Looking to build a high-performing sales team? For most sales organizations, this is a common goal. Strong salespeople close more deals and generate bigger profits. Motivated salespeople are always driven to do better and sell more. Happy salespeople are likely to stay loyal to you as an employer and continue to bring in great results.

Yet, achieving a high-performing sales team — one that is engaged and motivated towards exceeding their targets — is not as simple as saying: sell more. You need to have the right tools and measures in place to set your sales teams up for success. Programs that will inspire them to deliver great results, work towards specific objectives, or change their behaviours to align with your organization’s strategic goals. This is where sales incentives come into play.

Understanding sales incentive management

Sales incentive management is a formal engagement plan that promotes or encourages specific actions and behaviours by a targeted group to increase sales.

Sales incentives are an effective engagement tool for businesses, and can be used to:

• Drum up excitement and focus efforts on specific objectives over a set period.
• Motivate salespeople to perform at their highest level.
• Drive sales strategies and deliver targeted results.

Managing sales incentive programs

A sales incentive program is designed to motivate sales teams by offering rewards for reaching or exceeding specific sales goals or milestones.

 It involves setting clear objectives, and this can be anything from hitting a quarterly sales target or upselling a specific product range, and choosing appropriate incentives, which can either be financial (such as bonuses) or non-financial (like experiences or merchandise).

With a sales incentive plan in place, the performance of your sales team is consistently tracked, and those who meet their specified goals will reap the rewards. This not only helps to boost their motivation, but it also aligns their efforts with the company’s objectives. So it’s a ‘win-win’ for everyone.

However, designing a sales incentive plan is not a simple task of setting some goals, offering some rewards, and sitting back as your sales reps work like crazy to achieve their objectives.

Too many companies fall into this simplistic trap and invest millions into ill-informed sales incentives, only to find that they haven’t delivered half as much value as they could. To avoid this, you must first understand how exactly sales incentive program management works. Start by asking:

• Are there approaches to incentives, or specific incentives, that will bring out the best in my own salesforce?
• What role do factors such as communications or analytics play in bringing out the best return from a sales team incentive solution?

At BI WORLDWIDE Canada, we believe effective sales incentives must take human behaviour, or behavioural science, into account. After all, motivation is personal, so solutions that lean into individual preferences are likely to drive bigger changes to behaviour and drive incremental sales.  

For effective sales incentive management, there are a few boxes you must tick:

• Tapping into inspiration and emotion, and offering aspirational rewards, such as high-end merchandise, experiences, and travel.
• Setting sales goals that connect back to the purpose of the incentive program and overall business objectives.
• Engaging middle performers, where the biggest opportunity for growth lies (and not just focusing on top performers…).

What is incentive compensation management?

Sales incentive program management and incentive compensation management are actually very similar in nature. However, there are some important distinctions to be made when we look at a sales incentive vs. fixed or variable compensation.

Within a sales organization, incentives form part of what’s known as the Total Rewards System, and this consists of:

• Fixed compensation, or “base” pay, such as salary and wages.
• Variable compensation or pay, such as bonuses and commission.
• Cash and non-cash incentives, such as rewards and recognition.
• Employee benefits, such as medical, dental, or time off perks.

Technically, sales incentives could be classified as variable compensation. A key distinction, however, is that bonuses and commissions are typically part of the job definition and employment contract. Sales incentives, on the other hand, are seen as additional earning opportunities, which may be added, altered or withdrawn from the employee within a specific time frame. Think seasonal periods or product launch cycles. 

Have you ever won something, no matter how small, and experienced the joy that came with it? For salespeople, achieving an incentive goal evokes a real sense of excitement. It’s something that is often shared and celebrated with their fellow team members. Variable compensation, on the other hand, is usually kept private, and disclosing this to the team is not the norm in most countries. Incentives, in this regard, should be focused on achieving specific results or driving desired behaviours, and not the day-to-day duties expected as part of the job role. 

Why sales incentives are important for businesses

What separates the winners and the losers, with sales organizations, is a focus on more than just compensation packages to get teams to deliver results. A sales incentive program is important for your business, as it will allow you to:

Retain and motivate the best talent

Having a compelling sales incentive program can be a great asset to your business for attracting, retaining and motivating the brightest sales associates on the market. Not only do they provide tangible rewards for achieving specific goals, but they also boost morale and engagement. When sales personnel feel recognized and rewarded for their efforts, they are more likely to stay with their company and continue delivering great results, reducing turnover and fostering a happier, more productive sales force.

Increase profitability

Increasing profitability is a direct outcome of effective sales incentive management. By motivating sales teams to exceed their targets and push for more sales, your business can unlock great revenue growth. And it doesn’t stop there. Well-designed incentive programs, with the right goals in place, will encourage the sale of higher-value products or services, and additional upselling, further adding to your return on investment.

