6 November, 2020

How to Effectively incentivize sales teams to boost performance

Sales and channel partners determine a major part of an organization’s revenue, which is why incentivizing their performance has always been an important goal for a firm’s management. However, manual methods of sales tracking, channel partner data collection and incentive distribution have resisted optimization in this area. As a result, firms lose investment in the form of overpayments, rebates, fraud and worse- stagnation in sales numbers. This can only be combatted with a data-driven approach to sales incentives, backed by robust technology and a carefully planned incentives structure.

Incentives can range from commissions, SPIFFs, MDF to other types of motivational prizes, depending on the sales team structure, industry and organization-specific sales culture. To maximize RoI on incentives, it is essential to:

  1. Create relevant KPIs for sales and channel partners depending on their role in the customer journey
  2. Design reward programs keeping the majority of the sales force in mind (and not just the visible top performers)
  3. Continually modify rewards and incentives based on sales targets and gamify the entire sales process

With digital and social channels of communication expanding, customers are well-informed and heavily influenced by sources outside a firm’s sales and distributor network, which means firms need to establish KPIs to not just ensure sales numbers, but also modify partner behavior by rewarding, say, team work or establishing a personal connect with a prospect.

Secondly, the typical structure of a sales incentive program is meant to motivate only top performers and overachievers. The bar is generally too high to move medium or low-rung performers, which form a large part of any sales team. To increase sales in the long-term, the medium-rung performers need to be engaged with the right incentives and regular communication/mentoring. Digital knowledge bases, collaboration and virtual conventions (given that sales teams are mostly remote) have proven to work well. In addition, multi-tier reward programs, which means programs with more than two levels of achievement (either very low or very high) are proven to increase medium-rung performance according to a Harvard Business school study. Similarly, well-paced rewards, such as quarterly instead of yearly bonuses increase the performance of ‘weak’ players by about 10%. Finally, it’s important to remember that a majority of short-term sales are driven by top performers, hence their bonuses and incentives should be exciting enough to make them continually strive for more.

Interestingly, different people are motivated by different kinds of rewards. While some prefer cash, others are motivated by prestige (badge, title or memento), contribution (giving their bonus as a non-profit donation), or something more experiential (family getaway, fine-dining etc). Non-cash rewards have a subjective value, which means one is not obviously inferior to another. As a result, they appeal to a wider audience.


Lastly, real-time data for both direct and indirect sales needs to be integrated with the incentive distribution system, so as to improve partner experience. Sales incentive and channel management software can help in achieving this. Such technology platforms often come with open APIs, which means they can seamlessly integrate with other enterprise/CRM software to create a single platform for sourcing data. Besides, technology can automate workflows and prevent time and resource drain. As well, prescriptive analytics can help in analyzing individual, team and region-wise performance while giving action points to optimize performance. The right mix of pricing, redistribution, co-selling, upselling, and incentives can be the key to boosting sales performance and ensuring sustained growth.