Monthly Archives: November 2016

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Compete Through Service Symposium 2016: Recap in Pictures

Thank you to everyone who attend this year’s CTS Symposium! Save the date for next year’s symposium: October 25 – October 27, 2017. We hope to see you next year!

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Motivating Sales Reps for Innovation Selling in Different Cultures

The commercialization of innovations is the lifeblood for most organizations. However, bringing new products successfully to market can be a complex and difficult challenge, especially if your company operates in a business-to-business (B2B) environment. The sales force is often the dominant sales channel, and it can be a potential bottleneck in the route to market of innovations. That is why it is especially important for B2B firms to direct and guide their sales forces for successful innovation selling.

This task can prove quite difficult, especially since many sales reps have a low initial motivation for innovation selling. This is mainly due to three major reasons:

  • First, new products are often complex and difficult to understand. Therefore, salespeople need to invest a considerable amount of time in order to fully grasp the new products and their additional benefit for the customer.
  • Second, sales reps are often uncertain about the functionality and reliability of new products: Will the new features and technologies work out as promised? In fact, salespeople represent the “first line of customers” for new products, often equipped with profound skepticism towards novel solutions.
  • Third, many salespeople fear jeopardizing good client relationships with new products. They do not want to be held responsible for the latest gadget’s “teething problems” or even serious functional flaws and put their client base at risk.

In our recent article “Motivating Sales Reps for Innovation Selling in Different Cultures” in the Journal of Marketing, we report results on how firms can enhance reps’ innovation commercialization in a broad international context. Specifically, to examine this issue, we collected data from 406 sales reps from an international B2B supplier. These salespeople represent 38 countries on four continents. Consequently, this investigation delivers one of the most far-reaching international studies in sales research.

The study’s results demonstrate that firms should employ specific steering instruments in order to motivate their sales reps for innovation selling. Most importantly however, we find that these sales force steering instruments should closely correspond with reps’ cultural imprint in terms of Hofstede’s four dimensions: power distance, individualism, uncertainty avoidance, and long-term orientation (you may want to take a glimpse at https://geert-hofstede.com/ for more detailed information on Hofstede’s research on cultures).

For instance, we find that the total effect on financial innovation performance surges by more than 350% when firms apply variable compensation for innovation-sales results in highly individualistic (vs. less individualistic) cultures. Moreover, we demonstrate that innovation performance may increases by more than 300% when supervisor appreciation for innovation-sales results is applied in cultures with high power distance (vs. low power distance). Strikingly, we find that the average variation of all steering instruments’ effects across high versus low values for each cultural dimension is greater than 100%. These large percentage numbers illustrate the huge leverage of intercultural sales force steering regarding innovation commercialization.

In the following table we display an overview of our main findings. You might want to challenge your own company’s steering approach: Do your steering instruments actually match with the cultural environment they are applied in?

cultural_environmnet_steering_instrumentsTo enhance your firms’ innovation commercialization through intercultural sales force steering, we recommend three specific actions. Implementing these recommendations may help your company to exploit these large potentials:

  1. Adapt your sales force steering approaches to cultural environments

Many companies around the globe today harmonize their sales force steering in the course of globalization as, for example, when implementing one-size-fits-all approaches derived from corporate strategy. However, this study’s results lead us to warn you against overly meshing sales force steering across countries. Instead, we recommend looking carefully at the markets and cultures you operate in and focus on the most effective steering instruments per cultural context. In doing so, you will be able to most efficiently and effectively motivate your sales reps for innovation selling and see a strong performance. For instance, think about flexible steering approaches and heterogeneous incentive plans that have globally standardized elements but also allow for adaptation to cultural peculiarities.

  1. Develop a more comprehensive approach to sales force steering

Does the following sound familiar to you? Your firm has many autonomous units that are involved in sales force steering challenges. For instance, there is the compensation division that takes care of financial incentive plans, while the benefits division is responsible for non-monetary incentives. Then, there is global HR that schedules on-the-job trainings and finally the sales supervisors, who make use of on-the-job instruments to motivate their salespeople. However, in contrast to this fragmented common practice, we strongly recommend orchestrating these different sales force steering approaches to systematically align and make use of the entire range of steering instruments. We briefly outline in the figure below how such an integrated intercultural sales force steering approach could look like.

sales_force_steering_mix

  1. Segment your sales force according to their cultural imprint to customize your sales force steering approach

Finally, we recommend segmenting sales reps according to their cultural imprint in order to specifically tailor sales force steering instruments to enhance innovation commercialization. Specifically, you might classify the sales force in terms of power distance, individualism, uncertainty avoidance, and long-term orientation. To motivate innovation selling by sales reps from cultures with high power distance (e.g., Brazil, China, India), we recommend to focus on steering measures that involve close interaction with the direct supervisor, such as supervisor appreciation for innovation-sales results. In contrast, for sales reps from individualistic cultures (e.g., Netherlands, United Kingdom, United States), we recommend a focus on steering measures that reward or foster individual attainments, such as education for innovation selling or variable compensation for innovation-sales results. For sales reps from cultures with high long-term orientation (e.g., Slovakia, South Korea, Taiwan) as well as for sales reps from uncertainty-avoidant cultures (e.g., Belgium, Portugal, Romania), we advise focusing on supervisor appreciation for innovation-sales results.

For more detailed information and in-depth discussion of our study please refer to the original article published in the Journal of Marketing: http://dx.doi.org/10.1509/jm.14.0398

Sebastian Hohenberg and Christian Homburg (2016) Motivating Sales Reps for Innovation Selling in Different Cultures. Journal of Marketing: March 2016, Vol. 80, No. 2, pp. 101-120.

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picture_chomburgChristian Homburg is Director of the Institute for Market-Oriented Management (IMU) at the University of Mannheim (Germany). His special subjects are sales management, customer relationship management, and market-oriented management. Dr. Homburg has published numerous books and articles at the national as well as the international level. Today, he is member of the editorial boards of 6 scientific journals in the United States and Germany. Furthermore, since April 2011, he operates as the first German area editor for the Journal of Marketing. Prior to his academic career, Dr. Homburg was director of marketing, controlling and strategic planning in an industrial company that operates globally. In addition to his academic position, he is chairman of the scientific advisory committee of Homburg & Partner, an international management consultancy.

picture_shohenbergSebastian Hohenberg is Assistant Professor at the Marketing Department of the University of Mannheim (Germany). He also works as a freelance consultant at Homburg & Partner, an international consultancy agency. During his research and consultancy projects, Dr. Hohenberg focuses on topics in the areas of sales management and innovation management.