Common Sales Incentive Program Missteps
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Common Sales Incentive Program Missteps
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Transcript of Common Sales Incentive Program Missteps
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Common Sales Incentive Program Missteps
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Click to edit Master title styleSales incentive programs are designed to stimulate sales team motivation and increase sales. They can be a great energizer for sales people. However, there are a few common missteps companies make when they initiate a sales incentive program.
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An Incentive Research Foundation (IRF) study found
that, despite incentive programs having proven
benefits, organizations often fail to realize their full
advantage of them because they “lack the
knowledge or will to create properly constructed
programs that yield desired results” (Clark, R.E.,
Condly S.J. , Stolovitch). By being on the look-out for
these mistakes, you can avoid them from the very
beginning, before they become hindrances to
otherwise successful motivation strategies.
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Mistake #1: Not Diagnosing the Problem Correctly
Before executing an incentive program to address your sales team’s problems, it is crucial to first understand where those problems originate. Successful sales incentives programs involve two key elements in the planning stage: proper diagnosis and specific goal-setting (Deist, S., Emerson, M., Marks, M., 2012).
You can more accurately diagnose your team’s issues by examining internal data or consulting an incentives company. Steve Damerow, CEO of Incentive Solutions, says, “All projects must have either a formal or informal evaluation as to R.O.I. We help you research, plan, implement, and measure in order to justify past and future expenditures.”
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Click to edit Master title styleA well-designed incentive plan will be instantaneous, engaging, easy to understand. Incentive Solutions’ Mobile App add-on, for instance, allows their incentive programs to be accessible anywhere, at any time, using a smart phone. But picture logging in to this incentive program, ready to input a recent sales claim, only to see that administrators have changed which information is to be entered, or how. An unpredictable plan defeats the point of on-the-go ease.
Mistake #2: An Inconsistent Plan
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While incentive plans need consistency, they
also need the flexibility to evolve with the
changing needs of a sales team or business.
The sales goals of two years ago may be too
easily attainable now, or a new product may
take precedent over an old one. Incentive
plans need to be adaptable to new situations.
Plans that were successful in one
environment can fail in new contexts
(Lorimer, S. E., Sinha, P., Zoltners, A.A.,
2006).
Mistake #3: Inflexible plans
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Click to edit Master title styleIncentive companies like Incentive Solutions offer flexible plans with multiple optional module and configurable features. Program administrators have complete control over promotions, with the ability to change or create new goals at will. Steve Damerow explains, “We recognize the fact that incentives have a ramp-up period and need re-launching.”
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Click to edit Master title styleThere are three types of salespeople:
•low performers (about 25%)•core performers (about 55%)•high performers (about 20%)
Mistake #4: Applying the Same Goals and Rewards to Everyone
Motivation is different for each type of salesperson. A Salesforce infographic breaks down this arrangement:
•low performers are motivated by extra training and social pressure •high performers are motivated by multiple challenges and no-cap commission opportunities.
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Salespeoples know their own strengths and
limitations better than anyone else. While the
goal of a sales incentives program is to push a
sales team beyond their normal performance
levels, Prograde advises, “Don’t assume you
know what will motivate your sales force.” Talk
with your sales team to come up with agreeable
individual and overarching goals. They may feel
that your goals are unrealistic, or not challenging
enough. Either way, the team will be more
responsive to incentive goals they helped to
establish.
Mistake #5: Implementing a Plan Without Sales Team Input
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Click to edit Master title styleStudies have shown that sales teams are more motivated by non-cash rewards. People tend to assign higher values to non-cash rewards than the items’ actual retail value, for various reasons:
1. Cash rewards are intrinsically linked to salary. Merchandise, event, and travel are separate, unique rewards that create memories rather than being lumped in with a paycheck.
2. Many have a hard time justifying spending—even when the extra money is hard-earned —on luxuries like travel and merchandise. Presenting these items or opportunities as gifts removes the associated guilt.
3. The visibility of travel and merchandise rewards creates “trophy value.” Trophies can be shown off to peers and become conversation-starters (Lorimer, S. E., Sinha, P., Zoltners, A.A., 2006).
Mistake #6: Offering Only Cash Rewards
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Click to edit Master title styleYear-end rewards can be big pay-offs, but it’s best to keep sales teams energized throughout the year with shorter-term goals, too. Prograde’s article addressed this as well: “sales people, by nature, don’t have the stamina to wait 12 months to achieve their reward. Keep them focused with routine program communication updates over a shorter period of time and they will stay engaged.”
Successful incentive programs allow administrators to begin and end promotions as needed. Whether through setting quarterly or monthly goals, salespeople excel when they always have a reward to look forward to.
Mistake #7: Promotions That Go on Too Long
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Click to edit Master title styleAn incentive program can light a fire under your sales team, but it takes the right approach and preparation. By paying attention to your team’s needs and avoiding the common mistakes found in this piece, you and your sales team can share the benefits of an effective incentive program.
Conclusion
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