Sales Incentives

Sales managers have competing views on the most effective types of sales incentives. One school of thought maintains that cash prizes are always preferable to products and services, for they give their recipients total liquidity with which to buy the things they want or need. Proponents of this theory allege that trips, vacations, and other novelties may be squandered on sales reps who have no desire to use them.

The rival camp holds that cash is too impersonal, especially as a gift for a loyal and experienced rep who's put in years of consistent and outstanding work. Not only should a sales manager know his or her reps' individual tastes after years of working together, he or she should also put forth the effort to hand-pick an appropriate prize. This may be a nominal gift such as a 100-dollar certificate to a popular restaurant, or it may be something more generous such as a fine watch.

One problem that arises when choosing one type of incentive versus the other is the unpredictability of monthly, quarterly, or annual sales numbers. For any incentive to work, it must be dangled before its competitors prior to its awarding, and at that point it's simply impossible to tell who will win the crown and who will finish out of the running. Thus, the onus is on the manager to find an incentive that works for all members of his or her staff, their tastes and preferences notwithstanding.

To the Victor Go the Spoils

An effective trick that some sales managers have used over the years is to include a measure of choice for vying parties. By putting, say, a 10,000-dollar cash prize up alongside an all-expense-paid weeklong Hawaiian vacation and a new car, a manager can rest assured that he or she has covered all the bases. Odds are, there are team members who will view each of the three choices as the top prize.

The problem with such a setup is that it can grow costly--and quickly. Moreover, what if a manager offers up a total of 50,000 dollars worth of prizes, only to find that his or her reps generate a mere 25,000 dollars worth of sales? Since it's next to impossible to predict the economic climate for the year to come, most managers have opted instead for a multi-tier system in which the relative value of first-, second, and third-place prizes is easily discernible.

There's a famous scene in the David Mamet play Glengarry Glen Ross in which Blake, played in the movie version by Alec Baldwin, tells his sorry sales force that the first-place prize for the office is a new Cadillac. The second-place prize is a set of steak knives. The third-place prize is "You're fired!" While this may be too extreme for most sales managers, there's a lesson to be taken from this dramatic scene: to the victor go the spoils.

We're All on the Same Team Here

No matter what approach a sales manager takes with his or her staff, framing the competition as a double-win (to borrow from sales parlance) is a smart move. Doing so means aligning everyone's interests so that reps go out and sell instead of sniping at one another, sabotaging their competitors' leads, and worrying about job security. Achieving this unity while keeping individuals sufficiently motivated can be a tough maneuver, but it's not impossible.

One way to incentivize all sales reps at once is to offer rewards for aggregate marks. That way it's no good if one team member sells a hundred thousand dollars worth of real estate while the number two rep checks in at five grand. Opponents argue that this unfairly penalizes those maverick salespeople who go out and make a killing. On the other hand, allowing team members to motivate one another instead of motivating them from above can lead to unprecedented sales figures office wide.