Sales Incentive Plans

Written by Jeremy Horelick
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While it's impossible to generalize about salespeople as a whole, there are undeniably certain truths about those who make their living through selling. Smart incentive plans factor in the psychology of reward and use it to drive growth and high volume. It is the master sales manager who exploits these observations for the good of everyone in the sales office.

Great motivators have a few things in common, not least of which is a shared history with their underlings. It's hard for any manager to empathize with his or her force if he or she has never been "out in the field" suffering rejection and enjoying the rush of the close. For this reason, savvy national sales managers hire aboard regional managers who have come from the field. They in turn hire on district managers who have cut their teeth on direct sales, not text books from MBA programs.

Principles of Incentive

It's absolutely critical that incentive plan managers structure their reward pyramids as simply as possible. The more clauses, exclusions, and conditions there are attached to winning a given prize, the lower the incentive will be to win that prize. Nobody, salespeople included, responds well to gimmicks, especially those that obscure, distort, and conceal. Even if your incentive campaign does none of the above, it may in fact give off that impression just through its complexity alone.

Next, it's important that the rewards themselves be immediately redeemable. Setting a high bar at the beginning of the year, then withholding all forms of remuneration until that year is up is one reliable way to lessen the impact of a killer prize. It's okay to dangle a year-old carrot, provided you dangle weekly, monthly, and quarterly carrots along with it.

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