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What is the best way to use a special incentive for the sales force?

System og strategi for kompensasjon |Talent
COVID 19 Coronavirus

By Darren Tse and Ron Burke | April 28, 2020

We recommend considering five best practices when designing a Special Performance Incentive for Focus.

Is it too early to start thinking about using a SPIFF for the sales force? While it may feel counter-intuitive to focus on incentives in the current COVID-19 economic environment, maintaining momentum can ensure sales forces continue to be well-positioned in the market. When used selectively, a SPIFF can be a very powerful mechanism to reinforce key messages and desired behaviors.

Before getting into design, we should define what we mean by SPIFF. Not long ago, we asked a room full of clients “what does SPIFF stand for”. We received no shortage of responses, albeit centered around similar themes. What resonates with you when you pick your own combination of the following words?

S = Sales or Special or Specific
P = Performance or Pay or Price
I = Incentive
F = For or Formula or Fund
F = Focus or Fun

We favor “Special Performance Incentive for Focus.” Using this working definition puts the emphasis on supporting and rewarding the sales staff.

When designing a SPIFF, we recommend considering five best practices:

  1. 01

    Performance measures:

    To create focus, measures used to determine awards should complement but not be identical to benchmarks used in the core incentive plan creating a great opportunity to incorporate a new metrics. Of particular relevance in this environment is driving customer loyalty.

  2. 02

    Length of SPIFF:

    Establish a specific SPIFF duration to ensure focus — often one to three months, but no longer than six months — to reinforce a “special focus,” otherwise the SPIFF could be perceived as a replacement for or somewhat permanent addition to the regular incentive plan.

  3. 03

    Form of payout:

    To maximize focus, the immediacy of a cash payout can’t be beat (not to mention the benefit of avoiding the challenge of awards such as prizes and travel vouchers in this environment); a side benefit of cash awards is the minimization of administration related to tracking, proper tax withholdings, and creating a clear audit trail.

  4. 04

    Budget:

    Establish a budget for the SPIFF to be between 5% to 10% of base and incentive to ensure meaningful awards that can truly drive special focus.

  5. 05

    Individual opportunity:

    Establish the value of SPIFF rewards to represent no more than 50% of an individual’s “normal” incentive opportunity to allow for the SPIFF to be motivational for the employee, while balancing the focus of the individual on their core incentive program as well.

Remember that SPIFFs are only part of the sales rewards ecosystem. Sales incentives, SPIFFs and sales recognition can all have a place. Make sure that each component of your ecosystem has a clear purpose, for example:

Sales incentives
  • Primary source of performance-based variable compensation
  • Focus on attracting, retaining and engaging talent
  • Drive specific financial results
Sales SPIFF
  • Drive specific, short-term sales focus
  • Increase short-term motivation levels
  • Drive specific outcomes in a defined, short time-frame
Sales recognition
  • Reinforce organizational culture
  • Retain top performers
  • Increase sustained multi-year performance and employee morale

Clarity of purpose will help focus your design efforts.

We’d welcome hearing from you on your experiences with implementing SPIFFs. Please contact us if there are any specific sales rewards topics you would like to hear about as we continue this series.

Authors

North America Practice Leader, Sales Effectiveness and Rewards

Global Practice Leader, Sales Effectiveness and Rewards

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