18 MAY, 2017

The Difference Between SPIF and Loyalty Promotions

When designing promotions for channel incentives programs, figuring out exactly how to target participants is sometimes difficult. Do you reward short-term or long-term achievements? SPIF and loyalty promotions are both great formats to explore when designing your program.

Traditionally, SPIF promotions are for more short-term goals, and loyalty promotions are for long term goals. However, they are not mutually exclusive.

SPIF

A SPIF  is when a sales person is rewarded immediately for a sale. It is typically used in a short-term promotion such as (but not limited to) responding to a competitive threat, launching a new product, or if you need to reduce inventory. It allows participants to focus on a specific activity instead of overall performance. A SPIF program is also a great way to engage sales rep who are new or may never have a chance to be a top performer in a long-term promotion.

For example, Sales Rep Sally could be behind on her overall sales goal, but hit it out of the park selling a single product during a SPIF promotion.

Another example is that Sales Person Pete works in a geographic location that has a lower demand for the product than other areas. Since Pete has a smaller market, he has less overall opportunity to reach long-term goals. SPIF promotions allow Pete to get at least some kind of reward, since he might not make a long-term goal through no fault of his own.

Loyalty

A loyalty promotion is designed to reward long-term behavior like overall sales growth. If someone improves their sales numbers from month-to month, or year-to-year, a loyalty promotion would track these changes and reward appropriately.

With loyalty promotions, long-term visibility is key. This makes profiles, badges, and leaderboards particularly effective as you – the brand – are trying to sustain engagement over a long period of time. To do this, you want to stay top of mind with your indirect sales reps and create a competitive advantage at the point of sale. The goal is not just to lead the customer to brand loyalty, but also to lead them to advocate on behalf of your brand.

Quite often with loyalty programs, you will see tiers that depend on market size or sales history. Participants can earn rewards at different or accelerated levels.

Finally, communications between the brand and the rep tend to be much more personalized, as the information is more about the rep’s activity and performance.

When to use SPIF or Loyalty Promotions

Now that we’ve gone over the difference between SPIF and loyalty promotions, let’s dig into when you should use each.

Goals

First, you will want to ask yourself the question, “What are my goals?” When setting up the program, you know better than anyone else what you wish to accomplish. Is it simply an increase in product sold? Is your need immediate or are you planning on building overall brand recognition or loyalty?

Once you have the answers, you can begin to form your program, based on the categories of both types of programs.

Program Management

Whoever manages your promotions should be aware of the types of work that accompany both options.

SPIF promotions require a lot of attention for a short amount of time. Whereas loyalty promotions require attention only when you set them up, and then occasional analysis and outreach throughout its life. Managing multiple SPIF promotions at once can be confusing for your team if they’re not organized appropriately.

Additionally, if you run too many SPIF promotions, your users might get confused about which ones apply to them. This is especially true if the promotions unintentionally conflict with each other. Keep the SPIF promotions organized, and focused on which ones fit your company’s needs the most.

Loyalty promotions, on the other hand, take patience over a long period of time. Your program management should understand that it may take 6-18 months before any behavior is changed. That being said, your admins should still make efforts to communicate with your users to keep the loyalty promotions at top of mind.

Which One is Better?

SPIF and loyalty promotions are not mutually exclusive and you can have both types going at the same time.

You can have loyalty promotions that reward users as they go along and you can certainly have multiple promotions of each running simultaneously.

Unfortunately, there is no single answer as to which option is better. The best thing to do is map out your company’s goals, create promotions based on the immediate and long term plans, and track the progress of any contest or promotion you run. If you need help, feel free to contact your client success manager for assistance with building effective promotions!


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