Let’s say you — a business owner — are about to launch your awesome, innovative, game-changing new product. You’re beyond excited, but your sales team seems less enthusiastic.

You need them to move X number of units to meet your company’s sales goals, but they aren’t as motivated as you’d like them to be. You’re at a loss for what to do next, so you start exploring your options.

In your search, you may find that something called a spiff might just be the answer to your problem. In this article, you’ll get some perspective on what spiffs are, an understanding of the risks that come with them, and a better picture of how to use them effectively.

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What is a Spiff?

Spiff stands for "Sales Performance Incentive Fund" (spelled with an extra "f" for some reason in some cases). It’s a short-term, incentive-based initiative meant to motivate sales representatives.

The concept of a spiff boils down to telling your sales reps, "If you move X amount of product or schedule X amount of demos or close X amount of deals within a fixed timeframe, you get a reward." Most spiff incentives are financial, but things like prizes, vacations, and recognition can all serve as the basis for an effective spiff program.

Though spiffs can be a powerful resource for motivating sales representatives and giving your business the extra boost it needs in the short term. There’s no guarantee that they’ll work, and planning a successful one might not be as straightforward as you would think.

Why Use Spiffs?

1. Spiffs incentivize engagement.

Employee disengagement is a very real concern for many businesses. Keeping employees invested and efficient can be a struggle. Spiffs are one way to address this issue. They have been known to encourage employee participation and lend themselves to active, competitive workplaces.

2. Spiffs are a good way to meet short term sales needs.

Spiffs are designed to help businesses meet or exceed sales goals in a short period of time. If your business is looking to have its reps quickly meet their sales quota, a well-designed spiff might be the way to go.

Designing a spiff may be tricky to figure out, but there are certain steps you can take to ensure that your program is the best it can be.

How to Do Spiffs Right

1. Understand your goals and define them clearly.

You should know exactly what it is you want out of both your sales team and the spiff itself. Once you understand your objectives, make them abundantly clear to your reps.

No matter what it is you want to do — improve your sales pipeline, close more deals, promote a new product, or something else entirely — your reps need to know exactly what you're after to keep them on the right track and working towards what’s best for your business.

If you had a team of 15 reps, a clearly defined goal could be having them bring in at least 700 new leads by the end of the quarter cumulatively. That goal contains a clearly defined, attainable figure to serve as a reference point for how well your spiff is working.

2. Understand and articulate how your reps should achieve your goals

Your reps need to know what they are supposed to be doing and how they can earn the incentive. You need to tell them what you expect from them — be it selling specific products, scheduling more demos, or whatever else it may be that will help you reach the goals you set.

In our example, you could specify that the leads your reps are bringing in need to come from cold calls. That way you can put everyone on a level playing field and incentivize them to utilize a specific sales methodology that may have worked well for your business in the past.

Your reps should also know the figure you want them to hit. If they need to bring in a fixed number of leads by the end of the quarter, make sure they know exactly what that number is.

Tell them, "You’ll receive a $1,000 bonus if you bring in 50 new leads by the end of Q1," as opposed to, "You can win a $1,000 bonus if you bring in a lot of leads this quarter."

3. Establish who can participate

You need to set parameters for who is going to be involved in the spiff. Your reps need to know whether they are even eligible for the program to avoid any confusion.

If you’re trying to incentivize your SDRs to each bring in 50 new leads, make the spiff specific to them and clearly define those terms. You wouldn’t want other kinds of reps foregoing their other responsibilities to participate in a spiff when you don’t need or expect them to.

4. Determine the incentives themselves.

What are the reps working towards? Is it cash? A vacation? A trophy? A gift card? You need to establish what they should be looking forward to. That’ll be crucial in helping motivate your team. If they only have some vague idea of what the incentive is, they might not apply themselves as much as you need them to.

In our 50 leads for $1,000 example, your reps would need to know exactly how much money they were working for. Only telling them they’ll receive a bonus for their efforts likely won’t produce the results you need.

5. Figure out a timeframe.

You need to have a picture of how long your program will last — for your and your employees’ sake. Spiffs are temporary. They are meant for short-term sales boosts. You and your employees need to know exactly what "short-term" is going to mean.

If you’re trying to drive your reps to each bring in 50 leads in Q1, establish that quarter as your timeframe and concretely relay those terms to them.

6. Budget properly.

The cost of spiff programs can add up quicker than you might think. You should always be conscious of how much these kinds of programs could potentially cost you and plan accordingly.

If you’re willing to offer a $1,000 bonus for your reps that bring in 50 leads, you’d better be prepared to shell out that kind of money. Make sure your budget can handle several, if not all, of your reps reaching that milestone.

7. See if it was worth it.

You need to have a plan in place to measure whether or not the program was successful. You should identify the metrics that best fit your sales goals and use them as a reference point. That way, you can understand whether or not you should implement a similar spiff in the future.

The most important metric in this scenario is ROI. In our example, you would need to see if the spiff actually brought in the additional leads you were looking for, if those leads were worth the bonuses paid out, how many reps actually took the initiative to win the incentive.

Even with these steps in mind, there are still some issues you have to account for.

Potential Problems and How To Solve Them

1. Spiffs can lead to sandbagging

If your sales reps know that a spiff is coming, they may wait until the program starts to close deals they could’ve closed earlier. One way to manage this issue is to have your spiff be a surprise. Don’t let your sales reps know that it’s coming. That way, you can prevent them from essentially gaming the system and potentially losing out on deals they could deliberately wait too long to close.

2. Too many spiffs can eat up your budget

Though spiffs are good for sales in doses, there’s a reason they’re confined to short timeframes. Coordinating several spiffs can end up being costly, and the employee engagement they generate can have diminishing returns if your business uses too many. It’s recommended that you try to keep spiffs infrequent — generally just once or twice a year.

3. They can create a toxically competitive work environment

This effect is often the case with spiffs that have only one winner. Employees who are certain they can’t win may end up backing off of the competition as a whole, and this kind of "all or nothing" mentality may create tension between sales reps. One way to address this issue is to offer incentives that all employees can reach. For instance, you could reward any employee that exceeds his or her sales quota for the quarter.

Like I said, planning a spiff might not be straightforward. There are a lot of moving parts to consider, and the exact recipe for a successful program may vary from business to business. That being said, there are steps you can take, problems you can look out for, and solid starting points to reference for planning a spiff that suits you and your business well.

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Originally published Jan 23, 2020 8:30:00 AM, updated January 23 2020

Topics:

Sales Motivation