Sales Performance Incentive Funds (SPIFs) are short-term incentives that drive specific behaviours deemed important to achieving sales. Done right, SPIFs have tremendous potential to help sales teams concentrate their efforts on key items, markets and behaviours whose positive effect translates dollar-for-dollar in the business. However, achieving this requires careful thought. Here’s how to make SPIFs work.
1. Align SPIFs with Business Goals
The first step in building a successful SPIF programme is making sure it is aligned with the broader business goals. Let’s say your tech company has spent millions to develop a new product line that harnesses the power of artificial intelligence to analyse big data and make smarter recommendations to your customers. Ideally, your sales reps will sell more of this product, which in turn will generate profits and help the company meet its long-term goals. So your SPIF should be designed to drive the behaviour that is consistent with the broader business goals. If your business initiatives involve a major technology change, features should be designed to account for both the reality and potential of the technology.
2. Make Rewards Tangible and Timely
The rewards must be enticing, and they have to be meted out promptly to keep the momentum going. Cash bonuses, gift cards, or even vacations can add substantial oomph to a sales rep’s motivation. Say a pharma manufacturer offers a cash bonus for each sale of a new drug in the first quarter of launch. Timeliness matters – hold off and the salespeople might take their foot off the gas.
3. Set Clear, Attainable Targets
Meanwhile, targets have to be achievable yet somewhat difficult. Reps will be disheartened when they see unrealistic SPIFs, and will not be inspired by easy ones. A retail company could introduce a SPIF for a new product where reps are paid a bonus for completing five sales within the first two weeks of the launch. This kind of target will encourage reps to pay attention to the new product without overwhelming them.
4. Monitor and Optimize
Monitor how SPIF performs, and adjust accordingly, especially if a software company sees that its SPIF is moving product but the sales representatives are over-discounting to clients. The company could improve their SPIF by then asking their reps to hit certain profit margin goals before beginning to count the sales towards their quota.
SPIFs can be aligned with business objectives; can provide real rewards; and can be continually refreshed so as to create the best sales behaviour and hence, the best market results.
