If you are investing in sales incentive program, you want to know if it is going to make an impact on your sales team with a high ROI. But the question is: what's the secret to effective sales incentives?
The IRF’s quarterly academic review is out and this issue explored the largest component of corporate expenditures on incentives in the U.S., and, perhaps, the oldest – sales incentives.
We’ve combed through the full study and compiled 3 of the most compelling points on sales incentives, including why they are still such a popular tool for businesses, the types of incentives that work best to motivate, and ways to tailor your incentives for your workforce.
1. Use sales incentives.
One common insight occurred across the studies: sales incentive programs motivate employees. Even in difficult times, incentives decrease attrition, especially among top performers who have other job options.
One study states, “A robust body of empirical findings across diverse industries indicates a strong positive relationship between sales incentives and sales worker productivity...sales incentives increase sales workers’ performance by 17%.”
Even for salespeople who might be more intrinsically motivated, one study found that having a balance between intrinsic motivators (e.g. doing a good job for one's own sake) and extrinsic motivators (e.g. rewards and recognition) is the most effective system for motivating an organization.
2. Non-cash incentives aren't just an alternative to cash.
Considerable empirical evidence finds that non-cash rewards and recognition programs can be more effective than cash incentive programs—three times more effective according to some estimates. However, in tough economic times, travel, bonuses, and merchandise might be out of reach for some firms.
A popular option for companies with a tight budget is gift cards. With a wide-variety of brands to choose from, you can personalize options that are appealing (and more incentivizing) to your staff. Other non-cash rewards include flexible hours, greater autonomy and choice (i.e., products to sell, territories, etc.).
3. Tailor incentives as much as possible.
Avoid catering to the “average” salesperson by using a one-size-fits-all design. Consider using new technologies to offer a greater range of choice in incentives and give salespeople a voice in selecting their rewards. This can be down through points-based programs and redemption platforms, like our Engage2Reward® Reward Platform.
At a minimum, offer a mix of cash, recognition, and tangible non-cash rewards, such as travel or gift cards. Research results comparing cash to equivalent value non-cash items suggest that sales representatives value the latter more than the former.
Keeping these 3 takeaways in mind, your sales incentive program will soar to the next level. If you'd like to read the whole review, click here.