7 months ago
February 21, 2017

3 Sales Incentive Programs Your Sales Team Needs to Thrive

In this article, we’ll discuss the three basic sales incentive programs and how to leverage them for unmatched output from your sales team.

Claire McConnachie

Sales incentive programs can be difficult to use properly. If you’ve looked into ways to motivate your team, no doubt you’ve already seen the warnings about the pitfalls of a poorly executed incentive system. But you shouldn’t be scared away by potential problems in flawed systems–rather than scrapping the idea, you should look for the sales incentive programs that effectively improve the output of your sales team by rewarding them for doing the right thing. In this article, we’ll discuss the three basic sales incentive programs and how to leverage them for unmatched output from your sales team.

*Simple Cash System*

The simplest sales incentive programs can often be the most successful, but they’re also the most prone to failure. When paying out cash incentives to your employees, you need to tie the rewards to worthy metrics. The simplest form of this would be a commission-based sales system, with employees taking home a percentage of profits. A more nuanced approach often works better, however, as pure commission systems paradoxically result in lazier employees in many circumstances.

Another thing to consider. Years of observations and studies at business schools have shown one thing clearly: workers under an incentive program will act to most efficiently receive the incentive. The problem arises when the most efficient way to acquire the incentive doesn’t help the company. Put extra consideration into your sales incentive program’s underlying motivations before you implement it, if you’re going with cash.

*Company Benefits*

Company benefits have a wealth of advantages over cash bonuses, but have a narrower appeal than cash. The fact that benefits can be given and taken away as appropriate helps keep your sales team mindful of their performance at all times, not just when they want extra cash. It also works better psychologically, as studies have shown that employees disassociate a cash reward from the work to earn it very quickly.

Whether you go with this or cash, note that effective sales incentive programs are those easily understood by the employee. You need to balance ‘useful metrics benefiting the company’ with ‘numbers and behaviors an employee can easily understand and aim for’ in whatever sales incentive programs you develop. If an employee isn’t quite sure the best way to aim for an incentive, they won’t bother changing their current habits–the reward will be treated as a lottery, not an incentive.

*Individually-Tailored Rewards*

Sales incentive programs based on rewarding individuals with what they personally need or want most will always, always be more successful than the alternatives–the downside being that they require a much greater investment of time and effort than a broad, general approach.

Rewarding vacation time when a personal event comes up and the like quickly builds employee loyalty and attention to performance in a way other sales incentive programs cannot. The only question is whether you have the time and resources to invest in this type of incentive approach. That said, if you have this level of understanding of your team you should also know what behaviors to target with rewards, eliminating the worry common to sales incentive programs.

It’s worth noting that a company can implement one or all of these sales incentive programs to great success. There’s nothing making them mutually exclusive; choose what best fits your employees and your sales methods. 

Claire McConnachie

Claire is a Western University graduate with a background in recruiting, sales and customer service. As a Recruitment Consultant, her goals are to place the best people in the right roles resulting in satisfaction for both the candidate and client.