Sales Incentives Programs: How to Motivate & Mobilize in 2018 (with Examples)Jennette Evanco
You need to motivate your team and increase sales. You also need to do it right away. You want a sales incentive program to do the heavy lifting for you. However, the one you have does not seem to be lifting a finger. It is time to look at your options and how to get incentives to work for you—fast.
Why All Sales People Are Not Motivated
Some sales people are motivated naturally; some are not. Per small business site for The Balance, the 80/20 rule applies in sales, meaning 80% of your sales are from 20% of your people. These 20% are motivated. The other eighty, however, might need some help. Here is where sales incentives enter to deliver that motivation—unless they don’t.
When a sales incentive program does not produce the desired results, many sales managers are quick to blame the program itself. However, the reasons a sales incentive program fails to provide adequate results are numerous, and sometimes have little to do with the program itself at all.
A significant factor in a sales incentive plan’s success is its simplicity. Likewise, complexity contributes to a sales incentive plan’s lack of success. Like all people, salespeople like things that are clear and easy to do. When forced to sort through options and categories and formulas, people tend to feel frustrated. Ultimately, they lose interest and return to an activity they know works.
That said, it is essential that you remember your job in selling the sales incentives. When you explain the program well, promote it and encourage your team with adequate management of it, you give everyone a better chance at success.
Rewards should also be significant and immediate. The Balance cautions sales managers to keep the time between “winning and getting,” short. The longer your team has to wait for the reward, the less motivating it becomes.
Remember also that money is not everything. It’s important, of course, but so is recognition. Best of all, many times the recognition piece is free. (More on this later.)
Perhaps most importantly, however, sales incentives can sometimes produce lackluster results because they lack the versatility to appeal to the whole sales team, from top to bottom. The Balance says on their site, “the glove that fits everyone in the end fits no one.”
Different Strokes for Different Folks: Not All Salespeople are Incentivized the Same Way
Sales professionals have some things in common, but not everything. People are different and have different motivations. Also, at a far less philosophical level, they have varying ability and talent levels, too.
Harvard Business Review suggests companies that recognize these differences and adjust their strategies to address them have the most success encouraging teams and increasing sales. Viewing the sales team “like a portfolio of investments that require different levels and kinds of attention” entices improved performance across the team, from your top salespeople to the rookies on the bottom. Furthermore, research shows by seeking to wheedle higher sales from the middle of the pack, sales managers are more likely to get the results they need faster than with other methods.
Consider your own sales team. You likely have top performers who consistently bring in the numbers and trounce their goals. These stars burn bright but are few and far between. Next, you might have some steady sales professionals who don’t break records but often make their numbers. These core performers might comprise the majority of your team. Of course, then there are always new team members, complacent older team members, and poor performers rounding out the bottom of the performance chart, too. However, like the stars, these are hopefully few and far between as well.
You should individualize your sales incentives programs for the type of salesperson you wish to motivate. Motivating any one group is good, but spurring all of them is fantastic. In other words, enticing the stars to perform better will get results, but not as many as if you increased performance from all the levels of your team. However, do not neglect to encourage your top performers also. After all, stars do not burn as bright when they aren’t making commission, do they?
So, what inspires each of three groups, stars, core and poor performers? Here’s what Harvard Business Review says works best for each of our three groups:
Standard Incentive Plans Work Best for Star Performers.
Top performers respond well to traditional sales incentive programs (e.g., trips, cash, recognition at the annual meeting). If you only want to get more sales from the people who bring you the most deals, then using a tried and true incentive program will likely do the trick. However, since one of the stars will undoubtedly claim the top prize, and because the other two groups know this, traditional incentive programs will be less useful for the other two groups.
Multi-Tiered Incentive Plans Work Best for Middle of the Pack.
The middle group or core performers responded best to a 3-tiered program. The incentives started first at current sales levels, second at slightly higher levels, and
a final tier at levels achieved by only a few. When one of the authors rolled out this incentive type with a client’s sales team, the multi-tier plan motivated the middle group to outperform themselves. However, this approach did not make a significant difference in the performance of the top or bottom sales groups.
