Sales Forecasting, Sales Quotas and Sales Territories
Forecasting estimates future sales; quotas translate forecasts into targets; territories allocate markets and workload. The exam tests method selection, quota design and territory criteria, often through simple calculations.
Core rules
- Qualitative methods: jury of executive opinion, sales force composite, buyer intention survey and Delphi.
- Quantitative methods: naive, moving average, weighted moving average, trend projection and regression; choose by data availability and stability.
- Quotas: volume, value, profit, activity (calls, new accounts) and combination. They should be attainable, specific and tied to territory potential.
- Territory design: adequate potential, manageable workload, compact and contiguous, natural boundaries and cost-effective routing; adjust for market changes.
- A forecast is an estimate; a quota is a target; a territory is an assignment. Keep them distinct.
Worked example
A territory sold 100, 120 and 140 units in the last three months. A three-month moving average forecast for next month = (100 + 120 + 140) ÷ 3 = 120 units. If the firm sets a 130-unit quota, it is stretching the trend; if it sets 110, it is conservative. The reasoning must state which method is used and why.
Traps
Do not use equal geographic area as the main territory criterion; do not confuse sales forecast with sales quota; do not set quotas without considering potential and workload. Avoid forecasting from a single month.