What is a SPIF (Sales Performance Incentive Fund)?

Jul 11, 2019
6 min read
A SPIF, or sales performance incentive fund, is a short-term sales incentive used to drive immediate results. Here's what you need to know to use them.

A sales SPIF, also known as a special performance incentive fund, is a short-term incentive typically used to drive sales of a designated product or service. SPIFs are often considered in compensation planning but are not always mapped out. Rather, they are often spontaneous incentives that boost performance and sales over a short period of time.

Typically, when sales leadership implements a SPIF, they choose a particular product or service to focus on. Sometimes the product is chosen because there is momentum building in sales, increasing opportunities in the market, or because sales are not where they should be too meet organizational goals. Thus, a new product launch or the need to complete sales within a specified time period could lead an organization to offering a SPIF, or special "bonus" to those tasked with selling the particular product or service.

It’s probably no coincidence that the verb to spiff means to dress or spruce up something and give it a little extra pizzazz. In the same way, SPIFs are meant to motivate reps to shift their focus and make closing those deals more beneficial. Here is everything you need to know about implementing sales SPIFs.

When to use SPIFs

Since all companies have both short and long-term goals, SPIFs should be a regular part of your short-term incentive compensation strategy. As a matter of fact, recent research shows that more than 50% of best-in-class companies drove their increased profits through SPIFs. To help you get started, here are four ways a SPIF can be used to drive and increase sales performance:

1. To Push Pipeline Forward

Regardless if it's a company's "off season," where sales take an annual slump, or if it's close to end of quarter or year, SPIFs help progress opportunities further down the sales pipeline. SPIFs can be helpful to motivate reps to push deals down the sales funnel and progress deals even if it's the slow sales season.

2.  To Support a New Product or Service Release 

For new products or services, it's important for organizations to create and boost momentum for a successful launch. SPIFs can be helpful to put the new offerings at the top of sales reps' minds when they are assessing new prospects or looking to up-sell with current customers.

3. To Take Advantage of Opportunities in the Market

Similar to new product and service launches, SPIFs help companies take advantage of upcoming opportunities. Often, this means moving into a new market or industry that hasn't yet been tapped by competitors. A SPIF will encourage reps to jump on new leads and help establish the company as the first on the map in a new industry.

4. To Boost Poor Sales Numbers

Unfortunately, SPIFs don't always accompany new releases or other positive scenarios. Sometimes they must be implemented to boost performance when sales numbers are low. Meeting goals is extremely important for successful sales organizations. SPIFs can boost sales performance by pushing highly-motivating short-term incentives into the existing sales compensation plan to ensure goals are met.

6 Tips for Implementing SPIFs

SPIFs come in many shapes and sizes, including fixed-amount spot bonuses, double club credit, or double quota retirement. They can also take the form of non-cash incentives.

When spiffing up your incentive plan with sales SPIFs, keep these six tips in mind:

1. Understand Your Organizational Goals

Is your short-term goal to boost revenue, units sold, sales leads, or order size? Having a solid handle on your goals will help you develop SPIFs that drive the behaviors necessary to meet these goals. Like the core of your sales compensation plan, SPIFs should follow the ABCs of compensation planning. According to Numantra, a Texas-based advertising agency, you can even “tie your contest to sales behaviors. For example, reward them for using voicemail or sales techniques that you’ve coached them to use.”

2. Use SPIFs Sparingly and Spontaneously

SPIFs that come at the same time every month or year become routine and don't work as effectively to motivate sales teams. When reps come to expect SPIFs at the end of each quarter or end of year, the incentives can be taken advantage of. Keep your plan “gameable” by introducing SPIFs at unforeseeable times, and be sure you don’t have so many SPIFs throughout the year that gaming them becomes the main focus.

SalesGlobe’s Mark Donnolo says that over-reliance on SPIFs can create behaviors that you don’t want. He likens it to Macy’s ‘One Day Sales’: everyone knows they’re coming sooner or later, so they plan around them in order to get the biggest payoff. As a good rule of thumb, you should have no more than eight or twelve SPIFs in one year.

3. Know Your Audience 

One of the greatest benefits of short-term incentive compensation are quickly deployed is that they can be easily tailored to individuals and groups. Use your data to determine what kind of SPIFs have worked in the past and which are likely to work in the future, and then use predictive modeling to determine potential outcomes.

4. Choose the Right Timeframe

SPIFs are designed to boost sales in the short-term. Therefore, they shouldn't be used over long periods of time to drive performance. Sales leadership must determine the appropriate amount of time. Based on historical performance data, leaders must find the right balance between incentive value (amount of money offered) and the amount of time needed to get on track to hit goals. 

5. Keep it Simple

SPIFs, like overarching sales compensation plans, should aim for simplicity. When incentives are simple, they lay out the expectations for sales reps clearly and ensure compensation administration execution is easy. For specific actions, both results and actions should be crystal clear. At the most basic level, sales reps should understand that if they sell X, they will be rewarded with Y.

6. Analyze the Outcome

For any compensation put before sales teams, it's important to analyze the performance and effectiveness of the incentives. The same is true for SPIFs. Compare the results to your predicted outcome, and decide if you like what you see. If your SPIF didn’t drive the desired behavior, use data to figure out why. Then, tweak your plan.

Understand the Power of SPIFs

SPIFs work, but when they are poorly designed, they can also serve as a field experiment in unintended consequences, à la the Nike SPIF. Let us consider the case of Sergey Bubka and the world pole vault record.

As the Guardian reported, Sergey broke the world pole vault record for the first time in 1984. After that he spent a decade slowly increasing his performance in small, yet measurable increments.

Perhaps it was the bonus from his sponsor, Nike, that was driving this performance: Nike supposedly offered a bonus to Sergey for each record he broke (rumored to be as much as $100,000 for each increment). This might have been the factor that helped drive a man to constantly strive to beat his own record repeatedly, going so far as to break the numbers 14 separate times from 1991 to 1993.

The impact of an incentive is sometimes hard to separate from the innate drive that many have to simply win. However, we have to wonder if Sergey would have been as driven to break the world record for pole vault a total of 35 times without the additional payment from Nike to keep him going.

The follow-on question might be that he would have gone for larger incremental improvements if he had been incented to only chase the smallest measurable win, absent a competitor keeping him on his toes and over the bar.

The Golden Rule of SPIFs

If people have no control over the outcome, the SPIF is bad. If people can take quick action and make a change, than the SPIF is good! If you throw one out that sales people can’t control it can be simply demoralizing.

One of the many advantages of using SPIFs is that they can be used to reach any specific goal—no matter how large or small. If you feel productivity is getting stagnant in your sales department, a SPIF might be just what you need to fire up reps, and use their competitive nature to your advantage. They get an exiting trip or prize; you get to easily reach your goals or quota.

  • Incentive Compensation
  • Sales Coaching and Motivation
Karrie Lucero
Karrie Lucero
Content Marketing Manager

Karrie Lucero is a Content Marketing Manager at Xactly. She earned marketing and journalism degrees from New Mexico State University and has experience in SEO, social media and inbound marketing.