A Combination of Carrot and Stick Works Best for Poor Performers.
When you get to the bottom of the sales team, those who rarely hit their numbers, motivation by reward is not enough to get the desired results. Sales incentives are by
their nature Extrinsic Motivation, meaning the motivation comes from the outside. Sales incentive rewards become the carrots you dangle in front of your team’s nose and take the form of bonuses, lavish trips, promotions, a more lucrative territory, and many more. However, Extrinsic Motivation can go the other way, too. It can be the stick you use to cajole better performance from those unsuccessful thus far and take the form of social pressure and Performance Improvement Plans (PIP) among others. A combination of both carrot and stick is the most effective way to motivate and increase sales from the poor performers on your team.
Sales incentive plans don’t always have to be a contest or even formal. You could have an informal sales incentive plan where you take over a task your team hates to do, like prospecting calls, or you do something in a silly way, like wear a silly hat to lunch with the team. Also, when in doubt, you can always ask your team what motivates them. You might be surprised what you hear back.
Selling the Sizzle of the Incentive Program
If your team’s job is to increase sales, yours is to motivate them to do it. In the Mid-1920s, sales professional Elmer Wheeler coined the phrase, “Don’t sell the steak, sell the sizzle.” In The New Yorker’s profile from the 30s, Wheeler’s quote reads, “The sizzle has sold more steaks than the cow ever has, although the cow is, of course, mighty important.”
As Wheeler says, hidden in everything in life is a “sizzle,” even your sales incentive plan. As the leader of the sales department, you sell the sales incentive sizzle to your team. Remember, money isn’t everything here (but it is still something, so do not leave it out). Clear-cut and achievable goals motivate many people also, as well as recognition of their achievement. These are what you get if you buy into the sales incentive program, i.e., the sizzle. Another way to look at it is WIFM (What’s in It for Me?). After all, isn’t that what you always tell them to do?
The most effective sales incentive plans have a few common sizzlers, including:
Clear goals and easy calculations: It is vital that the sales incentive program be clear, simple to understand, and easy to determine the prize (read: $$$$). If it is too complicated, many of your team members won’t bother.
Allows for multiple winners: The Harvard Business Review authors point out that if only the top performer wins, then those whose performance is below star-level will not bother with the contest. Having more than one winner keeps everyone in the game.
No caps on earnings: To motivate your stars, it is critical that no cap exists on their compensation. Putting a limit on what a star can earn is the fastest way to get them to stop selling. The authors use the example of how cab drivers go home early on rainy days because they have the fares they need. The cab company would be better served to change incentives on rainy days to keep cabs out on the streets during high-demand times.
Includes Pace-Setting bonuses: A Pace-Setting bonus, such as a quarterly bonus is effective at keeping your sales team on track, particularly your lowest performers. The periodic check-in to performance keeps them focused on the goal. By contrast, when you don’t include the quarterly bonus, the Harvard Business Review authors say the poor performers generate 10% less in revenue. The stars and the middle group also decreased performance, too, but at 4% and 2% respectively.
Uses social pressure elements: Social pressure influences people to change their behavior based on what their peers are doing. An example of using social pressure in the sales incentive plan is to post the standings daily or weekly where everyone can see it. Using this type of social pressure can motivate activity in the lowest performers, ignite a competitive spirit or at least a desire not to drop in the group below in your middle group, and reward your stars with one of their favorite prizes, recognition.
To read the Harvard Business Review article in its entirety, please click here.
10 Ideas of Sales Incentive Programs
Give the winner a billboard.
Ambition, creators of a proprietary sales management platform, gave their salesperson who brought in the most revenue from new deals a billboard in any location filled with the winner’s choice of content. Some of the participants had the idea to put an Ad next to a hot prospect’s location. Another idea was to put the billboard outside the competition’s headquarters.
Award an extra PTO day.
After all, who doesn’t want more time off? Xactly, a cloud-based incentives solution company, suggested you use this incentive right after a quarter-end or time-consuming project as it has the added benefit of providing a much-needed mental break.
