Sales incentives can be a great benefit to your department or organization, but there are risks involved with implementing them incorrectly. For instance, you may reward salespeople unfairly if their rewards are based on territory. Rewards may also cause salespeople to coast by once they earn them. To figure out the most effective strategy for your particular supply chain, follow these five guidelines:
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Step 1: Analyze Your Sales to Focus Your Goals
Take a look at your current sales. Analyze sales by gross numbers, product lines, profit margins, territories and sales reps. Rank each of these categories in order of performance. This will help you determine where your pain points are and what your incentive program targets should be. You might discover, for instance, that much of your sales come from a single product, so you may consider rewarding your sales teams and sales channel partners for pushing out different products to increase your product mix. Offer smaller rewards for low-margin products that are easier to sell, and bigger rewards for high-end items.
Step 2: Provide Exciting Rewards
The next step is to decide how you’re going to reward your sales teams and partners. This is an important step. If you can’t offer appealing rewards, no one will want to enroll in your program. Think about the interests and needs of the typical salesperson you work with.
Cash is, of course, the easy answer, as cash can buy any reward. But cash doesn’t make a statement. It doesn’t stand out apart from other bonuses and commissions, and it doesn’t remind the recipient of your company or their achievement. To make your reward program memorable and engaging to participants, you can offer non-cash rewards through an online rewards system.
Companies like Loyaltyworks offer millions of non-cash rewards, from HDTVs and tools to flight and event tickets. These kinds of rewards are noteworthy conversation-starters. They will get people talking about your reward program and inspire them to be more active within it. With the promise of exciting rewards, your participants will be frequently submitting new claims to save up for exciting items like a new grill or patio furniture.
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Step 3: Decide How You Will Distribute Rewards
Start fresh with your reward system: focus on rewarding new and increased sales, rather than for existing or ongoing achievements. This will ensure new life is breathed into your sales numbers and start everyone off on the same foot, encouraging low performers to excel and outperform those who are usually the highest performers. You may want to consider offering tiered rewards—for example, 500 points for the first $100 of a sale, 1,000 for going over $100, 1,500 for going over $150, etc. This can inspire your to teams to make larger sales.
Another way to keep participants engaged is to use an instantaneous system, so they don’t lose interest waiting to be rewarded for their good deeds. Loyaltyworks online reward technology allows you to reward your participants immediately with points. This drives instant gratification and solidifies the connection between the salesperson’s desired action and their reward. Those points then act just like currency within an online reward mall—they can be redeemed for any item in the catalog. Remember how fun it was to go to the arcade as a kid and exchange your tickets for prizes behind the booth? The points-based system works very similarly, only the prizes are much better than just stuffed bears and keychains. When the reception and redemption of points is easy and immediate, salespeople will be much more eager to join your reward program.
Step 4: Distribute Rewards on an Even Playing Field
Determine how incentives can influence each salesperson or channel partner. Is there a senior distributor in a prime territory with large accounts who will earn rewards left and right, while smaller-scale partners struggle to meet your program objectives? Strategize your rewards system so that it isn’t skewed in favor of a few individuals or B2B sales partners. Make sure your low-end and—most importantly—middling performers will be able to see worth in joining your program. Your middle or average performing salespeople are usually those who have the most potential to grow, so motivate them to do so! This is where your incentive program can really make a positive difference in your sales numbers.
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Step 5: Communicate Clearly and Effectively
Communication, communication, communication! That’s the key to getting your employees and sales channel partners to adopt your program and stay involved. Make sure you clearly communicate to your participants what they stand to gain from joining; otherwise, why would they bother? Make yourself available to answer questions, create a FAQ section on your incentive program website, and lay out clear rules in the very beginning. Changing rules once the program has already begun is likely to put off participants and reduce their interest. Leave as little room for misunderstanding as possible, and gather feedback to adjust and refine your goals to drive ROI and ensure your program is even more effective in the future.
Loyaltyworks offers a communication package with every reward program so that you have a useful, multichannel marketing and communication tool that reaches participants through multiple mediums. Not everyone is best reached the same way—a multichannel approach ensures you communicate with as many participants as possible.
Following these five steps can help you avoid a host of common sales incentive program mistakes. Incentive programs are not one-size-fits-all solutions. A sales incentive program can help your sales team thrive and grow your profits, but only if you put time and attention into it from the start and tailor it to your organizational needs.