- Goals and Objectives
- Audience Identification and Involvement
- Beneficial Behaviors
- Structure and Rules
- Award Selection
As with any marketing campaign, a sales incentive program warrants a formal plan outlining the program details, timelines, and responsibilities – with all appropriate buy-in and approvals. Having a written plan significantly reduces the possibility for error, helps build a consensus, and greatly facilitates later return-on-investment analysis. Research consistently demonstrates that motivation and engagement involve a variety of factors other than pure motivation, including emotional state, task value, buy-in, training, etc. – so a program will get better results if it addresses all of these factors.
What specifically are the overall goals? These may include both specific targets as well as softer objectives, such as building morale or camaraderie. Measurable objectives can include specific increases in terms of units, revenues, net bottomline, or other factors. A program should have no more than one to three objectives, and they should all relate to one another. People do not have the attention span to grasp too many objectives, and will become confused if confronted with goals that pull them in various directions. Another key question: Are the objectives attainable? Has the organization ever hit that goal before? What circumstances would call for a more optimistic goal? The planning process should identify any outside factors that could realistically affect the outcome, such as economic conditions, competitive actions or conditions, the loss or gain of a big customer or customers in the marketplace.
Who specifically in the sales force can make the biggest difference and how? What behaviors, if performed by which people, stand the best chance of contributing to success? This part of the process identifies the specific part of the sales team, if not the entire team, that can help achieve the specific goals and objectives. Organizations with a multi-tiered distribution system have to consider both their own salespeople and those of their channel partners. Even though this section deals with programs targeting a company’s direct salespeople, it is critical to understand where salespeople fit in the sales chain to determine precisely how much influence they will have an achieving sales goals, and how directly or rapidly their behaviors can affect results.
Many organizations have up to three levels of distribution:
The direct salespeople working under any of these three company examples have different marketing agendas – specific activities or “behaviors” that incentive programs can help salespeople achieve, based on where they sit in the sales chain. The table below shows the types of behaviors that, if improved or increased, can lead to better business results, based on whom the salesperson is calling on.
|Company --> Customer||Examples|
|Company --> Distributor --> Customer||Examples|
|Company --> Distributor --> Retailer --> Customer||Examples|
Equally critical to getting results: Getting the buy-in of the target audience. This gets accomplished by involving participants in some way in the program development. Picking out a group or several groups of salespeople representative of your staff in a professionally facilitated process can help identify reasons why the sales team has not hit those goals, or provide ideas on how you can help make sure they do hit the goals. The best results will be achieved from this process if management is not present in the room. People speak more freely when they feel their comments will not be directly attributable to them.
The above involvement process given above should help yield the precise behaviors necessary to achieve the targeted goals – the behaviors that will be promoted, supported, and recognized in the program. These can include:
- Making more cold calls
- Conducting more frequent follow-ups
- Making more presentations
- Making more in-person calls
- Improving knowledge levels
- Communicating more frequently with customers.
Today, with many customer relationship management systems, it has become increasingly easy to track almost any behavior. The key is to select two or three behaviors most likely to contribute to the specific goal, and then to promote and support those behaviors in any way possible.
Salespeople often have a competitive nature that makes some of them prone to bending the rules in the fervent desire to win. Proper program structure and rules will help reduce the temptation to inappropriately pressure or time a sale to conform to a contest period, or to otherwise blur the lines between unethical and ethical, customer-focused behaviors.
The structure details precisely what performance qualifies for points or credits in the incentive program. Generally speaking, people can focus on about two or three related behaviors in a given program. That means that a program should have no more than two or three performance measures that can be weighted to provide a final points allocation.
For instance, a program might assign one point for every $1 per sale made, and ¼ point for every new presentation, and another ¼ point for every new qualified name added to the database.
Another key question: Should the program be open-ended, closed-ended, or both? An open-ended program awards points to anyone who has achieved some performance improvement; a closed-ended program, otherwise known as the tournament approach, rewards only the best producers. Research suggests that closed-ended programs have great appeal to top performers, who probably would perform anyway, but tend to discourage the mid-level performers who might feel that they have little chance to win. Open-ended programs – those that reward people for incremental performance rather than selecting only a fixed number of winners – tend to involve and engage more people, but they are more difficult to budget.
Organizations often use a combination of both approaches. The tournament approach aims to recognize the top performers and to foster loyalty; the open-ended program aims to improve the performance of the middle 60-percent of performers.
