance goal assigned to a marketing unit (salesperson, branch, or region) for a specific period of time.

Management by the Numbers

The strategy where if every individual reaching their assigned quota "number," the company fulfills its overall operational plan.

Sales Volume Quota

The most widely used quota type; based on dollar sales or units sold (e.g., $80,000 in sales per month).

Activity Quota

Quotas based on specific behaviors like daily calls, new customers visited, or product demonstrations made.

Gross Margin (Profit) Quota

Quotas based on the profit generated rather than just top-line sales volume; prevents reps from over-selling low-profit items.

Expense Quota

A quota that works in reverse; the salesperson attains it by keeping travel and entertainment costs under a specified amount.

Combination Quota

A plan that combines multiple types (e.g., volume, activities, and profit) into a single performance average.

Calculating Quota Attainment

Actual Performance divided by Quota; for combination plans, the percentages for each element are averaged.

Human Factors in Quota Setting

Adjusting quotas downward for rookies (to build confidence) or for older reps nearing retirement.

Psychological Factors in Quota Setting

Setting goals slightly above potential to prevent "relaxing" after a goal is met, while ensuring they remain realistic.

"Chase Your Tail" Quotas

An administrative weakness where the more a rep sells, the more their quota is raised, often destroying morale and causing top producers to leave.

Sales Potential

The estimated total industry sales that a company could ideally realize in a territory; often the foundation for setting quotas.

Sales Forecast

What a company realistically expects to achieve given current circumstances; usually lower than the full sales potential.

Expense Account Padding

The practice of reporting bogus or inflated expenses; estimated to cause typical companies to lose 5% of annual revenue to fraud.

Per Diem

A specific daily allowance provided to salespeople for lodging and meals while traveling (e.g., $238 in Miami).

IRS 50% Rule

A tax regulation where only 50% of legitimate business entertainment and meal expenses are deductible for a firm.

IRS Gift Limit

Business gifts are limited to a tax-deductibility of $25 per year for each recipient.

Unlimited-Payment Plan

The most flexible expense plan where the company reimburses all legitimate business and travel costs with no preset limit.

Limited-Payment Plan

A plan that sets a "ceiling" or flat amount for specific expense categories (e.g., $50 for dinner).

Salespeople Pay Own Expenses

Common in straight commission roles; provides freedom for the rep but gives the company very little control over territory development.

Fixed-Allowance Plan

A plan that provides a set amount of money per period (e.g., $1,000 a month) for all expenses regardless of actual spend.

Runzheimer Plan

A popular "geographical" allowance plan that accounts for the fact that it is more expensive to operate a car in some cities (like NYC) than others.

Fleet of Cars

A company-owned or leased group of vehicles provided to salespeople; usually the most economical option for large sales forces.

Hybrid Selling

The use of digital tools like Zoom or Teams to meet clients, which is currently reducing the need for constant physical travel and expenses.

Attainment Equation for Expenses

(2 - (Actual Expense / Quota)) x 100; used because spending less than the quota is considered "exceeding" the goal.