Provide VIP parking for the month.
As Xactly, points out, preferred parking makes a statement to the team, especially if it serves as a time saver for the employee. Best of all, it is free.
Pass possession of the tiki.
One sales team in California had a unique Hawaiian tiki-god statue that the top salesperson had the following month. Photos shared amongst team members from the salesperson who was currently in possession of the prize became a fun side event known as “Where’s the tiki god today?”
Bestow more time in the limelight.
Few people like the spotlight at your organization more than salespeople. Being the champion of the team is a high honor, so salespeople work hard to get it. The Balance suggests that something as simple as recognition from the president in front of the company can do wonders for your team’s motivation.
Present an excellent swag bag giveaway.
From technology gadgets to clothing to assorted merchandise, never underestimate the power of goods to get the best services from your people. One local cable company assembled all the best merchandise from the various channels (think HBO, ESPN, TNT, and more) into a choice assortment of the very best swag that had salespeople working overtime to take home.
Hand over hard-to-get tickets to a special event.
A radio station in the Midwest once awarded their top salesperson for new business development tickets to the major-league baseball team’s opening day. Even salespeople that did not like baseball worked hard to earn those sought-after seats.
Present special wardrobe pieces.
Ambition also had success when they ran a sales contest to win the Green Jacket right around the Master’s golf tournament. Per their Chief Sales officer, perhaps equally important to the jacket were the bragging rights that came along with it.
Hand out family-oriented incentives.
Whether it’s a special dinner out at a fine dining experience or tickets to a local theme park, salespeople like to take their families out to celebrate their success. Being a hero to the kids, or a vaunted cousin can light a fire for many salespeople.
Offer lunch with the executives.
Salespeople are ambitious. Time in front of senior management can be hard to get, especially in large corporations. Offering a lunch out with executives can be an exceptional motivator for employees that have their sights set high in the company says Xactly.
What Gets Rewarded Gets Done
Of course, one of the essential features of a sales incentive plan is that it gets your people to do more of what you want. The old saying, “What gets rewarded gets done,” is an old saying for a reason.
Your sales incentive plan should reward the activity you want sales reps to incorporate in their sales cycle. If you’re going to move a particular product or get more subscribers to a consumable product or service, that’s what you should incent. If you want to increase new business, then weight the commission heavier on a new customer than existing business. If you need to stop churn, then give special incentives for renewals. Some businesses reward customer experience initiatives, basing it on how satisfied the customers are with the product or service.
What you want done also dictates what the reward will be. For example, a large equipment purchase is well-suited to a juicy commission because it is likely a one-time sale. However, a consumable product might be better served by a higher salary and lower commission with a different reward so that you preserve the relationship between the sales rep and customer.
Finding Your Inner Motivator
The whole point of a sales incentive plan is to motivate your team to do their best. As the vaunted former CEO of the Chrysler Corporation Lee Iacocca said, “Management is nothing more than motivating other people.” However, fine-tuning your internal motivator gives your sales incentive plan its best chance at success. Per Inc.com, having the proper foundation for your culture, a substantial buy-in on the company’s purpose, and a relationship built on trust with your team is motivating, too.
A proper culture includes team-orientated recognition.
Commissions are excellent rewards, but salespeople expect them. As the team leader, you should also strive to make individual achievement a team event. For example, Sujan Patel, Co-founder of Web Profits, likes to have a dinner when one of his team members hits their quota. He invited the whole team to the meal. He found that it created “a team oriented mindset in the sales department.” The other team members attending wanted to have a dinner in their honor, too. Not only Patel observe his salespeople work harder individually, but also, he found the whole sales group worked together as a team more, too.
Salespeople sell more when they buy-in.
A couple of years ago, Fast Company reported that happy workers are 12% more productive and unhappy workers were 10% less productive. The researchers out of the University of Warwick said that positive emotions invigorate people. Furthermore, the researchers assert that companies that invest in employee support have happier workers. Part of your job is to keep morale up and support your team. Also, you should explain the company’s mission and emphasize to your team how their roles contribute to that mission. Knowing these details and feeling engaged with the company will help your salespeople feel important and appreciated, as well as help them invest emotionally with what you are trying to accomplish.
