A SPIF, or sales performance incentive fund, is a sales strategy used to improve results over a period of time. Read on to learn how to leverage SPIFs and increase sales performance effectively.
What are SPIFs in Sales?
A SPIF (or Spiff) is an amount that a company will set aside with the plan of using it to reward sales reps for achieving short-term goals. SPIFs can be in the form of cash and non-cash incentives, such as gift cards, travel vouchers, or paid subscriptions. SPIFs should be used as a one-off bonus to entice sales reps to meet their targets rather than as an ongoing incentive.
Tips for Implementing Sales SPIFs
When used properly, SPIFs can be an effective way in motivating sales staff. Try these tips to maximize the effectiveness of your sales performance incentive fund.
Align to Your Organizational Goals
Rather than tying incentives simply to "get more sales," consider your organization's goals and incorporate the Sales team to them. If there's a specific market your business is trying to break into, or is focused on investing efforts on a particular product, tying the sales incentive plan to those initiatives can help steer your Sales team to focus In the same direction.
Use SPIFs Sparingly and Spontaneously
Timing plays an important role in the success of your SPIF. These incentives are designed to boost sales in the short-term. Therefore, they shouldn't be used over long periods of time to drive performance. Based on historical performance data, you can find the right balance between incentive value (amount of money offered) and the amount of time needed to get on track to hit goals.
In addition, SPIFs that come at the same time every month or year become routine and don't work as effectively in motivating Sales teams. When reps come to expect SPIFs at the end of each quarter or at the end of the year, the incentives can be taken advantage of. Keep your plans “gameable” by introducing SPIFs sparingly, so that sellers aren’t expecting them. As a good rule of thumb, you should have no more than eight-12 SPIFs in one year.
Know Your Audience
Target your sales incentive plans carefully for maximum impact. For instance, you may wish to target some incentives toward managers and others toward field agents or contact center staff. Try to spread the incentives out so everyone is fairly rewarded for their efforts while ensuring that each SPIF helps your organization get closer to achieving its goals.
Keep it Simple
Have a set time frame and clearly defined objectives for each SPIF. If your incentive program is well-designed, it should be easy for your team to understand what it needs to achieve to earn rewards and why those goals were set.
Keep your program simple so everyone knows where they stand and what they should be doing during the program to improve their sales performance. When your Sales team understands what they're working toward and how their efforts will help the organization as a whole, they're more likely to be motivated and to perform at a high level.
Analyze the Outcome & Adjust
For any compensation plan, it's important to analyze the performance and effectiveness. The same is true for SPIFs. Compare the results to your predictions and whether or not it met your desired outcome.
You want to give enough time to see performance trends, which will vary based on your sales cycle. The important thing is to not set it and forget it. You need to analyze sales SPIF performance, and if it isn’t driving the desired behavior, use data to figure out why. Then, adjust your plan and try again.
Using SPIFs to Drive Business Impact
When implementing a sales performance incentive fund, it’s common to focus on a specific product or service. A product can be chosen because there is momentum building in sales (increasing opportunities in the market), or because sales are not where they should be to meet organizational goals. A new product launch or the need to complete sales within a specified time period could also call for a SPIF.
However, it’s important to remember that SPIFs are an additional incentive and should not replace your overarching sales compensation plans. Rather, they should supplement your existing plans to drive short-term performance.
Boost Low Performance
Unfortunately, sales SPIFs don't always accompany new releases or other positive scenarios. Sometimes they are implemented to boost performance when sales numbers are low. SPIFs can boost sales performance by pushing highly-motivating short-term incentives into the existing sales compensation plan to ensure goals are met.
If you’re noticing a trend of poor performance across your Sales team, it could be an indication that your core incentive plans aren't driving the right sales behaviors. In that case, a SPIF is probably not the best option. Instead, you should take a deeper look at your overall compensation strategy.
Accelerate Sales Pipeline
There are several reasons deals can stall in the pipeline—whether it’s a slower time of business or because of changing market dynamics. SPIFs can be helpful to motivate reps to push deals through the sales funnel and progress deals.
However, if you’re noticing a trend in your pipeline of deals stalling or falling off, you may need to dive deeper into your data to see if there is a need for additional coaching or training (Intelligent Forecasting software can help with that).
Support a Product or Service Release
The impending launch of a new product or service is a good time to roll out a SPIF, as they can encourage good sales reps to achieve even better results. If you're considering offering an incentive plan tied to a new product launch, make sure the performance requirements reward those who go above and beyond.
Rather than tying the SPIF to basic sales figures, consider offering additional rewards to those who are able to upsell or cross-sell to buyers of the new product. Alternatively, consider tying incentives to a specific type of customer, such as those who bought an older product several years ago, or first-time buyers.
Take Advantage of New Market Opportunities
If your organization is trying to expand to new territories or is targeting a new demographic, a SPIF can help focus the efforts of your Sales team on the prospective customers you're aiming for. Create an incentive plan tailored toward those market opportunities, and launch it after offering training on the products or services you're promoting to that audience.
Working in this way helps ensure your Sales team understands what they are doing and why. It also reduces the risk of sandbagging in the run-up to the launch of the plan.
Understanding the Impact of SPIF on Sales Teams
A well-designed SPIF will motivate your Sales team and serve as a form of positive feedback. But when they're overused, these plans can lose their impact. As with other forms of compensation, your SPIF strategy should be reviewed regularly. Make sure any plans you run are benefiting your company, offering value for the money and driving the wanted behaviors.
Unleash Your Team's Sales Performance Potential
Xactly Incent is an incentive compensation management solution that can help you design and manage compensation plans to get the best out of your employees at all levels—including SPIF programs. By arming you with an understanding of your team's current performance, where you need to be, and the likely cost of any SPIF you launch, Incent helps you determine the most impactful way to spend your sales performance incentive budgets. Whether you're looking to maximize the performance of your team during a big product launch or to end a difficult quarter on a high note, Incent can help you achieve your goals. Contact us today to schedule a personalized demonstration.
