Starting situation – when sales-based management creates false incentives
The sales department has a significant impact on a company’s profit through the volume and structure of its product range, tied up capital, prices, and conditions. For our client, an internationally operating consumer goods manufacturer, this was a good enough reason to focus its sales management on value creation. However, for a major international corporation with a global presence operating in various markets, consistently focusing local sales on value creation for the group posed a challenge. Besides ensuring the practical integration of the main value creation levers into the management structure, other key roles included the clear allocation of responsibilities at the different levels, and the consistent creation of incentives at the national market level.
Project approach – basing management on added value without looking at the figures
A review of the current management concept helped to identify the reasons for the unsatisfactory sales performance. The company’s Europe-wide management system was then realigned strictly on the basis of added value. Bonus points were defined for each value lever in order to reduce the complexity of the management system, while still guaranteeing a focus on added value. These bonus points replaced selected KPIs in the company reporting, facilitating communications with the sales department. In this way, it was possible to combine a high level of transparency with a value-based incentive structure.
Finding – transparency and clear communication as factors for success
For a multinational corporation, successfully changing the approach to local sales management posed a significant challenge. In this situation, a transparent management system and clear internal communication proved to be the key factors for success. The most important task, however, is to combine the incentive approach with pragmatic and understandable key data.
- Europe-wide sales management realigned to focus on value
- Added value strategy implemented within sales management
- Reporting adapted so as to create a value-based incentive structure