1. Money

Creating Sales Incentive Programs That Work

Part 1: Keeping The Incentive Program Sweet and Simple

By

Two female shop owners serving a customer

Incentive Programs can Increase Sales

Image (c) Cavan Images / Getty Images

Have your past incentive programs been a disappointment to both you and your salespeople?

The dangling of the proverbial carrot is an ancient art that is commonly understood to be at the heart of human behavior, psychology, motivation, and, in particular, business. Manufacturers and distributors commonly use this technique with their channel partners in an effort to add unique motivational value to move specific products or services.

The reason this technique has stood the test of time is because, for the most part, it works! At times, however, elements of the technique are executed improperly. Sales incentive programs under perform or fail as a result.

The monetary values of incentives are often not the critical factor in motivating salespeople to succeed. Take my own example. I was fortunate to work in an industry that provided an unending supply of incentives and awards for overachievement. I knew that, if I won every trip, every TV, every incentive offered, the money would come with it!

For me, the money and the goodies were not my primary motivation. My philosophy was simple; "If you win all the incentives there are to win, you couldn't help but be at or near the top every time." Corporations use incentive programs to drive behavior and I agreed to play the game and conform to their wishes; what gets rewarded, gets done.

The problem, from the vendors' point of view, is that not all salespeople are motivated the same way. Consequently, not all incentive programs work. Why is that? From my experience, I'll make the following observations:

1) The 80-20 Rule: Twenty percent of the salespeople make eighty percent of the sales and profits. Too often, sales incentives - perhaps in an effort to be fair - are geared to the entire sales force or VAR channel. The risk in a program like this is that the glove that fits everyone, in the end, fits no one. Enlightened marketing strategists know that the top twenty percent are already motivated. Simply put, a strategy that's geared to light a fire under the next twenty percent - the next logical group - doubles the business in a more cost efficient manner.

2) The KISS Theory: Salespeople by nature are like electricity. They naturally take the path of least resistance. That's not to say they are lazy or untoward. In fact, it's just the opposite. Good salespeople look to simplicity to make things happen.

For information on hiring and training salespeople see 7 Traits of Star Salespeople, 8 Tips for Hiring Salespeople, How to Interview Salespeople and How to Train Salespeople.

Often, incentive programs fail miserably because of innate complexities either in their recording and reporting systems or in how rewards are won. If you put the salesperson in a position where he or she is forced to assess "To get this, I first have to sell this, plus these and not these and they must include these," you are creating a recipe for confusion, sales frustration and failure. In the end, the incentive program becomes a disincentive!

The remedy? Manufacturers must keep the incentive program sweet and simple and attainable. There can be no ambiguity. Anything less will result in a lack of interest, as well as a waste of time and money that can sometimes spill over into other departments whose task it is to administer and account.

So what does an incentive program have to have to be successful? Continue on to the next page...

©2014 About.com. All rights reserved.