Is A Global Or Local Sales Incentive Scheme Better?

Any business that has a sales force needs the right sales motivation scheme. A good sales incentive plan takes into account all the details of the business, the sales force, the customers and market forces. The right scheme keeps employees happy, motivated and loyal, which ultimately boosts sales.

Businesses Are Becoming More Global

Selling goods globally is easier than ever before thanks to fast and reasonably priced product shipping, tax and trade treaties between countries, and e-commerce. As a result, more businesses are looking to expand beyond the borders of their own country.

Selling in different geographic markets raises some challenges for businesses; business culture is often similar between developed countries, but it’s by no means identical. 

The Challenges

For large businesses with customers or offices in more than one country, there are some challenges associated with designing a sales incentive scheme. These might include:

  • Working with clients in different countries
  • Different laws, business culture and market forces in different countries
  • A sales force in one country selling to clients in another
  • B2B selling where the products or services are purchased for use in several locations
  • A sales force split between different countries, each selling to their own local market

The question for businesses with a global sales force is whether to use the same scheme worldwide, or to design a different sales incentive scheme for each location. 

Pros And Cons Of Global Schemes

For some businesses, a global scheme is the most straightforward choice. This is particularly true where the sales force in different locales is selling the same product for roughly the same price. A global scheme works best in situations where the amount of effort required to sell the product or service is roughly equivalent across locations.

There’s no doubt that a global scheme is much easier from an operational point of view. It’s easier to administer one global scheme than it is to administer several different local schemes. A global scheme simplifies management and monitoring of the sales force and makes it easier to compare performances between teams or individuals.

On the other hand, a global sales incentive scheme doesn’t take into account the differences between locales. Different areas might have different business laws, for example. Business culture can differ widely between areas, too. In one area, aggressive high-volume selling might be the mark of success, while in another it might be the building of customer relationships.

A global scheme can leave the sales force in some areas struggling with an incentive scheme that isn’t well suited to their territory and market. These problems have a knock on effect on motivation and job satisfaction. 

Pros And Cons Of Local Schemes

A local scheme can be tailored to fit local business culture and the local market.  A local incentive scheme can take into account a wide variety of factors to ultimately make it a good fit for the local market.

The sales force might feel that a local scheme is a fairer choice for them, as it takes into account their unique challenges, opportunities, wage expectations and living expenses.

Using local schemes can help smooth out differences between markets in different countries and ultimately help the business function effectively across borders.

However, implementing a local sales scheme can quickly become complicated. A business attempting to do so will need to be very clear on how each local scheme is to be administered, and who is ultimately responsible for the scheme in each area. Local schemes can also make it difficult to disseminate information, compare performances, or roll out changes to the scheme.

Factors To Take Into Account When Deciding To Go Global Or Local

There are several factors a business needs to take into account when deciding between a global or local sales incentive scheme:

  • Do product prices differ between locations? 
  • Is the product itself the same between countries, or does it differ?
  • Are sales roles and responsibilities the same between different countries? Selling methods and roles can vary widely between cultures. 
  • How does the effort needed to sell compare? The effort needed to sell the same product can differ widely depending on the state of the market. 
  • Is the market mature or new? Selling in a mature market is very different to selling in a new market. 
  • Is the business’s brand reputation and visibility similar in each location?
  • What are the market culture and customer culture like? The way business is done, the correct way to approach clients, and the most acceptable way to sell can all be quite different in different markets.
  • What are the business and tax laws in each location?

Tips For Implementing A Sales Incentive Scheme Across Countries

No matter whether a business chooses a global or a local sales incentive scheme, following these tips will make it easier to implement a sales scheme across countries:

  • Keep in mind the importance of serving customers and making it easy for the sales force to do their job; these considerations should always come above what benefits the managers.
  • Decide early on who will be responsible for what. Whether that’s administering the scheme, paying commission, or flagging up training needs, make sure everyone involved knows who is responsible.
  • Focus on communication. Good communication between sales teams and managers worldwide will make things run much more smoothly.
  • Make it easy for teams to collaborate when they need to. Use chat apps, file sharing and voice and video calls to facilitate collaboration.
  • Make sure the sales force in each area has access to the most appropriate training and support

There is no black or white answer to the issue of whether to go global or stay local with a sales incentive scheme. Both have their pros and cons, and both can work depending on the individual business. For many businesses a hybrid solution is a good option. A hybrid solution means using a global framework, but with enough flexibility to adapt to different locations. 

The key to success is to consider all the issues in depth before choosing a solution, and to have a strong, clear plan that makes sure everyone is on the same page, no matter where they’re located.

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