Lextron Corporation * Selling Medical equipment to hospitals * 40% market share in US * Phil Lehman is a successfull salesperson in Lextron Corporation * Sales Territories : defined by metropolitan area * Commissions:based on sales volume
Before Moving (Working in Atlanta) * Phil was selling leader in most product categories * Company products were present in 40% of hospitals in the territorial area * Winning selling contests
After Moving (working in milwaukee area)
Phil result in the new area: * 1st years:6 major accounts * 2nd years:3 major accounts * Doubled Market share * Product in 80% hospitals
Problem:Share-based system vs revenue-based system * Phil is paid less Money in commissions now,despite placing products in 80% oh hospitals * Not winning sales contests like when he did in Atlanta * Mark Green,regional sales manager,praised the excellent work,however phil is wondering why he isnt compensated accordingly
Solution:Hybrid İncentive System
Step 1 :Detailed Market Search
Objectives:
1:To determine metropolitian area value (H-Hotel,PS-Potential sales,1,2..n-Hotel in area)
MAV=H1.PS1+H2.PS2+…+HN.PSN
2:To determine each hospital life value (last year sales-s,expected growth-g,expected economic timeframe-n
HOSPİTAL VALUE:S+(1+G).S+(1+G)^2.S+….+(1+G)^N.S
3.Average hospital value (sales divided by hospitals serviced)
4.Growth of population in the metropolitian areas
5.precited growth of number of hospitals in the area
6.sales growth per hospital
STEP 2 :Territory Formation (Territory Map)
From the market research define territories based on similar market value;either divide or merge metropolitian areas based on MVP
(example:Milwaukee+Chicago could from one area to compete with Atlanta or Atlanta could be divided in two to be comparable to Milwaukee)
Step 3 :Yearly Ponder Calculus