Rules Of The Game

What do you think is the most important element of a sales incentive program? Is it the prize offered to your top achievers? Perhaps it’s the commitment from management to the program’s success. If you ask some of the more competitive sales reps, it might be the joy winners get from lording their success over the rest of the sales staff.

Actually, while these are all key factors that help drive an incentive program’s success, they’re not as important as the program’s rules. So says John Farrell, senior director of client strategy for Carlson Marketing Group, in a recent article for Incentive Magazine. The rules, he argues, provide the basis for every aspect of the program, from awards and communication to training and budget.

Farrell adds that a program’s rules also demonstrate – whether the company recognizes it or not – a company’s true business objectives. The rules communicate to participants exactly what they need to do to be successful and just how much the company values their effort. For individuals designing a program’s rules, Farrell recommends considering the following three components.

1. Create a push me, pull me scenario. Think about integrating your program throughout the distribution channel – not just the sales organization. Ideally you should create a push among the salespeople who sell your product and a pull that motivates channel partners to buy and expedite products’ travel through the channel to end consumers. A well-designed rules structure will create seamless product flow that will remain effective even after the program ends.

2. Set your goals. Your objective when establishing the program’s goals is to present an attainable challenge that builds on salespeople’s inherent competitive spirit. Think about what behaviors and actions will be necessary for participants to reach or even exceed 100% of their goals. A good guideline is to base objectives on prior period performance plus an improvement factor. Try to encourage reps to compete with themselves, rather than against each other. Too much competition among individual salespeople can breed demotivation because it inevitably creates more losers than winners.

3. Invest wisely. An incentive program that doesn’t generate profits in excess of its costs is not an effective program. To make sure this doesn’t happen, think about the following questions: What are the expected profit margins? How much can be reinvested into the program? How many participants do you expect to reach their goals? What kind of award system (travel, merchandise, gift card) will deliver the greatest motivation? What is the ROI?

In closing, Farrell adds that focusing on the strategic importance of the rules will undoubtedly deliver results. Not only will your program be self-funded through incremental sales and profits, but it also should create a strong ROI for the entire company.