Sales Rewards: 5 Best Practices

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Ronald Sierra
Ronald Sierra
In Sales, Sales Coaching, Sales management
Ron Sierra is a Content Writer at Xactly. He earned a literature degree from UCSC and specializes in creating value-driven content for professionals in everything from construction to tech to sales & finance.

If you’re looking for sale rewards ideas, then it probably goes without saying that you’re looking to motivate reps to reach or exceed a certain level of performance. To accomplish this there are several critical considerations you need to make about the relationship between sales reps and incentives. These factors will help you choose sales rewards, not with a gut feeling, but with a greater sense of strategy.

If you simply want a list of non-cash sales rewards ideas, we have an excellent collection of 101 sales reward ideas here. Although, we highly recommend reviewing these six sales rewards best practices before viewing the list.

1. Keep Monetary Compensation Simple

You’re likely using financial compensation as a means to motivate your sales reps. That’s no surprise, but what might be is the data we collected from our recent Comp Survey, which included responses on sales compensation processes from 249 companies. In the survey, we found the following correlations between incentive plan complexity and rep turnover:

  • 74% of companies with low complexity plans achieve the desired turnover rate vs. 63% of companies with a high complexity plan

This is only one of the ways overly complicated plans are hurting you. Incentive compensation is put in place in order to maximize rep performance, but convoluted plans lead to throwing away money that’s actually supposed to grow your company. The lesson? Keep your plans simple if you want monetary compensation to be an effective sales reward. Past studies have shown the optimal set of measures for a plan is no more than three.

2. Keep Rep Psychology in Mind

Leveraging incentives to maximize rep performance is more than dangling a collection of carrots in front of your reps. The effective implementation of sales rewards is a behavioral science. This means considering the psychology of reps as you decide on the possible rewards you will implement. We could cover rep psychology for infinite fiscal quarters, so for the purposes of this blog (and the fact you probably need to get back to work), we’ll lightly dive into a few of the critical psychological factors pertinent to sales rewards.

  • Risk and Reward: Is this worth it? Whenever presented with rewards, your reps instantly weigh the perceived value of the reward relative to the effort needed to attain this goal. Fail to balance this line and you’ll set objectives that are too easy or so difficult that only a few salespeople will waste their time. The rule of thumb: rewards should be desirable and goals should be attainable.
  • Rewards Can Demotivate: This is a bit of a contentious claim as some of the research community is split. But there is enough evidence to prove that in specific contexts, rewards can negatively affect performance and be an ineffective tool for achieving business goals. In one field study, factory workers were incentivized to come into work on time. It worked—at first. Eventually many fell off, high-performers showed a 6-8% drop in productivity, and overall cost the plant $1500 a month. The problem? The researchers propose that this incentive program did not work because instead of rewarding high performance, it awarded fulfilling basic job expectations. The takeaway here is to always consider the overall message your rewards system sends and how that plays into the motivations of those who perform well and those who don’t.
  • Reps Will Game the System: In the same factory study, researchers were surprised to find what any sales manager in the world could have told you: reps will look for the holes in your sales rewards programs and exploit the system. Hey, it’s not cheating if it’s not against the rules, right? The factory workers, in particular, would call in sick if they thought they would be late in order to maintain eligibility for the program. Run your program through some critical minds as a beta test, so you can plug up any loopholes. And once your program is in place make sure to closely watch how reps are navigating the rewards program and make adjustments to the rules accordingly.

Download our guide, “Inspiring Sales Rep Performance” for top tips from industry experts on how to inspire sales reps and maximize their selling power.

3. Treat Non-Cash Incentives are Relative

Non-cash rewards are an effective way to support your traditional monetary compensation mechanisms. The power lies in the ability to incentivize reps with a reward that is novel and ideally lies between highly desirable, but not a must-spend-money-on item or experience. The challenge you will run into is that not all non-cash rewards will be appreciated equally.

Think of giving a gift to a friend. What’s going to go over better: a gift with mass appeal or a present that suggests you understand their personal interests? But in this case you’re not giving away this gift from the goodness of your heart, you’re attempting to catalyze a specific behavior from your sales team. So let’s consider the most difficult group of people in the world to motivate: teenagers.

One teenager may do his chores if you allow him to go a party. Another teenager would rather get the latest Game of Thrones book. The same can be said about between two sales reps. One could be excited about receiving an iPad, another may not only have no use for a tablet, but hate Apple products. In each case, success comes down to a saying sales professionals know well: know your audience. This audience includes the reps you’re managing or building compensation programs for—not just your customers.

While it’s unlikely you can cater to everyone’s specific wants, the better you know your reps, the better you can offer a selection of rewards that speak to your team personally.

4. Walk the Line Between Something People Want, But Won’t Buy

The most effective non-cash rewards follow this guideline: give reps something highly desirable that they wouldn’t necessarily want to buy on their own. Up and coming tech gadgets, free travel, tickets to a show or a sporting event could all work in this regard.

Novelty is your friend when it comes to these types of rewards. The more out of the ordinary, yet still appealing the reward, the higher chances of the incentive generating the results you need. These type of motivators stand as a nice contrast to traditional compensation as cash is often perceived as an expected part of the job. It doesn’t help that monetary incentives are seen as essentials—needs not wants. Providing reps the opportunity to acquire a “want” counteracts the diminishing returns seen with compensation incentives that are simply treated as part of the package.

5 . Choose the Right Rewards Structure

Almost as important as the sales rewards is the actual structure in which your reps obtain these incentives. Using an easy-to-understand form and rule set will help funnel your reps towards achieving goals that align with your overall business strategy. How you give out rewards matters. Two ways that have shown promise are unexpected rewards and gamified rewards.

  • Unexpected Rewards: While you wouldn’t intuitively think of an unexpected reward as a “structure”, surprises can be deployed strategically to incentivize predetermined behaviors. Studies have found that surprise rewards were better received than expected rewards.
  • Gamification: Interactive means of obtaining rewards, aka gamification, comes with a few advantages that leverage two motivational systems: timed-rewards and rewards compulsion loops. Time-rewards lean into the fact that people will often repeat actions that lead to pleasure. Compulsion loops tap into the satisfying behavioral pattern of action, reward, prompt, action, reward—ad infinitum.

It probably goes without saying to choose and design structures that push reps to achieve specific sales goals. This way they’re not just getting presents or playing games, but fuelling the business.

6. Distinguish Between Intrinsic and Extrinsic Rewards

These two types of motivations are not entirely disconnected, often feeding back into one another, but it helps to know the distinguishing features.

Extrinsic motivations are any external rewards, e.g. SPIFs, prizes, or incentives outside the rep’s self-driven desire to perform well. This aspect of rewards is often handled well enough, but how extrinsic rewards bolster intrinsic motivators is usually overlooked.  

Intrinsic motivations are the self-directed and innate psychological levers that drive a rep, e.g.  respect, competence, validation, etc. These internal motivators have been shown to be more powerful than any extrinsic reward, but you can use rewards to reinforce these intrinsic drives. For instance, does a rep like being self-directed? Strategically reward them with more autonomy in their role. Does another hold respect as particularly important? Award them publicly. Tap into what drives your individual reps and you’ll inspire performance.

The point is, when possible, build your sales rewards around the notion of intrinsic motivators. This way you’re not only providing your reps a reward for good performance, you’re validating and encouraging a sense of self that pushes them to excel every day.


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