How to Implement and Redesign Sales Incentives for Employees 🏆
Working in sales may be a tough job, so it’s vital to have methods in place to encourage and interest your staff. In a sense, as leaders and managers, you must understand that sales incentives for employees are critical to the success of your company.
Compared to the past, customers today are a lot more informed and well researched. This is 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 is through sales incentives for employees. We argue that sales incentives for employees can boost the growth of your business.
In this article, we will define a sales incentive for employees. To further explain it, we compare it to regular sales commissions. Then we’ll go over the top four kinds of incentive programmes that you may employ to come up with the ideal sales incentive for your organisation.
At Taylor Wells, we believe that irrespective of the nature of sales, whether retail merchandise, automobile sales, or service memberships, sales incentives for recognising when employees achieve or surpass standards are extremely beneficial in the workplace.
By the end, you will learn the best approaches for implementing for the first time or redesigning your existing sales incentive models for your employees.
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 have 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 for employees are one of the best ways to do this. How can you properly implement this strategy? First, let’s define what sales incentives are.
What are sales incentives for employees?
In the most basic terms, sales incentives go 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. For you to understand sales incentives better, let’s compare them to standard sales commissions.
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 fairly standard and expected practice. This strategy generally does not motivate salespeople or encourage collaboration or innovative thinking.
Sales incentives for employees, on the other hand, 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. When is the best time to employ sales incentives?
When should organisations utilise sales incentives for employees?
In a broad sense, when sales professionals reach certain sales objectives, such as selling a certain number of products or meeting a certain amount in sales income, incentives should be used as regular reward programmes. Likewise, firms can use sales incentive plans to motivate and engage their personnel. This will result in increased productivity and effort to reach their goals. How do you design the best sales incentives model for your employees?
4 Innovative Sales Incentives Schemes for Employees
When designing incentive schemes, companies must create a balance between a salesperson’s 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:
1. Role-based Incentives
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 there may be a need for specialising in terms of expertise. 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, experience in customer-focused needs analysis, SPIN selling techniques, and value-based 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 competition with them.
2. Long-Term Proportioned Incentives
In typical set-ups that need two or more sales reps to handle one account, they will have incentives 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 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.
3. Multi-stage Incentives
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.
4. 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 can comply with the actions gain rewards.
More Non-monetary Sales Incentives for Employees
1. Learning/training opportunities
Personal and professional development can be a significant motivator for sales representatives who want to better themselves. But did you know that such an incentive is underutilised? So, why not provide professional development opportunities as a perk? This could include specific sales training, admission to a future conference or sales event, seminars, training, and guidelines on how to use sales technology more effectively. Employees that enjoy cognitive enrichment will benefit from this.
2. A simple, yet memorable recognition
While most employees are content with their jobs, a research conducted by the American Psychological Association discovered that 44% of employees are dissatisfied with the recognition they get from their workplace. Further studies discovered that up to 50% of employees who got an incentive at work are more concerned with how the reward is given to them than with the prize itself. Isn’t that interesting?
That is why recognition can be a huge motivator in and of itself. Aside from the popular “employee of the month,” other sorts of acknowledgement include lunch with the company’s leaders or executives, as well as a commendation in an organisational meeting.
3. Product incentives
These are an excellent motivator for your employees as long as it’s a thing they want. Technology items or household appliances, for instance, are product incentives. They serve as a physical reminder of their accomplishments. People may doubt their achievements in the future, product incentives allow them to enjoy the glory of victory over and over. We advise that you provide a choice of two or three different items to ensure that this incentive appeals to all members of your staff.
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 receive rewards for their work properly. Happy teams result in more competent teams.
Using sales incentives for employees benefits your organisation, but we must not forget that it also has costs. You need a pricing team to assist you in deciding and selecting the most valuable incentives.
Our findings also show that with the right setup and pricing team in place, incremental earnings gains can begin in as little as 12 weeks. Using superior price management techniques, the team can capture at least 1.0-2.25% more margin after 6 months. After 9-12 months, organisations are frequently generating 3-7% higher profits every year as they find more complex and previously unrealised possibilities, efficiencies, and risks.
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