An examination of sales incentive programs by IncentiveCentral.org found that net sales can be increased by roughly 7.5% through the strategic use of incentives. Throughout a product’s life cycle, there are different sales incentive options that should be offered in order to motivate your sales force and maximize net sales.
Contests and Peer Competitions
Contests and peer competitions work best with new product launches, during the introduction and acceptance phases of the product life cycle. As a product is being introduced for the first time, an incentive contest can create competition among peers or teams that increases interest and commitment to selling a new product. These incentive programs are utilized in the short term and may last for only a few weeks.
Generally these incentive programs are set up so that the winner of the contest is clearly defined and there are rules in place in the case of a tie. Winners receive points that can be spent on one or more incentive awards. Participants of the sales incentive program may receive prizes for competing or for placing in the top tier of results.
Incremental Sales Incentives
Often I see incremental sales incentive programs established after the contest or competition has ended and the product has entered the growth phase of the product life cycle. As a product becomes familiar in the market place, you can keep interest up in your product by providing incentives to sales people who try to keep up conversations and create buzz with potential buyers.
Incremental sales incentive programs are designed so that a timeframe is defined, say one month, and if a sales person or team increases sales month over month by a certain percentage or more, then points are earned. These sales incentive programs can take place for months or even years depending on the projected length of the product life cycle. As points are earned, participants are able to bank or spend points on incentive merchandise.
Sales Quotas
Eventually all products enter the mature or saturation and decline phase of the product life cycle. Sales incentive programs based on quotas give your sales force a clearly defined goal and sets up expectations if the sales goal is met or exceeded. In order to keep up interest and sales, the first step is to help your sales people see what is in it for them. The WIIFM principle is an excellent motivator when everyone in your sales force is able to participate and earn quality incentive awards for reaching goals.
Chris Colapietro and Mark Griffin offer up advice in their article about incentive compensation planspublished on ManageSmarter.com, “In order to measure the actual effectiveness of the strategy, you must first define success.” Define what success means for your contest, incremental and sales quota-based incentive programs and you will measure the impact the incentive program has had. Combining these three basic types of sales incentive programs in coordination with multiple products at various stages of the product life cycle will ensure you are maximizing your potential sales.