Setting incentive program qualification criteria is easy when you’ve got sales data from previous months, quarters and years. But what do you do when you’re trying to move new products with sales estimates that are guesses at best? Call the psychic hotline? According to USMotivation president Michael Hadlow you have three workable options for setting up your incentive program – and none of them require help from Miss Cleo.
1. Open-ended contest structure
An open-ended contest doesn’t place a limit on salespeople’s earnings. Points are awarded based on the profit margin for each unit sale, with industry standard points typically equal in value to approximately 5% to 10% of a product’s gross margin. During or at the end of the program’s tenure participants can redeem accumulated points for merchandise, travel or whatever awards the manager has selected.
The point-based system allows management the flexibility to award differing point totals to emphasize specific products or to run short double-points promotions to spike sales of a slow-moving item.
2. Closed-end contest structure
With a closed-end structure all reps compete for a limited pool of awards, typically determined by a fixed budget. One downside to such a plan is that only top performers are rewarded, and the rest of a staff can actually wind up demotivated. To broaden the program’s appeal, consider staggering the contest in tiered programs that reward the very top with travel awards and middle performers with merchandise.
3. Behavior awards
Instead of rewarding actual sales performance, some sales organizations opt to offer points based on behaviors that lead to sales. A good manager should have a firm understanding of just which activities are most productive for his or her sales team. In the high-tech sector, for example, a salesperson’s knowledge can determine the success of a sales call, so building incentives around learning product features and capabilities can deliver optimum results.
The bottom line, says Hadlow, is that sales organizations should not let a lack of historical data deter them from creating sales incentive programs that deliver maximum motivational impact from the outset. Then once the results are in, future programs can be altered based on actual experience.
For more information, visit www.usmotivation.com