Trust is foundational and irreplaceable.
For all of this to work, incentive plans and everything else, your team needs to trust you. They cannot be happy, feel supported, and engaged with the company mission if they don’t believe their boss. To build trust, you need to tell your team the truth and keep your promises. You are a coach; you help them solve problems; you remove obstacles. You are not there to punish or berate. Working with your team members on an individual basis, recognizing what comes naturally to them, and helping them find a workaround for their challenges can form deep bonds of trust that result in employee engagement.
7 Common Mistakes to Avoid with Sales Incentive Plans
Up to this point, we have examined what you should do. Now, let’s take a look at some of the things you should not do. After all, why not learn from other people’s mistakes? To that end, here are a few tips on what not to do with your sales incentive plan management.
1 | Not getting input from the team.
You know many things, but you don’t know everything. Your team knows what is possible; they also know what is not possible. Share your goals for the program and what you want to get from it. Then, see what ideas they have to get you there and what they want as a reward. Be careful, however. If you scale the sales incentive plan back from what your team told you they wanted, your incentive plan can have the opposite of your desired effect—and damage the trust you have worked hard to build.
2 | Designing the program outside of the company’s big picture.
The sales team is a significant part of the company, but not the only part. Your sales compensation plan should support the overarching philosophy of the company. The Prosperio Group, a compensation planning and design firm, recommends your incentive plans align with your organization’s business objectives, organizational hierarchy, company culture, and goals.
3 | Allowing for only one winner.
If you have one winner, someone who is not a top performer knows they do not have as much of a chance as a star performer. When you have a plan with more than one winner, it promotes team spirit and encourages an atmosphere of collaboration. A supportive team can reap excellent rewards long term. As Steve Jobs said, “Great things are never done by one person. They’re done by a team of people.”
4 | Having a one-size-fits-all incentive plan.
Different salespeople like different types of rewards. Therefore, it is crucial to diversify the awards to increase sales incentive’s plan appeal to all kinds of salespeople.
5 | Launching the plan and then never discussing it again.
For a sales incentive plan to motivate your team, you should have it be a regular part of their day. As Forbes suggests, you should have daily reports on their results. Depending on your strategy, you could even have a chart you update with all the team’s performance on it. However, if you do not update the team, they will forget about it— and forget about putting in the effort you need them to as well.
6 | Dragging it out too long.
People have short attention spans. They like quick wins, even when the victory is not as substantial. Incentive Solutions, recommends that your sales incentive plan can have long-term goals, but it’s a good idea to have some short-term goals there also to keep your team motivated.
7 | Forgetting to make it sustainable.
The activity you incent should fund the sales incentive plan. The Forbes team suggests tying it to financial results, like the gross profits, because, as they say, “A good incentive plan should result in more money for everyone, company and employees alike.”
The Bottom Line for Your Bottom Line
The bottom line is sales incentive plans done right can do the right thing for your bottom line. From regular compensation structure to select programs for specific goals, sales compensation, sales incentive plans are an excellent way to motivate your employees and increase sales.
Remember that different incentives motivate your salespeople. It is your job to match the program to the individuals. It could mean that you have a few different plans throughout the year or different levels of achievement to include all the salespeople segments you likely have on the team.
Whatever you decide, be sure to sell the benefits to the team to get their buy-in on the program. You have many options; be sure to pick the ones that have the best sizzle for your organization. Furthermore, make sure you communicate the WIFM so your team can hear, smell, and taste the sizzle for themselves.
The sales incentive plan is vital to getting the results you need, but so is your contribution. By creating the right culture, fostering employee engagement and establishing a relationship of trust, you have built a solid foundation for your sales incentive plan to succeed. Couple these efforts with some careful planning, collaboration, and budgeting and you could have a successful sales incentive program that lifts the team and takes a heavy load off your shoulders.
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