This entry was posted on Tuesday, January 17th, 2012 at 5:13 AM and is filed under sales incentive programs, sales incentives. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.
This is the kind of article that is written by those who think they understand incentive programs, but is what he says correct? Unfortunately much of it is correct all too often, but it is not the norm, nor is it what happens when the incentive program is designed and implemented by professionals in the industry. While the author offers a list of disadvantages of sales incentives, they are not disadvantages of using sales incentives them; they are disadvantages of how they are used. Let us review the points mentioned in the post and how they differ from ours.
Rewards for Top Performers
“Most sales incentives tend to reward only the top performers …some of these representatives may already be selling at a high level. They do just enough to collect their bonuses or trips”
Most top salespeople will be the top salespeople regardless and will always work to be the top. For them it is intrinsic. If historically only the top salespeople earn, the objectives and rules structures were not set properly to include 80% of the universe, not just the top 20%. A properly designed system will motivate the majority to better their own performance. In essence, they should compete with themselves.
“Many sales incentives are also narrowly focused on just sales. This causes sales representatives to focus only on revenue-generating activities.”
Absolutely! That is as it should be. If you want them to focus on something else then incent that objective as well, but good salespeople are success driven. And that’s where you want them to be. The best programs will be those that are narrowly focused with qualifications to avoid other issues.
“Sales incentives also have high associated costs. Small companies which fail to tie incentives to the right performance variables may needlessly be paying tens of thousands of extra dollars per year for bonuses, trips and impromptu rewards.”
This should never really happen. Before you implement any sales program, enough time and due diligence should be spent so your measurements and objectives are tested against historical averages, taking all current marketing conditions into consideration. Any client who spent tens of thousands of dollars needlessly did a poor job of planning.
“The best sales incentives should be equally tied to increases in new business and sales of specific products and services. Some products or services may be ignored for higher-priced products or higher volume sales. “
Not necessarily. You can’t solve all problems with one program, but there are ways to tie them all together with one program using combinations of these other objectives as qualifiers or bonus earning opportunities when the main goal is achieved.
A professional incentive salesperson has the experience to turn these perceived disadvantages into advantages that will make your program the best it can be. One of the best incentive consultants in the business is Paul Hebert of I2I Incentive Intelligence. Drop him a line if you want that well developed and successful sales incentive program.