Over the years, we have received many questions from leaders concerned about the success of their sales incentive programs. Our experts have turned the answers into a series of blog posts – Sales Ops FAQs. Here’s one of the latest questions we got.
Q: Is there a perfect recipe for contests and SPIFFs? When should we boost our sales incentive programs with contests and SPIFFs?
A: Contests and SPIFFs are like diamonds – their rarity enhances their value. To add them to your sales incentive programs, start by analyzing your business needs. Is a new competitor entering the market? Are you launching a new product or, on the contrary, struggling with a lagging one? In cases such as these, your organization may gain value from contests and SPIFFs. These sales incentive programs can help create excitement in your sales organization. But be careful not to let them overwhelm the impact of your core sales compensation plan. Overusing them may create strategic misalignment between your plans and your objectives.SPIFFs and contests can dramatically change the “effective weights” of the overall comp package, motivating reps to oversell one product while neglecting others. As expected (and intended), reps will devote their time where they can make the most money. Before rolling out any SPIFF or contest, be sure to understand how a rep will change their allocation of selling time and see if it will be in line with your strategy.
How to avoid misalignment
To mitigate the risk of misalignment, many top sales organizations plan their total annual comp budget and associated allocation of target bonus across products knowing that later in the year they will run a SPIFF or contest, even if they don’t know the exact details.
This lets them get the benefits (excitement and focus) of the SPIFF while being careful to maintain a close alignment between the allocation of target bonus across products and their strategic objectives.
Use contests and SPIFFs but make sure they don’t distract your sales force.
One of the biggest challenges organizations encounter when running contests and SPIFFs is the compensation plan changing in the middle of the contest. It can be tough to ensure the goals of the comp plan align with the goals of the contest when the comp plans are in flux. The approach we had taken in the past is to leave the main yearly contest aligned with the old comp plan (for consistency) while launching smaller quarterly contests that are more in line with the new updated plan.
Besides the yearly contest, quarterly SPIFFs and contests motivate reps to sell specific products, services or extra features. Sometimes, reps lose motivation for the yearly contest if they have a bad quarter, so a fresh contest wins back their engagement.
Getting the best ROI
It’s also important to define expected outcomes of your contest/SPIFF and to know how you will measure them for the best possible ROI. From my experience, contests are more effective with practical prizes. These allow sales reps to have a tangible representation of their reward. If in doubt when picking the right prize, you should know that 51% of people remember travel prizes longer than other rewards. An exciting trip or a city break for two is something they would fight for more than extra money or gadgets. As Charlie Warner notes in Media Selling, trips can be promoted well too, they can be glamorized, and people love to fantasize about them.