These days more and more companies are recognizing the importance of having a sales incentive plan to boost employee morale, increase retention, and drive sales. In the competitive modern marketplace, an incentive plan is no longer a nice idea to try sometime in the future; it’s a necessity now. If your company decides to wait until your competitors have plans of their own and then create a plan in the hopes of competing, you are already behind the curve.
Don’t miss out a tremendous opportunity to move ahead of your competitors and gain a larger market share through a smart sales incentive plan. Once you have identified who your target audience is, you can move ahead to implement a plan tailored to their needs. Keep reading to learn how.
Entice the Salesperson with a Sales Incentive Plan
Enticing the salesperson, sometimes referred to as "dangling the carrot," is one of the most critical stages of a successful sales incentive plan. The thinking behind this strategy is rooted in psychology. Many studies have shown the desire for something just out of reach is a powerful motivating factor.
Using this technique to motivate employees is not new. In fact, it is and has always been the cornerstone of sales incentive plans. Keep the carrot concept in mind when you are working a plan that will keep your employees excited and happy to work for what they want.
It's Not All about the Money
This statement may seem counter-intuitive, as sales incentive plans are usually about cash prizes. They reward the salespeople who contribute the most to the company's finances by giving them a piece of the pie, so to speak.
But some motivations are much stronger than money. Simple recognition is impossible to put a price on but treasured by many people. Furthermore, while recognition from higher-up is important, recognition from peers is valuable as well. Recognizing the achievements of your salespeople in non-monetary ways should also be part of your sales incentive plan. It should enhance, but not replace, the monetary rewards.
It is a widely accepted rule in all facets of sales that 20% of salespeople will make 80% of the sales. This has become clear over many different industries over the years. However, sales incentive programs often don’t take this phenomenon into account as much as they should. When they do, they often reward only the performers who pull in the most sales; the problem is that leaves 80% of the employees twiddling their thumbs in respect to earning incentives. This doesn’t do much for morale. Therefore, it’s important to focus on incentives that reward factors other than sales volume.
One Sales Rewards Program Doesn’t Fit All
Consider the differences in the productivity, motivation, and personality of individual salespeople when coming up with an incentive program. Most experts recommend focusing most of your efforts on the salespeople in the 60th to 80th percentile. The reasoning behind this is simple: the top 20% (the 80th to 100th percentile) are already motivated.
You should have a sales incentive plan for your top people, but it doesn't need to be complex. A simple combination of monetary prizes and recognition will suffice.
The 60th to 80th Percentile Segment
However, the people in the group just below the top are a little trickier. They have potential, as proven by solid results. However, they haven't quite reached the next level. If they do, this could improve the company's revenue.
Employers often make the mistake of believing those who are almost in the top tier of salespeople need more education on the technical aspects of sales. This is not the case. Rather, these individuals already know what they need to know; they just need a reason to get to that higher level. Give them a reason to try harder with incentives that motivate them—from money to recognition to tangible, clear rewards they can earn with a bit more effort.
The best way to get the second segment of your salespeople producing at a high level is simplicity. If you provide them with an easy-to-understand sales incentive plan that shows how they can reach the next level, they will find it easier to get motivated. Something too complicated can turn employees away from the idea of incentives.
Now that you know how and why you need a sales incentive plan, it’s time to get the ball rolling. At Incentive Solutions, we are proud to have been helping businesses boost their sales through innovative, customized incentive plans for over 20 years. What sales incentive plan can we develop with you? Connect with us online to get started.