Short-Term vs. Long-Term Incentive Plans

by | Jul 7, 2021 | Incentive Solutions, Incentive Strategies, Sales Incentives, Sales Tactics, Uncategorized

If you’re a manufacturer, you’ve probably already used a number of short-term and long-term incentive plans, whether or not they were formal or you referred to them as such. Ever run a discount on a product line? Ever given sales reps bonuses or recognition for gaining extra insights during a sale? Anytime you offer a reward in exchange for an action, it can be considered a sales incentive. When you formalize these incentive strategies by planning, measuring, and repeating your success, you can have a reliable tool for increasing sales, rather than sporadic or last-minutes efforts to move products.

Short-term incentive plans and long-term incentive plans require different approaches in order to manage them with best results. You can even have multiple short-term plans within your overarching, long-term incentive plan. Let’s take a closer look at long-term vs. short-term incentive plans, and the best practices for each.

Short-Term Incentive Plans

Long-Term Incentive Plans

Types of goals they’re best suited to:

  • Quick sales increase.
  • Re-engage disengaged distributors, dealers, or sales reps.
  • Spark sales motivation during slow periods.
  • Run short sales promotions or sales performance incentive funds (SPIF/SPIFFS).

What kind of rewards you should use:

  • Debit and gift cards make great short-term incentive rewards since neither a reward redemption platform or participant support services are necessary. There’s no learning curve since everyone knows how to use them.

Enhancing incentive technology and services:

  • An interactive sales leaderboard to display top performers can drive the competitive instinct and keep participants engaged.
  • Gamification tools such as Spin to Win or Scratch Off can give incentive promotions a boost during enrollment.
  • Mobile optimization will help channel partners and sales reps interact with the incentive program quickly and conveniently while they’re in the field.
  • Sales claim upload & verification tools help you gather sales claims documentation and authenticate claims, speeding up the reward delivery process to make it more effective.

Types of goals they’re best suited to:

  • Increasing customer loyalty and retention.
  • Training channel partners and sales reps.
  • Supplementing revenue with gradual, incremental sales growth.
  • Increasing awareness and knowledge of product lines.
  • Gathering customer and sales data to boost sales and marketing strategies.

What kind of rewards you should use:

  • Reward points that can be redeemed in an online merchandise catalog work well—participants can save up their points over time, redeeming the for small items along the way or hoarding them for big-ticket items such as new laptops or vacations.
  • A big, group incentive trip at the end of a long sales initiative makes a great reward and an excellent opportunity to develop your channel partner relationships.

Enhancing incentive technology and services:

  • A training incentive program with various types of training content delivery can encourage ongoing, long-term boosts to product knowledge and sales enablement.
  • Open enrollment allows you to collect customer and channel partner data from your incentive program, which allows you to refine and improve future sales and marketing plans.
  • Audience segmentation allows you to manage multiple groups of incentive program audiences with different goals.
  • Performance tracking with exportable data, charts, and graphs helps you justify your program, showing its successes and growing its ROI over time.
  • Reward redemption & participant support services allow you to quickly and reliably service a large and diverse participant audience.

Using these guidelines, you should be able to create successful short-term or long-term incentive plans (or both!). Generally, the longer or more often you run incentive programs, the more ROI they generate. Like many sales and marketing strategies, not every rule is hard and fast. You may find some unexpected, effective techniques within your unique sales channel. And you can always think outside the box, even with a formalized incentive plan. Good luck boosting sales!

<strong>About </strong>Mark Herbert

About Mark Herbert

Mark Herbert is President and CEO of Incentive Solutions. He has more than 30 years of experience overseeing business operations within the incentives industry, helping companies increase channel sales, build customer loyalty, motivate employees, and grow their business.

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