It’s about as predictable as mudslinging in a presidential campaign or a Boston Red Sox nosedive in October – as soon as the economy heads south corporate bean counters begin casting their gaze around in search of costs to cut and fat to trim. That’s when the knife falls on the company sales incentive program. Yet as Carol Wain, president of Incentive Depot, Inc. (www.incentivedepot.com), notes, strategically speaking, this type of budgetary streamlining occurs at precisely the wrong time.
“Many marketing initiatives, including incentive programs, are cut just when they can be most effective,” she says. “Incremental potential is at its highest when sales have bottomed out and your competition is vulnerable.”
So what are the risks when sales organizations cut from the incentive and reward budget? “First, you can miss an opportunity to capture significant incremental sales and market share,” Wain says. “Second, you can dilute your average award payout below the threshold that is motivational. And third, by concentrating your award earnings opportunity on your highest volume producers, you may create an unfair earning opportunity and risk resentment and attrition among up-and-coming salespeople.”
Unfortunately, many sales managers are not given the opportunity to argue their case – the budgets are simply no longer available and they have to make do as best they can. For these situations, Wain offers two suggestions. “The first and best way to approach the issue is to shorten the program’s timeframe,” she explains. “If your annual budget is cut in half, run a six-month program. Do not reduce management support or communications or the perceived value of the program will drop precipitously. The other thing you can do is to increase your program’s recognition elements. Post a leader board on the wall outside the President’s office. Have top management introduce the program and comment on its progress,” she suggests.