A sales incentive program should motivate sales reps to meet or exceed their sales goals with cash and non-cash incentive rewards. This method gives salespeople rewards and recognition in addition to their sales compensation plan.
Sales incentives not only motivate sales reps to surpass their goals, but they also drive greater revenue, boost rep retention, and act as a competitive advantage to attract and recruit top talent.
Just how beneficial is a solid sales incentive program? Check out these study findings:
- Properly constructed incentive programs can increase performance by as much as 44 percent.
- After money, recognition is the second most important sales rep motivator according to Hubspot’s Sales Strategy & Trends Report.
- According to a survey conducted by the Society for Human Resource Management (SHRM), 68 percent of HR professionals agreed that employee recognition has a positive impact on retention.
- In the same SHRM survey, 56 percent of HR professionals said employee recognition programs also help with recruitment.
- An Incentive Research Foundation survey found that 60% of top-performing tech companies strongly agree incentive and recognition programs are effective recruitment tools, but only 25% of average-performing companies agreed.
What are the types of incentive programs?
There are five types of sales incentives including role-specific, presales, split incentives, analytics-based, and omnichannel. The approaches you choose for your sales incentive program depend on your sales process and what behaviors you wish to motivate your sales reps to adopt.
Let’s review these different types of sales incentives.
1. Role-specific sales incentives
Role-specific incentives are created based on individual roles and responsibilities. This approach enables you to acknowledge reps based on their job function.
For example, a sales manager has different duties than a business development rep (BDR) who prospects and identifies leads. You can reward a sales manager based on their results against the requirements of their position. And, the same is true for the BDR.
2. Presales incentives
Presales incentives reward salespeople at different stages of the sales process before closing a deal.
For teams with longer sales cycles, more touchpoints, and buying committee members, this model keeps reps motivated throughout the process by rewarding them in the short term and at the close.
For example, you could give reps incentives after completing specific activities like scheduling meetings with prospects or running a sales demo, and upon contract signature.
3. Split sales incentives
Adding split incentives to your sales incentive program is a great way to reward sales reps working together on the same deal or project.
This approach allows you to split the incentive between the salespeople when the deal closes or the project ends. You can designate an even split between everyone involved or specify rules for split calculations.
For example, if two sales reps collaborate to close a large deal, you can reward them equally or based on their specific roles throughout the sales cycle. We see this model commonly implemented for sales engineers.
4. Analytics-based sales incentives
All businesses analyze data to make accurate sales forecasts, set realistic goals, and create an ideal sales cycle.
Analytics-based sales incentives reward reps based on their behaviors that align with the best practices gathered from data. For example, if data from prior years indicate that achieving designated revenue goals requires a sales cycle length of a specific number of days, sales reps earn rewards or bonuses when they close deals within that timeframe.
5. Omnichannel sales incentives
Finally, the last type of program is omnichannel sales incentives.
With buyers embracing a digital-first approach to the buying process, salespeople often interact with prospects online and over the phone before directly engaging with them.
Adding omnichannel sales incentives to your sales incentive program rewards reps for the support and value they provide to prospects–even if they aren’t directly involved when the buyer makes their purchase.
Best sales incentive plans
Knowing the types of sales incentives is only one aspect of creating a sales incentive program. You must also understand what key elements will ensure your incentive program is successful.
The best sales incentive plans share the following common characteristics:
- Drive the right selling behaviors
- Motivate reps
- Reward overperformance
- Align with business goals and metrics for the quarter or the year
To get started, here are some of the best sales incentive plan ideas to inspire your sales team to greater achievements:
1. Monetary rewards
A popular and easy way to motivate sales reps is by offering cash incentives. These might include:
- Commissions: Give reps a percentage of each new sale in addition to their regular earnings.
- Bonuses: Reward salespeople with extra money as they meet or exceed quota to motivate them to reach higher.
- Pay raises: Periodic salary increases for your top performers are a way to display appreciation for their consistent overachievement.
2. Physical items
Non-cash incentives can be more powerful motivators than cash prizes if the reward is appealing to your sales reps. Physical items like tech gadgets, coffee brewers, or sporting goods can inspire your sales team members and drive them to meet or exceed their goals.
