With companies expecting high performing sales team, it’s no secret that leaders pump millions into their sales incentive programs – and rightly so! The sales team is arguably the heart of every business and certainly benefits from that extra nudge designed to increase motivation. However, here’s the catch: though most companies recognise the importance of sales incentive plans, they rarely execute it in a profitable manner. Of course, this raises the question – are there any approaches that can bring out the absolute best in a sales team? And, do communication and analytics play any role in boosting ROIs for sales incentive plans?
At BI WORLDWIDE, we conducted a study with 575 sales compensation and sales operations professionals based in the United States to answer these questions. We spoke to them about the way they design their incentive program’s rules, the way they budget their money, and the challenges they face to gain deeper insights into what really goes on in sales teams with regards to such programs. Of course, it wasn’t all talk – we also looked at the performances of various sales teams over the last 3 years to determine the best practices that leaders can use to maximize their sales incentive ROIs.
Some of these best practices are:
Our experts noticed that most companies offer a mix of cash rewards such as the baseline salary, commissions, and benefits, as well as non-cash rewards and recognition. These investments go a long way in motivating the sales team to perform better, and the following 5 points illustrate how companies are using these investments in effective ways for high sales, happier customers, and more loyal sales teams.
According to our research, we saw that companies that reward over 50% of their sales organisation in a year in a meaningful way experience much better sales and higher rates of employee retention than the companies that rely solely on cash rewards. This is predominantly because people get acclimatized to cash fairly quickly – a cash bonus becomes the baseline expectation the following month, dulling the thrill of receiving it. However, the pleasure of a meaningful experience never becomes the norm.
Additionally, our studies suggest that even if companies already offer stack ranking incentives, such as a President’s Club, they must be willing to offer additional incentives that can create the opportunity to achieve for all levels of performers. Some of these incentive programs that can split into 30 or 90 day spurts that are meant to focus the sales team on one particular product. Leaders must design these incentives in a way that makes it possible for performers across all levels to gain from it, not just the top performers.
Our study showed us that companies that use travel and non-cash rewards enjoyed increased sales and customer satisfaction. Based on this, our experts recommend that leaders consider adding a smattering of non-cash rewards into the mix to make receiving the reward even more meaningful for employees.
While determining the use of budgets, it wasn’t uncommon for companies to direct their funds towards incentive programs and call it a day. Now, however, leaders must recognise that while rewards must be robust and meaningful, it is more crucial to direct the budget towards developing engaging and motivating programs for the sales team, rather than just dumping the same in the rewards pile! To do so, companies must invest in great technology platforms that can help them analyse results in a timely way.
The panelists present at the study informed us that incentives served as a great way to reinforce learning in the sales team. Most companies employ a ‘learn and earn’ model that helps sales people understand the product they are selling in a more comprehensive manner, while still enjoying the perks of the incentives.
While every company faces its own set of challenges when implementing any program, one of the most common issues with saw across the board were miscommunication and manager misalignment, which often were the downfall of the sales programs. This illustrates that a successful incentive program requires more than just rules and structure, it requires the support of the manager, and regular communication regarding the program and the employees’ performance for it to work.
Though leaders many recognise the value of incentive programs, not recognising the best practices to maximise their sales incentive ROIs can be akin to burning money. These best practices listed above can help organisations enjoy high sales performances, motivation, better employee engagement, and even high attrition when implemented correctly!