Many organizations think of their sales incentive programs as static entities. Once designed, the programs often are not reviewed and updated regularly. As a result, there are increasing challenges to validate the programs’ performance or improve ROI. This is particularly true when designing incentive programs to motivate direct sales teams or independent channel partners, including dealers, distributors, and resellers.
If you’re not keeping up with competitive programs, you are falling behind. Without intending to, sales managers may be ignoring simple ways to maximize ROI from their incentive programs – without increasing their existing budgets. Others may not even be clear on what they are getting out of their existing programs – and can’t quantify any ROI.
Below is a list of best practices that will help you get the most from your sales incentive program. Whether you are running sales incentive programs for your direct sales teams or indirect channels, the following 10 principles apply:
1. Reward for sales behaviors as well as sales.
Everyone wants to drive more sales with their incentive programs. Most sales incentive programs focus their reward investment on post-sale rewards; however, a growing trend is to reward key behaviors that drive more sales – albeit at a lower reward value.
There are dozens of potential behaviors and factors to consider, including activities such as training, lead follow-up, reporting new opportunities, and providing demos or evaluation units. The idea is that, if you encourage the right behaviors at critical steps in the sales process, you will benefit from more sales when those behaviors increase. Plus, it is easy to measure the change in behavior over time via a key KPI tied to your program objectives.
This strategy is particularly effective for long-sales-cycle products or complex sales.
2. Tailor incentives to roles, segments, or geography.
One size is not necessarily the best option for all when it comes to sales incentives. Your direct sales team may be segmented by regional managers, salespeople, support personnel, marketers, etc.
Each of these personas may have a different role in the sales process. Channel sales may have a different composition altogether – and incentives may need to be modified for unique segments, allowing for varying industries, go-to-market models, and individual roles within each segment.
Consider different program components for various combinations of role (or persona), segment, or geography.
3. Give participants what they want.
Create compelling rewards for participants based on their interests and preferences. People value choice in all aspects of their lives – and incentives and rewards should be no different. Participants are looking for value and flexibility. For example, you could offer merchant gift cards. Or, for even more flexibility, offer universal incentive cards that are widely accepted. After all, how many iPads or toasters can someone earn and still be excited about them?
4. Test your program before launching.
Many organizations launch their sales incentive programs all at once and hope for the best. Instead of arbitrarily assigning rewards before rollout and blindly guessing what will work, run live tests. You can analyze which sales rewards resonate best in different geographic locations or with different demographics, and whether the communication used during reward delivery was effective. Doing so can help identify which rewards and delivery methods your different sales team members prefer. Plus, it helps you seize opportunities to integrate customizable, tailorable sales incentive options. You can also evaluate administrative processes.
In general, testing before launching will give you an opportunity to fine tune all aspects of the program before a broader rollout. The data you gather can also help create benchmarks for program expansion and help with sales forecasting and budgeting.
5. Keep it simple by streamlining administration.
Cumbersome administrative requirements – on behalf of participants – that suppress participation can kill an otherwise great program before it gets off the ground.
The importance of administrative ease is more pronounced for channel incentive programs. If your competitor’s program is easier to use, your program may get ignored in favor of theirs. This is often cited by potential participants as a reason for not engaging.
You should minimize paperwork, shorten the approval process, and make it easy to deliver rewards that recipients can easily redeem.
6. Drive engagement with a good communications strategy.
Unlike in Field of Dreams, the idea of “Build it and they will come” may not result in optimal program engagement.
Make sure you have a comprehensive communications strategy to generate awareness and drive participation; then, be sure to drive ongoing engagement through continual outreach such as monthly newsletters, program reminders, and more. What’s old can now be new again with the resurgence of physical welcome kits distributed to participants in addition to the more commonplace emails and e-newsletters. These physical materials can be viewed as more engaging and unique.
7. Set KPIs for goals and reporting.
It’s not enough to have a general objective to “increase sales.” Key performance indicators (KPIs) are a part of the sales cycle many organizations overlook.
KPIs should incorporate leading indicators as well as performance indicators aligned with your program objectives. Each should be benchmarked against the current status quo so you can measure improvements over time. Clearly, you will also need a source of data to evaluate performance, so make sure there are metrics and reporting tools available for all KPIs selected.
8. Continually monitor program performance.
Review your program regularly against the established KPIs. This helps measure objective feedback to better understand the perceived strengths and weaknesses of the program design and administration. You want to make sure you’re dispersing the right value and right type of rewards and that recipient preferences aren’t changing. The data you gather can also help create benchmarks for program expansion and help with sales forecasting and budgeting.
9. Keep your program fresh and relevant.
Your business objectives and goals are likely evaluated and adjusted annually. Incentive programs should be treated no differently.
You should evolve your program to align with new business goals and help overcome new challenges. Evaluation and evolution should happen as often as it needs to, but no less often than once a year. Further, adding new program elements and rewardable activities keeps the program fresh for participants.
10. Expire points.
Until reward points are redeemed, your organization may be liable for them as outstanding debt. Unused points or rewards can linger in your financial statements and impact your bookkeeping.
Incentive programs should expire earned points within a specified period of time. Make sure your recipients are using their rewards – after all, they earned them – and keep your accounting practices efficient by attaching a timeline for redemption.
Keep in mind that these tips don’t work just for new sales incentives programs – they can be applied to existing programs as well. The process isn’t over with the flip of a switch. Instead, it requires regular, thoughtful evaluation so you can better motivate your sales team or partners, meet your KPIs, quantify ROI, and meet your sales goals.
Craig DeWolf is regional vice president of incentive strategy at Blackhawk Engagement Solutions.