Sales incentives can be a business leader’s most powerful tool to drive success across their organizations. According to Aberdeen Group, incentive compensation management solutions are deployed 100% more frequently by best-in-class organizations. The reason why is simple; incentives work. Research illustrates employee incentives boost performance up to 44 percent. In turn, such yield drives billions of dollars that are spent annually on incentive programs, or roughly 10% of total sales. When creating programs, though, which sales incentive ideas are worth pursuing?
There are many forms to consider – spot bonuses, SPIFs, contests, special events – yet all have the objective of driving a desired behavior towards positive business outcomes.
Perhaps you want to motivate your sales team to increase upselling or cross sells. You may want to strengthen your organization’s customer focus. Or, you may wish to give your team an incentive not to do something – such as lowering pricing, for example.
To earn desired results from your incentive architecture, your plan must drive the desired performance – yesterday’s best practices are less effective.
In our evolving selling (and buying) environment, here are five top guidelines to follow when orchestrating sales incentive programs.
Sales Incentive Ideas
1. Use Automation
Automation makes it easier to manage incentive compensation leveraging fewer resources and giving real-time end user visibility. These are the table stakes today. Xactly’s customers found by replacing spreadsheets with an automated solution, they are saving time and increasing accuracy – building more trust with teams and improving organizational efficiencies.
Before adopting Xactly Incent™, for example, Hyatt Hotels managed their compensation plans manually on spreadsheets. Their old process took weeks to close a period. Using Xactly, Hyatt has automated more than 36 different types of compensation plans supporting over 1,800 employees.
Xactly’s customers are able to dismiss tedious administrative tasks, which waste dozens of hours and reduce them to less than 30 minutes.
Automation also reduces payout errors. Did you know that roughly 1 in 12 commission calculations is incorrect? It also eliminates rep shadow accounting (read: reps spend selling time checking math on their commission payment). Selling time is expensive and leadership and/or shareholders shouldn’t pay for such administrative tasks.
Automation will serve as a communication lever or single source of truth making requests effortless for finance to test on-demand insights versus expected incentive or commission payments. CFOs recognize the movements with no surprises – and what’s on the books.
2. Apply Analytics
In its 2016 Sales Performance Optimization Study CSO Insights states:
“On average, the more companies rely on the science of selling versus the art, the more success they achieve.”
Data-driven insights are transforming sales. Today it’s clear – companies that embrace new technology outperform laggards. This encompasses all different components of the sales process – notably sales incentives and compensation.
At Xactly, we see first-hand how our customers react to data-driven intelligence and apply knowledge to sales incentive plans. With analytics layered on top of these programs, organizations gain a treasure trove of data, which deliver greater business outcomes.
With aggregated data available at your fingertips, you see how your sales compensation plan performs versus similar organizations. You see what type of compensation plans are being adopted by similar-sized companies or businesses in your industry. You can see what they’re doing and their respective results.
Xactly has amassed 11 years worth of data-driven compensation intelligence. Our platform calculates more than eight billion transactions each quarter and has handled $20 billion in incentive compensation in the last two years alone. With the only empirical sales incentives and compensation data set on the market, we empower our customers to maximize the effectiveness of their sales incentive and compensation plans.
Take National Instruments, for example. While the first step in redesigning their incentive compensation plans was automation, they also wanted insights regarding effectiveness. Working with sales compensation consultants on Xactly’s Strategic Services’ team, they were able to harness the power of analytics to monitor and assess the performance of their plan, quickly identify/ adjust problems; and apply benchmarking capabilities to analyze relevant industry and peer data. (Read the case study here.)
The business technology research firm Ventana Research recognized this innovation. In its 2016 Leadership Awards – an annual awards program honoring companies that embrace technology to drive change – Ventana named National Instruments as a winner in sales excellence.
You don’t coach people the same so why would you incentivize everyone the same? People are individuals, and what motivates one person on your team may not motivate another. Today’s sales teams are diverse. We hear a lot about millennials yet today’s work force is multi-generational.
You want to consider what approach will work best for different members of your team. If you have a disproportionate number of millennials, study their needs. According to Aberdeen, millennials crave more recognition for a job well done. They are digitally savvy and expect to leverage new technology in their jobs. Learn more on motivating millennials.
Building a meaningful relationship with your team is more important versus your customers. It’s not simply supporting the sale it’s supporting the seller.
4. Go Mobile
85 percent of us check our mobile devices within the first 15 minutes of waking up in the morning. With sales people the number is higher. Sales people live on their mobile devices.
Sales reps want on-demand access to relevant information. They want to know how close they are to achieving quota and how much they’ll earn when they ‘hit’. Give them the ability to accurately estimate bonuses and track progress on their mobile devices–this is how they operate.
With seamless mobile access to data, you help lower questions regarding commissions and payments. Customers cite up to 88% reductions in commission queries with on-demand performance access.
5. Include Recognition Initiatives
Incentives are no longer just monetary rewards. Aberdeen research shows that while “financial compensation remains the leading contributor toward sales excellence,” internal recognition for positive performance is growing as a behavior motivator – notably for millennials.
In the eBook “Inspiring Sales Rep Performance,” sales expert Alice Heiman suggests:
“Do a survey of your salespeople and find out what they like to eat, drink and do in their spare time. Then collect gift cards for coffee, meals, movies, golf and other favorite things. These can be under $20 or $500. Have them ready and then find opportunities to appreciate an action internally or for a customer that deserves applause. Say thank you to them and be specific about what you appreciate and then give them the gift cards. People who feel appreciated perform better.”
6. Future-proof Your Compensation
Progressive leadership teams thrive in a math house. “Gut instincts” are dangerous given we have empirical data to drive decision-making. Of course, experience still matters, and we’re not fully robotic (yet). But it’s important to embrace a new way to accelerate performance of your team.
Finally – while you’re doing everything – don’t forget to keep it fun! Keep it personal. Keep it authentic.
At Xactly, we’re passionate about the value in human performance with incentives and compensation. If you’d like to learn more about how Xactly can optimize your employee incentive or compensation plan, please contact us today.