Sales incentive programmes are an excellent way to help your business achieve many business objectives, for example recognising performance, increasing sales, inspiring dealers and channel partners, or encouraging repeat business from customers.
But they can also go horribly wrong, as the PPI scandal has demonstrated. If you want to know how to avoid your incentive failing here are our seven deadly sins of sales incentive programmes:
1. Misaligned programme and business objectives
This is perhaps the primary cause of the banking scandals. Incentive programmes weren’t aligned with business objectives and so prioritised sales over customer service; as a result the sales teams got paid and were happy but it cost the banks millions both in terms of reputation and compensation.
You should design your programme around positive behaviours that will align with your business objectives, and then consider all the potential unintended consequences that might occur.
2. Too many rules
Incentive programmes that have too many rules and regulations make for frustrated, demotivated and aggravated employees. They shouldn’t have to jump through hoops or read the detailed small print to receive their reward. If your programme is too complicated then your sales reps will quickly disengage from the programme.
Keep it simple by measuring your sales team against a small number of specific metrics.
3. No transparency
A lack of transparency in a sales incentive programme can lead to mistrust and accusations of favouritism or brown-nosing. The result is that the programme risks its credibility and dis-engaging employees.
The reward criteria and people’s targets should be completely transparent. This means making sure that everyone knows the targets they have to achieve and that they can see each other’s performance.
4. Ill-thought out incentives
Too many rewards and incentives are not properly thought out. Not only will the wrong rewards and incentives not motivate anyone, but you also risk demotivating employees and reducing sales rather than increasing them.
Not all rewards will motivate your audience or be appropriate for the level of reward you wish to deliver. Involve your participants in choosing a mix of rewards that will motivate your high flyers as well as your middle and lower tier performers.
5. Setting impossible targets
Sales targets are often challenging; that’s their nature. But setting targets that participants don’t believe they can achieve will result in your incentive scheme failing.
Set your sales targets to be challenging and specific but attainable. At the start of your programme set targets that give your participants quick wins and rewards to develop programme engagement.
6. Not considering the data
Sometimes businesses have their data in different systems that don’t talk to each other, which means rewards can be missed. Other times businesses don’t use the data generated to improve the programme and motivate their sales teams further.
And when it comes to selling your products through a dealer or channel partner then businesses often struggle with the availability and quality of data they receive.
Before you launch your scheme carefully think about what data you have, what you’ll get and what you need to know and set up your programme accordingly.
7. Short-term focus
Sales incentive programmes need time to bed in if they are going to be successful. Having a short-term focus will generate a quick sales boost, but it doesn’t give employees and channel partners’ time to revel in their success and buy into the programme.
Ensure you have management buy-in for a long-term sales incentive programme. The most successful programmes run, on average, for two years and research shows that programmes that last more than a year average a 44% gain.