Another potential issue to keep in mind is territorial differences. Some people may labor in regions with far greater obstacles or opportunities than others. It sometimes makes sense to weight goals accordingly, so that the employees in the toughest areas have reason to participate and those in the hot territories don’t reap an unnecessary windfall. Sometimes the difference between success or failure is the combined ability of a number of poorly performing territories to pull themselves up and make a bigger contribution than usual.
The program rules should address such nitty-gritty issues as: The term of the program; the products that qualify; the method of sale confirmation; the timing of points allocation (for example, when the customer is invoiced or when the customer has paid?); and any caveats.
Note on fine print: Avoid it when possible. Fine print, with numerous exceptions and caveats, can create distrust and sap the positive emotional spirit your program should create.
One of the few potential pitfalls of an otherwise well-structured program is the tendency of some salespeople to “sandbag,” or encourage customers to delay or speed up an invoice in order to help the salesperson qualify. This can be avoided by adding an element of surprise to the program, or simply by emphasizing that such behavior will not be tolerated and that anyone found doing so will be subject to disqualification. Organizations that use incentive programs on a regular basis usually don’t have this problem, because sales employees in most cases would have little incentive to speed up a sale for one period that will simply make it harder to hit the goal the next time around.
The best programs put the emphasis on the mission and how to achieve it, and make the awards part of the fun and celebration. The awards should contribute to the positive emotional atmosphere and feelings of support. Communication about awards, however, is identified in research as critical to performance improvement through engagement. In other words, awards function as a medium that helps communicate the program goals, create a buzz, and provide satisfaction, residual motivation, and loyalty. They should not be promoted as the sole reason why people should perform.
Key award considerations include: The value of the performance improvement (budgets for top performers generally total about 3 to 5 percent of someone’s compensation), the culture and demographics of the organization, the personality of the brand, ability to fulfill when people win them, etc. The more the award selection addresses not only motivational but communication goals, the more value your organization will derive. Non-cash awards should create excitement, generate buzz, and contribute to everyone’s sense of task value.
Motivation does little good unless people know the goals and how their actions can contribute. Communication begins with an enrollment process that explains the program in a way people can quickly absorb. Salespeople get inundated with information and often have little patience for even company communications. Making salespeople sign or submit something that engages them helps to get their attention and ensure their commitment. Every incentive program should include an integrated, multi-touch communication program that includes print, e-mail, Web, or other media.
Today, it is possible for almost any organization to have Web-based “Selling Centers” that can include any type of information related to your program, with any information that can help your team succeed, including:
- Individual standings and general rankings, if desired
- Information on the program
- Useful sales tips
- Quick product knowledge or market tests
- Competitive information
- Product information
- Ability to redeem awards.
The most motivated individuals will fail if they lack the capability to do the job. So a successful incentive program creates the motivation for people to perform, identifies the things they can do to perform better, communicates those things on a regular basis, and then makes sure people have the ability to do it. Training can take the form of periodic meetings of a half-day or less. It can occur online, via e-mail, or in Webinars. No matter what the configuration, it should also have a multi-touch component to appeal to different learning methods; it should occur over time and during a period when people can rapidly apply it; and it should be specifically focused on supporting the desired objectives and behaviors.
That which gets measured, gets done, as the old adage goes, and it applies here as well. Today, customer relationship management systems or Web-based incentive programs provide unparalleled ability to measure not only outcomes but the behaviors that may or may not contribute to them. By including up to three measures in your sales program, with at least one focused on the desired outcome, and the other two measuring the activities contributing to those outcomes, organizations can get a good handle on not only whether the outcome warranted the investment, but on whether the targeted behaviors contributed to the gain. For instance, if making outbound calls is a behavior that can contribute to increased sales, most CRM systems can easily track that activity.
If the organization hits its goals, but the desired behaviors did not occur, the organization can assume that outside factors potentially produced the outcome, and not necessarily the program itself. If, on the other hand, the results improvement mirrored an increase in the targeted behaviors or activities, it’s likely the program had a significant impact on results.
Many people outside of sales can have a direct impact on outcomes, including customer service, shipping, or production. Running an incentive program in a vacuum often neglects key factors that can make or break the outcome. For instance, the involvement process above might have identified shipping reliability as a reason for poor sales. If the program does not involve a component to address this, either by addressing a logistical, motivational and/or training issue in the logistics area, there is no reason to expect any sales incentive program to achieve its full potential.