A sales incentive program is a plan or strategy that motivates salespeople to surpass status-quo performance metrics. A sales incentive program may use non-cash incentive rewards, cash-based sales performance incentive funds (SPIFFs), or both. The defining aspect of a sales incentive program is being a supplemental part of an overall sales compensation plan or sales strategy.
Why are sales incentive programs important?
A study conducted by the Incentive Research Foundation revealed that 90% of top performing companies use sales incentives. The companies in this study were vetted extensively for high revenues, notable stock growth, and excellent customer and employee ratings.
Successful businesses know that a high-performing sales team is vital to the company’s success. Sales incentive programs can potentially increase sales by 44% and motivate employees by recognizing and valuing their contributions.
What are different types of sales incentive programs?
Sales rewards and incentive programs come in various forms, each designed to motivate and reward sales teams in unique ways. Below, we explore different types of sales incentive programs that can be tailored to meet the diverse needs of your sales force and organizational goals.
These programs are customized to the specific roles within the sales team, acknowledging that different positions contribute to the sales process in distinct ways. For example, a program for sales representatives might focus on closing deals, while one for account managers might reward client retention and upselling.
- Split Sales
Split incentive programs encourage teamwork by rewarding groups of salespeople who collaborate on the same account or project. This type of incentive is beneficial for fostering a collaborative environment and ensuring that all contributors to a sale are recognized.
With the rise of omnichannel retailing, these programs reward salespeople for effectively integrating and selling across multiple channels, such as in-store, online, and over the phone. This approach encourages a seamless customer experience across all touchpoints.
Focused on the early stages of the sales process, these incentives reward activities that contribute to the sales pipeline, such as lead generation and qualification. This type of program emphasizes the importance of building a healthy pipeline for future sales success.
Leveraging sales data and analytics, these programs reward salespeople based on data-driven performance metrics. This can include incentives for salespeople who consistently meet or exceed sales forecasts, conversion rates, or other key performance indicators (KPIs).
These programs are designed around the geographical or sector-based territories assigned to salespeople. Rewards are based on performance within their specific territory, encouraging salespeople to maximize their impact within their designated market area.
Monetary vs. Non-Monetary
When it comes to sales incentive programs, rewards can be broadly categorized into two types: monetary and non-monetary. Monetary incentives include direct financial rewards such as bonuses, commissions, and SPIFFs (Sales Performance Incentive Fund). These incentives are straightforward and highly valued by salespeople for their tangible benefits.
Non-monetary incentives, on the other hand, may include rewards such as group incentive travel, recognition at company events, professional development opportunities, and merchandise. These types of incentives tap into intrinsic motivations and can be highly effective in building a positive company culture and fostering long-term loyalty. Non-monetary rewards often complement monetary incentives by providing recognition and personal growth opportunities that money alone cannot buy.
Both monetary and non-monetary sales incentives examples play crucial roles in motivating sales teams. The best sales incentives programs often incorporate a mix of both, tailored to the preferences and motivations of the sales force, to drive performance and achieve sales goals.
What are examples of sales rewards?
The key to identifying a “good” sales reward lies in understanding your sales team. No two sales people are alike. Varying personalities, interests, and motivations will shape how effective your sales incentive rewards can be. Along with this factor, effective sales incentives are in constant need of a “refresh” to keep your sales people on their toes. The good news: sales incentive program providers have experience with a variety of reward options and can help determine the best variety of options to fit your specific audience.
Some examples of effective sales rewards include:
How do you create a sales incentive plan?
Whether a company chooses to designate reward and recognition responsibilities to a sales manager, or enlist the help of a sales incentive program provider, implementing a successful sales incentive plan requires key steps to make sure your efforts have a lasting effect. These steps include:
- Specifying the goals of your program. The more specific, the better!
- Establishing your budget.
- Studying your audience to determine what motivates them the most.
- Choosing your reward options.
- Identifying the key performance indicators (KPI’s) that will help monitor program success.
- Structuring specific sales promotions.
- Engaging your sales team and educating them on the rules.
- Tracking sales reports and analyzing the effectiveness of your efforts.
- Enhancing your current promotions to improve and grow your program.
Looking for more information on sales incentives?
With over 30 years in the incentive industry, Extu has a variety of resources on running successful incentive programs. Check out our sales incentive FAQs, or read our white paper study on the benchmarks of incentive programs.
And, as always, we offer free consultations and product demos with our sales incentive program experts. Happy sales incentive program hunting!