Incentive scheme principles - Sales Management

The structuring of a motivational rewards package might use any or all of the formats discussed here, and a seemingly endless range of variations on these themes. If too many incentive programmers are running at any one time it might be confusing for salespersons to clarify their own priorities, and there may be some conflict between schemes aimed at short-term versus longer-term goals.

Therefore, when more than one incentive scheme is operating at the same time it should be planned that they all address compatible objectives. For example, a commission scheme that gave varying commission relating to the profitability of customer accounts, with a minimum level of profit required for eligibility for the commission,would work against an incentive scheme relating to opening new customer accounts,which would take some time to reach minimum profit levels.

Giving time to developing new accounts might put at risk the maintenance of minimum profits with established profit (and commission) earners. In this sort of situation the scheme could waive profiteer for new accounts, say for the first year.

Principles of Good Incentive Scheme

When devising a motivational incentive scheme adopt the following basic principles: Ensure the scheme’s relevancy and compatibility with established company portfolio goals, objectives and priorities.

Base rewards on specific measurable and quantifiable criteria.

  • Required achievements should be realistic and achievable by the sales team within any set time spans.
  • The timing of incentives relating to company products and sales activities should match in with the timing and priorities of mainstream marketing activity
  • Base incentive awards on efforts and activities controlled or influenced by the salesperson or manager.
  • The scheme should be fair and equitable to all team members, offering rewards related to individual productivity and performance.
  • Schemes should not penalize individuals if circumstances outside their control (e.g. strikes) affect results unless all are so penalized.
  • The scale and level of rewards should relate to the specific potential of the territory or accounts under the salesperson’s direct control.
  • Earnings of incentives are usually better spread evenly over a longer period, rather than all or nothing on a few orders.
  • Earnings from incentive schemes, and the targets and objectives to which they relate,should be assessed at regular intervals to facilitate personal planning and budgeting,and to maintain motivational momentum.
  • Reward, like criticism, should follow quickly the activity to which it relates.
  • Avoid ‘all or nothing’ sales reward schemes, as restrictive schemes where few can win are de motivators to the rest of the sales team.
  • Keep the incentive scheme simple,easy to administer,with minimum requirement of time and special training,and ensure it dovetails with existing systems, procedures, priorities radiogram.

The following checklist helps in the choice of which scheme or what combination of rewards to use.

The introduction of motivational reward and incentive schemes is no substitute for thorough training and development by line managers, as under-trained salespersons will not achieve within their true potential and will become de motivated. Also, programmers be designed so that they will not impose control burdens on the sales managers.

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