Sales Network Models for Multinationals and SMEs

The organization of a commercial network is a critical element for a company's success. Both multinationals and SMEs adopt specific models to optimize their ability to reach customers and meet market demands. This article explores the main organizational models, with examples ranging from large global companies to SMEs, tailoring strategies and incentive programs to different operational contexts.

1. Traditional Hierarchical Structure

A clear chain of command with centralized decision-making.

Multinationals: Coca-Cola manages its global network with a hierarchical structure that facilitates control over standardized products. 

SMEs: Small artisanal businesses, such as local fashion producers, can use this model to maintain direct supervision. This approach is ideal for highly standardized markets and requires strong operational control.

2. Divisional Structure

An organization segmented by product, geographic area, or customer sector.

Multinationals: Apple uses divisions for product lines such as iPhone and Mac, ensuring focus and innovation. SMEs: A fitness equipment manufacturer can divide its team by market (gyms vs. specialty stores). This model enables specialization and adaptation to complex markets but requires greater investment in dedicated resources.

3. Partner-Based Model

Networks of distributors and external affiliates to reduce costs and expand coverage.

Multinationals: Microsoft leverages a global partner network to sell and implement technological solutions. 

SMEs: Organic food companies rely on specialty stores and local distributors to reach new markets. This model is suitable for rapid growth with limited investment, maintaining operational flexibility.

4. Matrix Structure

Combining criteria such as product and geographic area for complex contexts.

Multinationals: Procter & Gamble adopts a matrix to manage its product portfolio across multiple markets. 

SMEs: Software companies can organize sales by industry sectors and geographic areas, ensuring coordination. This structure is ideal for highly customized sectors but is complex to implement.

5. Network Structure

Collaborations with external distributors and logistics partners.

Multinationals: Amazon uses a network of partners to ensure fast deliveries and global coverage. 

SMEs: Small e-commerce businesses can leverage shared warehouses and couriers to expand quickly. This model is perfect for dynamic and rapidly evolving markets.

Incentive Systems for Sales Networks: Models, Curves, and Bonuses

Incentivizing sales networks is a strategic pillar for business success. An effective incentive system motivates salespeople, boosts individual performance, and aligns operational goals with strategic objectives. The choice of model and type of incentives depends on the business context, product complexity, and organizational culture.

Incentive Models

Sales network incentive models are based on the relationship between salesperson performance and rewards. The main types include:

Direct Commission: Percentage on each sale. Simple and immediate but risks focusing solely on volume.

• Example: Real estate sector.

• Advantage: Clarity and transparency.

Cumulative Targets: Incentives are triggered only upon reaching specific periodic targets.

• Application: Pharmaceutical sector, where rewards are tied to achieved prescriptions (Kotler et al., 2018).

Progressive Scale: Increasing percentages for exceeding specific thresholds.

• Example: Car sales, where exceeding 20 units earns a higher commission (Brown & Peterson, 1994).

Quality-Based Incentives: Rewards for parameters such as customer satisfaction (Reichheld, 2003).

• Example: Using Net Promoter Score in luxury sectors.

Incentive Curves

The design of incentive curves influences salesperson behavior:

Linear: Each unit sold generates proportional rewards. Simple but less motivating for exceeding targets. 

Exponential: Increasing incentives for surpassing thresholds. Highly motivating for ambitious goals but penalizing for lower performers. 

Non-Linear: Combines fixed and variable bonuses, used by companies like IBM to stimulate loyalty and high performance. 

Bell-Shaped: Maximum rewards for optimal performance levels, reduced for excesses or shortfalls.

Types of Bonuses

Bonuses can be monetary, material, or long-term:

Monetary: Direct cash rewards.

• Example: Salesforce offers cash prizes to salespeople who exceed 120% of their targets (Harvard Business Review, 2020).

Non-Monetary: Gadgets, trips, or experiential rewards.

• Example: American Express rewards top agents with exclusive trips (McCarthy, 2017).

Long-Term: Such as stock options, used by companies like Google to motivate and retain talent long-term.

Practical Considerations

An effective incentive system combines quantitative and qualitative goals with diversified tools. For instance, Unilever adopts progressive commissions to promote new product penetration, while HSBC links bonuses to customer loyalty. Incentive curves should be designed to reward excellence without excessively penalizing those who fall short of maximum targets (Holtrop et al., 2017).

Adopting mixed models and continuous monitoring allows optimization of incentives, adapting them to market dynamics and team needs.

Conclusion: What Is the Ideal Model?

There is no one-size-fits-all solution: the choice depends on the product's nature, the target market, and business objectives. While multinationals can afford complex structures, SMEs benefit from scalable models such as partner networks or geographic divisions.