Sales incentives as a strategy execution tool

Abstract

Sales incentives are a crucial medium for companies to encourage their employees to execute strategic objectives. Numerous studies indicate that sales incentives are strongly connected to better performance and productivity in sales campaigns. This thesis argues that companies can also use sales incentives as an effective tool towards better strategy execution if incentives are continuously updated and matched with new strategic initiatives. This paper demonstrates this view via empirical mixed method research done in collaboration with a Finnish financial sector case company. The findings of the research suggest that companies should adjust sales incentives so that strategically core products generate relatively higher incentives (20% to 25% more) to ensure that sales agents are motivated to sell the core product and thus better execute the strategy. Moreover, this paper suggests that companies should favor long-term oriented sales incentive plans that focus not only on the quantifiable but also nonquantifiable sales outcomes. Long-term oriented sales incentive plans may reduce unwanted sales force behavior, increase sales force wellbeing, and help companies gather crucial market and industry related information, which in turn translates to better financial success in the long run.