3. Extra paid time off (PTO)
A popular non-cash sales incentive is additional vacation time. Sales is hard and can be very stressful. So, giving reps extra PTO to decompress promotes work-life balance, boosts mental health, and shows that your company cares.
4. Self or professional development courses
Access to upskilling is a sought-after employee benefit and a powerful employment attraction tool. Providing these types of rewards in your sales incentive program helps reps advance their careers, improve skills and performance, and increase productivity.
5. Public recognition
Gallup research shows that recognition is a desirable reward that boosts employee well-being, engagement, and a sense of belonging while increasing productivity.
6. Gift cards
Personalized gift cards can acknowledge sales reps and give them an opportunity to splurge on special items they’ve been wanting to buy.
7. Spinning the prize wheel
If you find pinpointing one reward challenging, consider putting a variety of options on a wheel so reps can spin to see what their reward is.
8. Activities and entertainment
Entertainment incentives are good motivators because they give your sales reps the things they’d love to do but aren’t necessarily willing to splurge on.
9. Office upgrades
Boost rep productivity by offering upgrades to their office as part of your sales incentive plan.
10. Allow reps to select their own reward
If your sales team consists of various types of personalities with diverse tastes, hobbies, preferences, and needs, it may be easier to allow them to choose their own incentives.
Sales incentive structuring
Now for actually structuring your sales incentive packages.
1. Include all comp plan stakeholders from the beginning
Streamlining your sales incentive program by involving all affected departments as you initiate the planning process is essential.
2. Review historical sales data for possibilities
Analyzing previous years’ sales data reveals seasonal sales trends. Once identified, commonly slow periods are candidates for incentives like SPIFs to help remedy these shortfalls.
3. Include non-monetary incentives
Although everyone needs money, it very rarely is the sole motivator. Average and lower-performing sales reps may be more motivated to improve by non-cash incentives.
4. Create role-based incentives
Customization is essential to the success of your overall comp plan, so it makes sense to incorporate role-based incentives.
5. Allocate funds for short-term incentives
6. Incorporate some team incentives
Including team incentives or competitions can be fun, increase collaboration across the sales team and create healthy internal competition while boosting goal achievement.
7. Add fun incentives
The addition of fun or unexpected incentives injects some excitement into your plan and can be quite motivating.
8. Rank your incentive plan against the industry average
Make sure your sales incentive plan is realistic and attainable to ensure the likelihood that it will motivate your sales reps.
9. Complete a compensation risk analysis
10. Get sales rep input
Most sales reps want a personalized incentive plan.
11. Confirm that your selected incentives will promote the right behavior
12. Fine-tune your sales incentive plan
Creating a sales incentive plan is not a set-it-and-forget-it process.
13. Clearly communicate the sales incentive plan
It’s essential to clearly explain your sales incentive plan to sales leadership and the sales team.
Sales incentive program management
Sales incentive program management is the use of supplemental rewards in addition to the standard compensation structure to drive better business outcomes. Incentives include things like:
- SPIFs: Short-term incentives designed to motivate sales reps to focus on specific activities.
- Bonuses: Monetary rewards for meeting certain goals.
- Commissions: Paying salespeople a percentage of the sales they make.
- Prizes: Gifts awarded for completing specific activities.
- Awards: A trip or other major reward given to top-performing salespeople.
- Recognition: Public acknowledgment of sales reps exceeding expectations.
A properly managed sales incentive program motivates sales reps to exceed their goals, boosts revenue, increases sales rep retention, and provides your organization with a competitive hiring advantage.
Sales incentive software
When it comes to calculating sales incentives, many companies still calculate commission in Excel. This may be effective for small teams, but as teams increase in size, consider automating it with a sales incentive compensation platform like QuotaPath.
FAQs
What are the best practices for sales incentive planning?
Align incentives with company goals.
Make incentives fair and equitable.
Keep incentives simple.
Test the plans.
Introduce comp plans in a timely manner.
Monitor the results of the incentive plan and make adjustments as needed.
How can you calculate incentives for sales?
There are a few different ways to calculate incentives for sales. The most common involves applying a percentage of the sales.
What are some of the most commonly used sales incentive programs?
Some of the most common incentive programs include commissions, bonuses, and SPIFs.
Which companies are implementing the best incentive programs?
Companies like Zappos, Salesforce, and Netflix offer attractive employee incentive programs.