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How sales incentives can boost motivation and improve productivity?

10th Feb 2015
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In a competitive business environment the achievement of sales targets is often key to success. Incentivising people to achieve a specific outcome is an ancient practice and it’s commonly understood to be at the heart of human psychology, behavior and our motivation. We use it not just in business but also in everyday life because for the most part it works – what gets achieved gets rewarded.

In order to ensure people are meeting sales targets businesses try to extract 100% effort all the time. So it’s no wonder that dangling a carrot (in the form of sales incentives) is a technique often used by manufacturers and distributors to motivate their sales teams and channel partners. As an added bonus, a successful incentive scheme can also play a role in improving employee loyalty and recruiting and retaining the best talent.

The start of a new year, whether it’s a calendar year or a financial year, is a great time to review and refresh your incentive scheme to ensure that it continues to meet your objectives and encourages your employees and channel partners to achieve their sales targets.

The main challenge when developing a sales incentive scheme is that not every sales person will be motivated in the same way. So here are some tips to make the most of your incentive scheme:

1. Remember the 80/20 rule

Experienced sales managers know that they typically achieve 80% of sales from the top 20% of the sales team. This means that it can be easy to make significant gains in a cost efficient manner by motivating those just outside the top 20% – it’s likely that top performers are already highly motivated anyway. When designing your incentive scheme keep in mind those just outside the top 20% and work out how to raise their performance levels.

2. Keep the targets real

We’ve all heard of SMART objectives and sales targets need to meet the SMART criteria, but you don’t want to make them too easy. This means they should be challenging, achievable and individual. However in many organisations sales targets are quarterly or even annual targets and this can result in a loss of focus. By setting smaller monthly goals as a stepping-stone to the overall target you can maintain the interest of your sales team, make annual targets appear more achievable and motivate those who are not your top performers.

3. Make recognition an integral part of the scheme

Don’t underestimate the impact of recognition. Sales people by their very nature like the limelight so make recognition part of your sales incentive programme by announcing achievements and making presentations in front of the company. And remember that in most cases recognition is free.

4. Select the right rewards

The right reward will motivate and inspire your sales people or channel partners to achieve their sales targets, but if the rewards on offer are unappealing then it’s unlikely you’ll see much return on your investment. Take a tip from the ‘Sales 101’ manual and find out what people want first and then offer it to them. Examples of great rewards that motivate include: prepaid cards, vouchers, gift cards, merchandise and travel.

5. Communication

Communication is critical to the success of any incentive scheme. In addition to launching your new incentive scheme, make sure that you are maintaining regular communication throughout its lifetime. You need to consider how people like to be communicated with and any differences that might be caused by sales teams who are office-based or field-based. As well as keeping your sales teams updated on scheme details and performance levels, ensure that you congratulate people and partners who have achieved their targets. By demonstrating what they’ve achieved and the reward they received others will be motivated to follow their lead.


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