Creating a Sales Incentive Program that Works by lisafugere

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Creating a Sales Incentive Program that Works
by lisafugere

shutterstock_82798759The right sales incentive program motivates your employees to make more sales, and injects a little extra fun into their day-to-day jobs. However, not all sales incentive programs are made equal. An incentive program that your reps find lackluster will have the opposite of the desired effect. You don't want to draw a lot of hype and energy to an incentive program that rewards reps with a water bottle for their hard work. Before you build an incentive program, figure out when motivates your reps. The answer is different for every rep, so pick out the patterns.
Step One: Choose Non-Cash Rewards
The most important part of your incentive program is the actual incentive. If your employees are not significantly motivated by your incentives, they won't try their hardest to make sales. Some business owners use cash rewards to try to motivate their employees, but this rarely works. There are several reasons why cash is not enough of an incentive for your employees:

    Many employees view cash rewards as bonus pay rather than as a reward for a particular job. Employees tend to think that they deserve bonuses simply for doing their job every day for a long period of time. Most employees expect bonuses during the holiday season or on their work anniversary.
    Employees forget about extra cash soon after they get the reward. This makes it less likely that they will associate the cash with a job well done and continue doing a superior job. Most employees spend cash and then forget about it.
    The brain processes cash differently than other rewards. When you receive cash, your brain calculates whether the amount you received is reasonable given the time you put in. When you receive other awards, your brain responds emotionally rather than logically. Thus, your employees won't have an emotional reaction to cash rewards.

Instead of cash, choose tangible rewards that will mean something to your employees. The rewards should go up in value as your salespeople hit higher goals. For example, you could use $10, $100 and $500 gift cards to a particular store, or reward gifts of those values. You could give out bags or jackets with your logo, tickets to an awesome concert, or an expensive dinner. The harder your reps work, the bigger the prizes should get.

You might also want to consider making travel part of your rewards package. Employees often want to go on vacation to exotic locales they can't afford--having a trip as your top-tier reward can motivate employees to outsell one another.

Step 2: Target Rewards Towards Your Middle Tier Employees
In most companies, 20 percent of the sales people make 80 percent of the sales. These people are already motivated, and you don't need them to take on any more of the sales success. You need your middle-tier employees to perform. Of the 80 percent of your salespeople that are left, it is often difficult to motivate everybody, and not everybody will appreciate the same rewards.

Thus, it makes the most sense to try to motivate the top 20 percent of the people who are not currently selling as much as you would like them to. Imagine that you have 100 employees. They could be split like this:

Top tier: 20 employees

Middle tier: 16 employees

Bottom tier: 64 employees

Target your sales incentive program towards the 16 employees in the middle. These employees are not selling as much as the top 20 employees but are hard workers and just need an extra push. It'll be far easier to motivate these 16 employees than to try to motivate all 80 employees who aren't in the top tier.

Step 3: Make It Easy to Understand Your Program
Once you've chosen who to target your program towards and what rewards you'll use, make the program as simple as possible to follow. Require your salespeople to sell a specific product or product bundle and make recording straightforward. The less complicated you make your program, the more likely it is that your salespeople will follow it.

If you follow these steps, you should be well on your way to creating a sales incentive program that works for your employees and helps improve your sales.

References

http://www.worldincentives.com/sales_incentive_programs.htm

http://sbinfocanada.about.com/cs/marketing/a/incentiveprogps_2.htm

http://funnymotivationalspeaker.wordpress.com/2011/07/26/incentive-programs-creating-a-sales-or-employee-incentive-program-in-6-steps/