Incentive measures in a solution-oriented sales organization

Abstract

The case company, a large multinational vendor in the ICT industry, is facing increasing pressure from its customers and competitors. Old merits as being a reliable product provider are not enough in the current business environment. To succeed the target company must become a true partner. It needs to engage with the customers and develop solutions to their business challenges. New incentive measures must be developed and aligned with the needs of a solution-oriented sales organization. The target company has recognized the above needs and defined the objectives of the thesis as follows: "To gain extended understanding regarding incentive measures in a solution-oriented organization and provide managerial recommendations for the target company."

The thesis was carried out in two parts. First, a critical literature review was conducted. Second, a case study was done by interviewing sales personnel the target company as well as interviewing three external organizations and three academic experts. The findings from the thesis include a framework for designing incentive measures and managerial recommendations with a focus on issues relevant for the target company at its current transformation phase to become a solution-oriented company. The key attributes of an incentive system in a solution-oriented sales organization are: Focus on the customer, and focus on the long-term performance and long-term customer relationships.

The recommendations provided to the case company are derived from the key attributes. By introducing account-based measurement in all measures the existing silo-thinking mode of operation can be transformed towards a mode of operation that enables focus on the customer. Transforming the focus of the measures from a financial to a non-financial viewpoint also achieves a customer-oriented mode of operation. The case company needs to introduce new incentive measures that are focused on customers and long-term performance, such as opportunity management. Finally, the case company needs to execute with a group of customers a set of pilot projects that will explore the use of customer perceived value measures as part of an incentive measure structure.