DEFINITION of Activity Quota
Activity quota is a minimum level of sales-oriented actions that must be met by a salesperson during a given time period. An activity quota may require a salesperson to make a certain number of outbound calls, send a certain number of emails to potential clients or submit a certain number of statements of work. The quota is not typically based directly on a revenue figure requirement, but is related to the actions that lead to a sale being made.
BREAKING DOWN Activity Quota
Activity quotas are often used in situations in which salespeople have to contact potential clients. The quota is designed to ensure that the salesperson is making a minimum level of effort to attract new clients, and employers may reward employees who surpass the activity quota as an incentive to put in more effort.
When a product or service "can't sell itself," a salesperson must put in great effort to do so. Sales staff in an Apple store or a Tesla dealership have the luxury of eager customers looking to buy, but for most other goods and services that are not so differentiated or lack strong brand equity, salespersons must work hard to promote them. Computer software services come to mind, as do several financial services such as financial planning, insurance and retail banking. Unless well-connected to high net worth individuals (HNWI), a financial planner (or advisor) without a pre-existing "book of business" must contact hundreds, if not thousands, of prospects to generate sufficient revenues to keep the sales job. The same holds true for an insurance salesperson. Since it is generally not in a person's nature to make so many cold calls and write countless cold emails only to get rejected, the salesperson must be held to account by his or her employer. An activity quota is the principal means by which an employer measures this effort.
Activity Quotas in the Age of Social Media
The types of activities subject to quotas are changing in the age of social media. Cold calling is still considered a way of reaching prospects, but increasingly the method is being supplanted by contact techniques offered by social media. Potential customers clicking on links or "liking" or "tweeting" about a product or service give direct signals to salespersons so they can better focus their sales efforts. Thus, instead of an activity quota of 250 phone calls in a week for a financial advisor in his probation period, he may be ordered to contact 50 people who commented on "retirement planning" in a social media feed.