How to Build an Effective Sales Incentive Program
What is a sales incentive program?
More than 50% of US companies are using incentive programs for employees, and are estimated to spend more than $100 billion (yes, with a “B”) on them each year. Why so much?
If we think about what an incentive truly is, it’s the promise of a reward for achieving a certain objective. And when incorporated into an engagement or performance program, they encourage employees to produce measurable outcomes for a company through specific actions, all for the pot of gold at the end of the rainbow.
Short-term vs. Long-term Incentives
When most of us think about incentives, we think about short-term, or transactional incentives. Sell five of these products and you’ll get a $100 reward. Sale completed; transaction completed.
These types of incentives certainly have a place in your sales performance program, but they have a limited effect. Once the current promotion is over or the participant has maxed out his or her earnings, the motivation wanes. There may also be a temptation to hold back reporting of sales until the next promotion starts.
In order for an incentive program to have a shelf life of longer than a year or two, ongoing incentives must be incorporated. What types of ongoing incentive options are there?
Ongoing Employee Incentive Programs
Incentives for improvement:
Set a goal for the sales rep to achieve a certain percentage of sales growth over last year.
Why it works: Even if there is no short-term SPIFF running, there is still a performance driver in place.
Incentives for training or certification:
Offer rewards for completing an online training program, or make completion a condition of participation in the next SPIFF.
Why it works: For dealer incentive programs especially, this training has lasting effects, as a sales rep is more likely to talk up a product that he or she is familiar with. If they’re educated about your brand, it’ll likely be at the tip of their tongue the next time they are approached on the sales floor.
Incentives using social engagement and competition:
There’s no such thing as a non-competitive salesperson. Add badging, leaderboards, and the opportunity for some friendly competitive banter (and encouragement) through a social interface.
Why it works: You’ll have your reps checking in to the site each day to see where they stand. Social elements and gamification work to encourage short-term results, while fostering long-term performance by encouraging and rewarding measurable employee behaviors.