Stay ahead of competitors

By continuously motivating and inspiring sales teams to deliver better results, your company will gain that competitive edge needed in today’s market. A sales incentive program for channel partners, for example, can help capture the mindshare of channel salespeople and encourage them to sell more of a specific brand. (Hint: we’re talking about your brand!)

Why managing your sales incentive program right is crucial 

Having a sales incentive plan in place is really only half the battle. Managing and executing it effectively is crucial to its success. There are several best practices businesses can follow to ensure effective management, and these include:

1. Rewarding results, as well as progress towards achieving the sales goal. 
2. Giving different salespeople personalized goals, whenever possible. Incentives should be structured, and goals set, in such a way that each participant has a reasonable chance of achieving the award criteria.
3. Trying to “move the middle” and motivating the performance of the entire sales team, not just top performers. 
4. Changing plans up and refreshing them from time to time. 
5. Keeping programs short: typically three months or shorter, unless the sales team is selling products and services with longer sales cycles. 

Key elements of a sales incentive plan to manage

When managing a sales incentive program, there are three useful elements to take into account. 

First, you’ll want to set your goals and objectives. When setting goals for a sales incentive plan, try to avoid a ‘one size fits all’ approach for your entire sales team. The more confidence a person has that they can achieve a goal, the more likely they are to succeed. Everyone is different and unique, which is why goals are so much more effective when they’re set according to individual ability. Or better yet, when they’re self-selected by the individual themselves.

Secondly, a sales incentive plan needs to be measurable, so you can track how they’re performing and if they’re successfully meeting their defined objectives. For salespeople, measuring and communicating progress helps maintain focus and meet target dates. Not to mention the exhilaration of getting closer to achieving a goal (otherwise known as the Goal Gradient Theory). What does this look like in practice? An example of a measurable sales incentive goal could be ‘to generate 25% more sales leads within three months in order to receive a 10% bonus’.

Finally, you need to constantly review and ensure your compensation, rewards and incentives plans are competitive for your market. Competitive salary is a great foundation, but as we know, salespeople are driven by more than just their pay cheque. Competitive tangible and experiential rewards are brilliant motivators that go beyond a great compensation package. Ultimately, it’s all about striking the right balance between salary, commission, benefits, and rewards.

The challenges of managing sales incentives

Rather than trying to solve every challenge at once when managing a sales incentive program, why not focus instead on clear, ongoing communication with your sales team? And gaining buy-in from their front-line managers, too. Additionally, having separate goals and rewards for front-line managers based on their team’s performance is a great way to incentivize.

Managing a sales incentive program is also challenging when we take into account the complexity of incentive structures. There are so many different types of sales rewards and incentives out there to offer. Role-specific incentives, split sales incentives, pre-sales incentives, omnichannel incentives, and analytics-based incentives – to name a few.

Having an expert on hand to support and guide you through the best incentive structures for your objectives can be a real weight lifted. Creating a plan that motivates all team members (without being overly complicated) requires a deeper understanding of human psychology and engagement. An expert provider can offer tailored solutions and best practices to ensure the program is both motivating and manageable. At BI WORLDWIDE Canada, our sales incentives and channel incentive management software are grounded in data-driven insights and behavioural science, understanding that to inspire engagement, you need to tap into emotions.

Integrating sales incentive plans into your business

There’s an art to creating a sales incentive management system that really works. What may seem like an effective approach may not actually resonate with everyone on your sales team. If you’re integrating sales incentive plans into your business, there are four key factors to consider:

1. Finding out what motivates your team

If you offer sales incentives that fall flat amongst your team, simply put, they won’t be motivated to achieve their goals. You must take a step back first and put in the time to get to know each of your employees. What are their hobbies? What motivates them? Why do they come to work? Not only will this allow you to curate and offer the right incentives, but your team will appreciate the time you are taking to get to know them.

2. Maintaining variety

To avoid people’s motivation depleting towards the end goal, variety is essential. You can maintain a sense of excitement in your sales incentive through the likes of gamification, “surprise and delight” rewards, and opportunities to earn bonus points.

3. Utilize sales reward and recognition processes

Social media has undoubtedly played a huge part in people’s increasing need for instant gratification. What does this mean for sales incentives? Recognizing and magnifying success is key. Social recognition can be instrumental in making someone feel appreciated at work. At BI WORLDWIDE Canada, our effective sales incentive programs have been designed to create a contagion effect, also known as Relativity Bias or “keeping up with the Joneses.” This means that our sales incentives leverage the human tendency to compare themselves to one another and be influenced by the success and rewards of their peers. This can be a powerful motivator in a sales team, as it encourages healthy competition and drives individuals to excel in their performance to achieve similar or better outcomes.

4. Focus on non-monetary sales incentives

The effectiveness of sales incentives relies heavily on the rewards on offer. If the rewards don’t land well with the people, then the people will not be motivated to achieve their goals. As such, non-cash, hedonic rewards that provide a true idiosyncratic fit have been proven to impact performance more than their (often boring) cash counterpart.