Design and implement your best sales incentive ever

Author: 
TIM HOULIHAN

Maybe we’ve met. Was it was at a trade show or a conference? You said you’ve built a lot of sales incentive programs as a manager, and, not to toot your own horn, but they have worked pretty darn well.

So, why read this article? With 20-plus years and more than 1,500 sales incentive programs under my belt, I’ve got some experience to share. Like all of us, sales managers get into ruts and here are some ideas to get you out of a rut and off to running your best sales incentive program — ever.

1. Change things up more often. Variety is the spice of life.

2. Run more pilots. Your marketing compatriots spend big money pre-testing messages; the same should apply to sales.

3. Measure the results. Data can reveal all sorts of insights if you let it. Dive in.

7 steps to success

1. Start with a measurable objective. What do you want to achieve: Boost your quarterly numbers? Launch your new product? Stop reps from coasting on their big accounts? Get clear on the one thing you’re trying to accomplish before anything else.

2. Create a structure and rules. Identify the optimal structure by matching the structure to the objective. An effective structure will drive your program goal (singular!). Tip: Run a pre-mortem on how it could be gamed and what could go wrong, because something will.

3. Maximize eligible winners. The more reps, supervisors, managers, etc. you include as eligible, the better. You need more than just the lead dogs to pull the sled. Too often, contests omit front-line sales managers — and they make a big difference. Or if your program requires reaching quota to be eligible, you’re leaving half of your workforce in the cold.

4. Set goals for yourself. Don’t forget that you need a goal for what you want to accomplish, which might be different from the program’s objective. Your self-selected goal will be a more powerful motivator. Seriously, try it.

5. Determine a budget. Ensure that risk and effort match the size of the reward. Lower risk earns lower payouts, higher risks and effort earn higher payouts. As a guide, use between 2 and 10 percent of period income as a starting point for payouts.

6. Communicate, execute, measure. For a program to work, reps need to understand how they’re doing, so communicate their progress frequently. Warning: do not stack rank them publicly. Stack ranking only motivates a few top reps and it frustrates the rest. Engage the middle performers and skip the stack ranking. Tip: A catchy program name will rally the troops — make it easy to remember and connect it with the objective.

7. Post-mortem. How did you really do? How does the final program data compare to the pilot? A formal analysis benefits you in two ways: 1. You might learn something from the data beyond the intuitive conclusions you’ve drawn. 2. You will remember what happened — good or bad. Next time could be more successful.

Try something new

Throughout your career, you’ve learned new things. Unfortunately, it’s easy at any point in time to think there isn’t anything more to learn.

In 1450, the printing press was expected to render the brain useless by making memorization obsolete — it didn’t. In 1600, most people were certain the Earth was the center of the universe — it isn’t. In 1700, most sailors believed drinking malt whisky cured scurvy — it doesn’t. In 1985, my sales manager told me that mobile phones (then hard-wired into cars) were only good for one thing: calling your customer to say you’re going to be late.

Try something new and you might experience a new level of success.

Tim Houlihan is chief behaviorial strategist at Behavior Alchemy, which blends the best of experience, research and the challenges of the real world to make investments in behavior more effective. Learn more at BehaviorAlchemy.com.

Online Bonus: Answers to some frequently asked questions about these seven steps to successful sales incentive design, click here.