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A sales incentive plan is a business tool used to drive salespeople to meet their goals within a specific period of time; typically a fiscal quarter or fiscal year. Sales incentive plans use specific metrics and sales quotas, amount of new business developed, and other mutually agreed actions of the salesperson as goals. Incentive plans are usually used with a base salary versus straight commission and the desired results are increased company profitability, decreased sales costs, and development of new territories.
Rewards and recognition are at the heart of any successful sales incentive plan. There are some basic rules for creating an incentive plan that works.
1) Be Strategic – As in many other areas of business, 20 percent of the sales force usually makes 80 percent of the sales. The reality is that the top 20 percent are already motivated and equate earning incentives with “winning” against their peers. Trying to incentivize everyone else can defeat the purpose. Instead, strive to motivate the next 20 percent to increase sales. This is much more cost effective and can actually double the business produced by that group. A strategic plan supports a good business model.
2) Customize – All salespeople are not motivated in the same way. Incentives must fit your business and be valuable to your salespeople. The best way to determine this is to simply ask. A quick questionnaire will often do the trick. Find out what they want and give it to them!
3) Keep it Simple – Salespeople like programs that are straightforward and attainable. Complex incentive programs become cumbersome and frustrating causing them to lose interest. The best plans are well communicated, metrics-focused and very clear.
4) Make it Competitive – Competition drives real salespeople. Broadcast individual progress on a regular basis to instill a sense of urgency and friendly rivalry. Identify the sales leaders and make them champions for the rest of the team.
5) Reward Quickly – Part of the excitement of winning is getting rewarded quickly and with as much fanfare as possible.
Salespeople are like movie stars…they love the limelight. Recognition by peers is actually the quintessential motivator for salespeople. Being acknowledged publicly and timely by the President of the company goes a long way because it is personal and memorable.