The Green Sheet Online Edition
September 10, 2012 • Issue 12:09:01
Ignite revenue with a sales incentive program
Your sales force is your company's front line in the battle to increase revenue and market share. This is true of both direct and indirect sales teams. What if merchants aren't signing up as fast as they have in the past, or your sales force just isn't selling with enthusiasm anymore?
You may have a compensation and commission plan firmly in place, but have you considered that it might not be sparking the action needed for your company to reach its revenue goals?
So what more can you do to stimulate your salespeople to meet and exceed the quotas you've set? Adding a good incentive program to the mix may just be the answer to give your sales force that little extra nudge, or push, that's needed from time to time.
What is an incentive program?
An incentive is something that stimulates or motivates, with the intent to spur determination and action. As such, an incentive program is a powerful business tool that can be used to recognize salespeople and motivate them and thereby increase performance levels that support organizational goals.
Incentive programs are generally looked at as a means of generating business your firm wouldn't otherwise have realized. You fund such programs out of sales revenues, and related expenses are based on how well the program does. Good programs can bring in sales in both favorable and tough economic times. But no matter the state of the economy, this old saying always rings true: you have to spend money to make money.
What should incentive programs include?
Incentive programs are frequently referred to as rewards programs; however, they are, in fact, more comprehensive than that. Rewards comprise just one integral component of them. To achieve success, incentive programs should encompass the following areas:
- Research and assessment: Develop a deep understanding of your current business situation, as well as that of the marketplace environment. It's basically a process of doing your homework.
- Goal-setting: Identify the desired outcome you want for your program. In most cases, this is financial in nature.
- Program design: Decide what type of reward(s) you will offer, develop clearly defined rules for achievement that are neither easy, nor impossible for salespeople to attain, set guidelines for communication frequency, and determine how you will track progress and fulfill rewards.
- Program management: Execute the incentive program through all its steps and phases. A well-designed program is useless unless it is carried out fully.
Measurement and feedback: Identify and track corresponding sales revenue, and solicit feedback. This is essential for future program improvement.
What value do incentive programs provide?
Ultimately, incentive programs work better when you keep them simple and deliver rewards quickly. This motivates your entire sales force by providing regular feedback for maximum momentum and engagement.
While incentive programs can help to keep top talent, the real value is in motivating sales personnel in the middle 60 percent of performers. If you can change the behavior of this middle group, by even a small percentage, it can have a significant impact on your bottom line. Remember, it's really not about the rewards; it's all about the psychology of attempting to change the behavior of your sales team.
Can you trust what people say they want?
Although many salespeople indicate a preference for monetary awards, in this and many other cases, a real disconnect exists between what people say they want and what they actually respond to. Money does indeed elicit a response when enough is given, but it is not necessarily the most effective incentive choice. If money were the be-all, end-all motivator, then every commissioned salesperson should be a superstar.
Once basic needs are met through adequate compensation, people typically are interested in something more - something that touches them emotionally. Noncash rewards that fall into the category of hedonistic luxuries often fit the bill, having a greater impact than cash incentives.
What kinds of incentives motivate people?
Perks such as high-end merchandise, electronics, jewelry and spa treatments; group or individual travel; movie, sports and theater tickets; fine dining; automobile leasing; stock options; and even time off work are highly desirable offerings that provide incremental lifts in sales performance over established, traditional commission-only programs. Why? Because they have widespread trophy value and brag-appeal, which makes people willing to work harder for them.
Let's go back and talk about why cash incentives are not quite as effective. When offered cash rewards, people become practical, economical and, unfortunately, less willing to work for them.
Recipients consider cash rewards to be extra money. They use the funds to pay for ordinary, everyday living expenses and bills instead of pampering themselves with what are commonly perceived as nonessential or luxury items.
Cash incentives can also become an expected form of compensation. This can create dissatisfaction when the program ends because recipients feel they've taken a pay cut. Further, after only a short time, most cash incentive winners don't remember what they did with their reward; they don't remember why they received it or what they used the money for.
Do incentive programs work?
Sales incentive programs are perhaps the biggest, most logical, bottom-line boosters because their results are readily measurable in the form of sales revenue generated.
The plans speak for themselves, with numbers that back them as proof. Research also confirms that incentive programs work. A study by the Forum for People Performance Management and Measurement found that on average, during the lifetime of a program, incentivized sales nearly double. A major study from the Site International Foundation confirmed that incentives increase work performance by an average of 22 percent - on top of going a long way to improve morale.
And a study by the Gallup Poll and Carlson Marketing Group shows that incentive programs that combine sales performance measurements with rewards equal success.
Is it wise to label incentives discretionary?
Ironically, many companies are willing to invest in everything from capital improvements to research and development, but they are often hesitant to include incentive programs in their arsenal of business tools.
This is because incentive programs are viewed as a discretionary expense, rather than an investment opportunity. This is a huge mistake. Incentive programs can make more money at less risk than most other things companies can do.
So whether you're interested in generating new or incremental sales, improving sales effectiveness, or simply getting a faster start to a new product or service launch, incentive programs can be very useful in achieving your company's goals.
Get going today by giving your sales team the motivational nudge; dangle the proverbial carrot in front of their noses with an incentive program. It will be sure to generate more revenue and boost your bottom line.
Peggy Bekavac Olson founded Strategic Marketing, a full-service marketing and communications firm specializing in financial services and electronic payment companies, after serving as vice president of marketing and communications for TSYS. She can be reached at 480.706.0816 or email@example.com. Information about Strategic Marketing can be found at www.smktg.com.
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