Spiffs are short-term incentives targeted at individual sales reps to accelerate sales of a particular set of products within a specific span of time. Also known as channel incentive programs and sales incentive programs, spiffs produce performance improvement, measurable results, and engaged participants.
Your Guide to Everything Spiff-tastic
If selected, implemented and monitored correctly, incentive programs increase performance by an average of 22 percent.
When asked to persist toward a goal, people increase their performance by 27 percent when motivated by incentive programs.
Define Your Goals
The first step, the most important step, is defining your goals. The #1 mistake made by frantic companies is racing to implementation without clear, concise, written goals.
What should you consider when defining goals?
What factors are critical to the success of your business?
- Market share
- New customers
- Pipeline generation
- Employee enablement, training, education
- Engagement of employees, customers, partners
- Customer Service
Keep in Mind
The two most important perspectives to keep in mind as you develop and evaluate any spiff program are:
Will the executive sponsor of the incentive feel the program’s investment generated a satisfactory return?
If you were a participant in the program, would you put forth the extra effort required to take advantage of the earning opportunity?
Your Target Audience
Now, determine who can impact your goals and how. Start by making a list of who is in your target audience.
- Employees or customers
- Sales reps, channel partners, third-party agents
- Age — average and range
- Male / female
- Average income
- Functional role, job titles, and levels
- Number of participants
- Number of locations, stores or companies
- Countries, regions, divisions
- Level of buy-in or engagement presently
- Current level of motivation
- Capability to improve, learn or sell
- Extrinsically or intrinsically motivated
- Attitudes, interests, opinions
70% of American workers are “not engaged” or “actively disengaged”.
Move the Middle
This advice is counterintuitive — motivating middle performers fuels more sales growth than focusing on top performers. In the 20-60-20 breakdown, top performers are fewer in number. So, the company’s average performing sales reps, the “middle performers,” are actually your greatest opportunity.
An effective program structure, or incentive contest rules, must be designed to achieve your objectives and budget parameters. Tell the participants what you want them to do and what they will earn for doing it.
EVERYONE CAN WIN
Enable all people who achieve program goals to earn awards.
TOP FEW WIN
Have a pre-determined, limited number of award earners.
TIER 1, TIER 2, TIER 3
Research consistently suggests that spiff programs that are too short in duration often fail to achieve buy-in because it takes people too long to learn about them before they’re expected to act. Alternatively, longer-term programs can suffer from “program burnout” because employees simply lose interest. It usually makes sense to align the program with a buying cycle or the business’s financial reporting period.
A common trap is for the award provider to select awards they prefer rather than awards the recipient would like.
Participants can select their award of choice for lasting trophy value
Best for short-term spiffs and employee reward programs
Determine the most motivational awards by asking
- What will catch their eye?
- What have they done or earned before?
- What is the hot destination or cool gadget?
- Do they have children?
- Are they sports enthusiasts?
Cash or Non-Cash?
Tracking Your SPIFF Program
|EXCEL SPREADSHEET||INCENTIVE WEBSITE|
A good technology solution will include these key elements
- Program Rules
- Current Promotions
- Claim Form
- My Account
- Award Catalog
- Contact Us
- Website development
- Customization options
- Content management systems
- Online forms
- Redemption or shopping cart functionality
- Secure data center hosting and monitoring
- Real-time reporting
GRAPHICAL EMAIL ANNOUNCEMENT
Don’t rely solely on email
Catch attention with a well-designed mailer
Themed super billboards embellish large spaces
MONTHLY STATEMENTS/ NEWSLETTERS
Build the Budget
Key Budget Drivers
- Number of participants
- Percentage of participants
achieving incentive levels
- Duration of program
- Average award amounts
- Forecasted results
Estimated Program Budget
(based on percentage of profit contribution that the incentive program will generate)
.5 – 3.0% of total gross profit
5 – 10% of incremental gross profit
Rule of Thumb
Our incentive budget rule of thumb is 10% of total budget for each support component. For large programs or simple programs, the percentages could be lower. For programs that are small, short-term or complex, the percentage could be higher.