How to Create the Best Sales Incentive Plan
‘We’re adding a little something to this month’s sales contest. First prize is a Cadillac Eldorado, Second prize is a set of steak knives, third prize is – you’re fired.’
‘Oh, do I have your attention now?’ (Alex Baldwin as Blake – Glengarry Glen Ross)
Every organisation we work with offers a different variation for their staff incentives. Low basic salary, high commission. High basic salary, no commission. Uncapped commission (there’s no such thing) KPIs for customer satisfaction, profitability, activity and revenue. Then there’s the breakdowns of commission. Hit your target and earn a percentage. Go over that and earn enhanced commission. Go much higher and get massive accelerator commissions and bonuses. And what about commission only? Or sales contests where you win an invitation to the ‘top performers’ club?
These plans are sometimes changed every 3 months. The reason is that salespeople are pretty crafty and always make these systems work for them – rather than you! They’re so complicated to monitor and manage. If your overriders aren’t attractive enough then your sales teams will perform to target, then hold back orders for the next month. It’s a form of cheating, where they maximise their regular income rather than go for broke. If they smash a target and go too high they know you’ll whack up the target next year and then they’ll earn less. Targeting is a bit old hat because it becomes something that salespeople manipulate and work around – rather than something that necessarily makes you money.
The most successful programme we ever saw was a company that paid a straight, fair commission on everything sold. No overriders. In effect, there were no targets. So the incentive was to sell as much a possible every month. This takes some courage but actually it’s the fairest because it rewards effort and there is no need to cheat.
Sales incentives are very odd when you think about it – what other job can you get where you’re paid extra for just doing your job – which is to sell?