Sales managers are racing to hit their 2020 goals, which are likely higher than last year’s. It’s no secret that by setting effective sales incentives and pay structures you can dramatically increase your team’s success rate. Here are a few tips to help you along the way:
Recognize hard work with a meaningful gift.
Celebrating milestones with a meaningful gift shows that you care about your employees, not just the deals they close.
Choose a gift that communicates not just gratitude, but meaning. A gift that does some good in the world is much more impactful than one that doesn’t. There are plenty of premium products that make great corporate gifts which also contribute something positive to communities around us.
By being rewarded for their efforts in a way that connects them with a grander purpose, your reps will be more compelled to reach higher.
Use a tiered commission structure.
A tiered commission structure pays a fixed price until a rep exceeds a certain amount in sales. As performance ramps up, so does the commission rate reps can earn. Tiered commission can specifically reward reps who overperform and, at the same time, motivate the rest of your sales team to boost their performance.
Offer quarterly bonuses.
Giving bonuses based on sales achievements is the standard for most companies. Usually, these bonuses are awarded on an annual basis mainly motivating top and middle performers. When the bonus is annual, lower-performing sales reps tend to lose motivation. For bonuses to be effective in motivating all members of your sales force, consider offering them quarterly.
Recognize that each sales rep is an individual.
Many companies adopt a universal approach when trying to motivate their sales team. But—to take a page from the Harvard Business Review’s book—it may be better to treat your sales force like a portfolio of investments, each “requiring different levels and kinds of attention.”
According to HBR, research shows that most sales reps fit into three performance levels: stars, core and laggards. Each team member is motivated by different incentives, the magazine says:
Stars seem to knock down any target that stands in their way, but may stop working if a ceiling is imposed. Laggards need more guidance and prodding to make their numbers (carrots as well as sticks, in many cases). Core performers fall somewhere in the middle; they get the least attention, even though they’re the group most likely to move the needle—if they’re given the proper incentives.
The takeaway here? A one-size-fits-all approach may not be the best way to incentivize a diverse team that’s composed of individuals of varying levels of ability.
Treat your sales team.
Sometimes, though, it’s effective to treat the entire crew to a reward.
Engaging your entire sales force encourages them to think less as competitors and more as a cohesive whole. Consider setting aside a percentage of new revenue each quarter towards something sweet for the entire team (e.g. a case of wine or whiskey, tickets to a game, etc.).
This is a particularly good strategy in situations where sales reps are interdependent. For example, in project-based jobs, where team members must reach specific milestones before the rest of the team can advance, a group-based incentive may get individuals to perform at a higher level. (That way, they aren’t perceived as letting down the team.)
If you don’t believe me, here are the numbers to back it up: A study by the International Society for Performance Improvement and The Incentive Research Foundation found that incentivized teams increased their performance by 45 percent, while incentivized individuals increased performance by just 27 percent — 18 percent lower.
Leverage the power of SPIFs.
Sales performance incentive funds (SPIFs) are an incentive that rewards a salesperson immediately for making a sale. Commonly used in limited promotions, like reducing inventory or a new product launch, SPIFs allow reps to focus on a specific activity rather than their overall performance. It’s an effective way to motivate reps who’ve never been top performers in longer promotions.
SPIFs are a great way to push for results especially during slower times of the year.
The secret is knowing how to use SPIFs effectively, and which incentives to use to boost specific sales behaviors. For example, a sales rep might be behind on their overall sales goals, but could have success selling a single product during a SPIF promotion.
One of the advantages of including SPIFs in your incentives program is that they can be used to reach specific goals—no matter the size. If productivity is becoming stagnant in your sales department, a SPIF might be just what you need to fire up reps, and use their competitive nature to drive results.
Recognition isn’t one size fits all.
Rewards and incentives are inherently personal, and the most effective sales leaders understand that every member of their team needs to be acknowledged for their individual contributions.
By following the steps above, you can make sure you’re inspiring performance from your team that will convert leads, grow your accounts, and ultimately drive more revenue for your bottom line.
Leeatt Rothschild has over 15 years of experience at the intersection of business, sustainability, and brand purpose. In 2016 she founded Packed with Purpose, a corporate gifting company that embeds social impact into the everyday act of gift-giving, from empowering underserved women with job skills to supporting sustainability efforts.