Planning An Incentive Scheme

 The implementation of an effectual incentive system for sales staff is a subject repeatedly requested on management training courses.

You are setting up an incentive campaign for your sales team in order to win back a lost share of the market. The sales competition should give your sales people the necessary motivation boost. The aim of the campaign (gaining at least one new client a week) and the participants has already been established.

Now the criteria on which the sales people are to be assessed have to be determined.  You have now reached a very significant point in your planning and the extent to which the incentive campaign will be a success for your company depends on the type of assessment you choose. There are two demands you need to meet:

The assessment system must be logical to every participating sales person. They must be able to work out ahead of time what prize is attached to what performance.

Each sales person must feel that they have the chance to accomplish the goal.

The following choice, of conventional systems should give you a few thoughts about how to structure your competition. They come from the planning themes “Incentive Campaigns in the Sales Department” in the Kienbaum-based bonus advisory company, which offers companies advice, and help in structuring sales competitions.

100 % - Plus - X System

Every sales person who succeeds in exceeding the 100% basis (e.g. turnover in the last quarter) by a certain “x” percentage. The basis is an individual value for each sales person, but the x-percentage is the same for everyone.

Critical analysis: Depending on the level or basis the sales person starts on, a 5% increase, for example, may be very difficult or very easy to attain (inequality of opportunity). Since the number of winners cannot be fixed beforehand, it is impossible to plan for the bonuses in your departmental financial plan.

Top 10% System

Only the 10% of sales people who achieve the highest turnover or other defined goals win.

Critical analysis: Those sales people, who no longer see an opportunity to win, give up. It is imperative that they remain motivated as covered on management training courses. Competitions based on this evaluation system can in the long-term have a negative effect on the motivation of your sales people. Furthermore, the results of the top 10% can, if seen in absolute terms, also be disappointing.

 Opportunity Mix System

In this scheme, as well as the ten sales people who achieve the highest turnover, an additional ten sales people who have improved their personal turnover also win.

Critical analysis: Increased individual performance as well as performance in comparison to “competing colleagues” is assessed.

 Top-area System

Under this system, the performance of sales people in a whole sales area is assessed. This way, 60% of the bonuses are divided between sales people in the office and field sales departments. Each receives the same bonus for team performance. The other 40% is used to reward individual performance.

Critical analysis: This system is very suitable for a team competition with salespeople in the office and field sales departments. By combining the team bonus with an individual bonus, you prevent certain salespeople relying solely on team work and neglecting to become actively involved themselves.

Qualification System

Participating in the competition can only be done once a certain threshold has been exceeded. Once the threshold has been reached, you can assess the sales people on the basis of all the other systems (e.g. the Opportunity Mix system).

Critical analysis: By setting a threshold (e.g. minimum turnover for individual products) you are ensuring certain product lines are being pushed.

 Product-Emphasis System

Depending on the aim of the competition, individual products (or client groups) are given different points. To win, a sales person has to reach a certain number of points. In addition, you can also set a minimum turnover for a product.

Critical analysis: With this scheme it is possible to push various different products or clients within the structure of sales strategy.

 Profit System

The winners are those who reach their goals first. A timeframe is set during which sales people can benefit from the profit ‘pot’ until it is empty.

Critical analysis: This system is suitable for products, which need accelerated sales. However, the sales people are only encouraged as long as the pot still has profits to share out.

Implementing the right incentive scheme is important to achieve a high level of results and is a subject covered on good management training courses.

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