Redesigning Sales Incentives For Employees 🏆
Compared to the past, customers today are a lot more informed and well researched. This largely thanks to the wealth of information available online. In effect, salespeople are having to navigate an ever-changing and challenging market. Companies are having to think of new and innovative ways to keep salespeople motivated. One way to do this through sales incentives for employees. We’ll be discussing how sales incentives for employees can boost growth for your business.
How Sales Incentives For Employees Can Help You Achieve Growth
With the advent of the digital age, today’s environment brings constant changes. Businesses are having to adapt to new channels like e-commerce. They also have to think of new ways to cater to customers new needs in a post-pandemic world.
This can be hard on teams that are having to undergo restructuring and additional training. New compensation models often have to be adopted in order to motivate teams continuously. This is especially true for sales. Your sales team should feel committed to improving rather than forcing them to reach quotas. Research has shown that sales incentives are one of the best ways to do this.
What Are Sales Incentives For Employees?
In the most basic terms, sales incentives are given to salespeople who meet certain sales targets, in addition to their standard compensation as a form of rewards or bonuses. Sales incentives can also come in either monetary or non-monetary forms. Non-monetary incentives can be anything from a flatscreen TV to a paid vacation or time off.
This strategy has been around for a long time. However, if you’re aiming to use this method to motivate sales teams for changing old habits, slapping a check beside a sales quota is not going to cut it. This is why it’s important to design your sales incentives well. If done correctly, incentives can encourage healthy competition, drive to exceed targets, reinforce pricing discipline and create lasting positive impacts on business culture.
Sales Incentives For Employees Vs. Standard Sales Commissions
It can be easy to confuse sales incentives with a commission. A commission is an amount or percentage of money a salesperson receives based on the number of sales they make. Commission-based pay won’t set your company apart from the rest, as it is a fairly standard and an expected practice. This strategy generally does not motivate salespeople or encourage collaboration or innovative thinking.
Sales incentives allow teams to constantly work towards new goals and to improve their skills in order to outperform themselves. Though it fosters a competitive nature, incentives also encourage team members to collaborate in order to think outside the box. This gets them to try new tactics outside of their usual routines.
Innovative Incentive Schemes
When designing incentive schemes, companies must create a balance between a salespersons salary, their commission, and incentives for quotas. Doing so properly will allow for growth and a higher impact on sales. We’ll be discussing several tactics that drive profit, productivity, and performance:
With all the new digital channels available these days, making a sale isn’t as straightforward as it would seem. Products and services are often more complex, which means specialised expertise may be needed. For example, if the offering is not a physical product, such as cloud-based software, or a value based offer, salespeople will need more technical abilities or value selling skills. This can include IT or software engineering knowledge, or experience in customer focused needs analysis, SPIN selling techniques, value base customer segmentation.
People filling these unique roles may have different goals and motivations. Creating role-based incentives that can address the specific needs of teams may prompt them to reach higher. For instance, frontline sales that directly work to acquire and retain clients can benefit from more traditional incentives or commissions. However, those who aren’t in frontline sales, such as technical product specialists or strategic business development managers, will benefit from incentives that encourage support for frontline sales rather than in competition with them.
Long-Term Proportioned Incentives
In typical set-ups where two or more sales reps are required to handle one account, they may be incentivised by “double rewards” where both salespeople get the same amount from the revenue of a sale. Arrangements like this between reps in different branches/regions or functions can work to promote collaboration. However, since you’re doubling the pay for one revenue, this method can prove to be uneconomical in the long run.
A long-term alternative would be to split the generated revenue between the salespeople in proportion to their workload or involvement in the sale. This encourages both people to pull their weight. Take note that the human resources department should put in place and monitor a good governance mechanism. This will prevent disputes over the allocated funds.
Because products are more complex and offerings are more diverse, sales cycles have grown longer. Customers are taking more time to evaluate their options. To keep salespeople focused, multi-stage incentives can be used. This means that commissions or rewards can be collected in fragments. The first can be collected at the initial lockdown of a sale, then again at the final closing of the sale. This creates shorter periods between rewards.
Some companies such as those in B2B med-tech use incentives that reward measurable milestones instead of traditional sales closings. This can include acquiring verbal agreements to sales and signing contracts.
Digital Channel Adaptations
Less traditional salespeople are becoming more involved in the process as a result of less common channels that are being used, such as digital platforms. Sticking to conventional methods can leave them out despite them being key players in the sale. Therefore, incentives can be given to those that help facilitate or act as consultants for sales made through digital channels. For example, a client purchases a product online. Though the sales process was completed digitally, customers might’ve been introduced to the company at sales runs or webinars. Hence, rewards should go to the staff who leads these events.
Similarly, companies that have shifted much of the process online, therefore, require less physical or face-to-face involvement from sales representatives. This can be discouraging as traditional incentives won’t work as well. Instead, companies can use their data and advanced analytics to produce recommended selling actions. Salespeople who have the ability to comply with the actions are rewarded.
Bottomline – Redesigning For Success
The ability to restructure in order to progress from traditional methods is key to growth and success. A company should prioritise motivating their employees and make sure they are rewarded for their work properly. Happy teams result in more competent teams.
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