Sales Incentives... What Works and What Doesn’t
Adding sales incentives is a great way to boost your team’s performance—but only if you’re doing it right. Find out which incentives are the most effective, and how to stay within budget while offering prizes that really motivate your team.
In 19, hyper-focused minutes, we’ll cover:
- Why cash isn’t always an effective incentive, and better alternatives that provide long-term motivational value
- Intangible sales incentives that are low cost for the organization, but still motivate salespeople to perform
- How to understand what motivates individual salespeople and use that to build an effective incentive program
Read the Full Transcript of the Briefinar Below:
Janice Burke: Hello and welcome. My name is Janice. Thank you for joining us on our monthly Briefinar. We promise to be bright, brief and done in 19 minutes. Today we're going to be talking about sales incentives, what works and what doesn't. I'm Janice Burke, regional vice president of sales for the Brooks Group. I've had the good fortune to work with many of our clients daily to identify training and assessment needs. Early in my career I did work for a sales incentive firm, helping organizations to create and provide incentive programs.
Drea Douglass: I'm Drea Douglass, director of Talent Management Consulting. I lead a team of consultants who help our clients hire, develop and retain top sales talent.
Janice Burke: Before we jump into the topic, we have a poll question for you. We'd like to know how many of you are currently offering sales incentives at your organization and what types? So we're going to, Drea is going to launch the poll, the poll is going to be open and we're going to just give you a few seconds to answer the questions. So we're going to go five, four, three, two, one. Hopefully everyone's had an opportunity to answer the question. I'll look at the results. Okay. So it looks like there's a few of you that are offering incentives at this time and a lot of it is more on the merchandise and then there's many of you that are not offering sales incentives at this time. So that's great that you're on this Briefinar and hopefully we will be able to provide you with some good tips and information on some good strategies on why incentives are good as well as what types. So that's what we're going to move into right now. We're going to talk about the types of incentives momentarily.
Drea Douglass: Well, Janice first, can you tell us a little bit, why our incentives important to drive sales?
Janice Burke: Yeah. Most sales people already commit being a salesperson because they have a quota or a target and monthly goals, annual goals and so that's their job. That's what they need to do every day is to achieve those goals. But basically incentives are used to help motivate people to go beyond those targets, to push to be over 100% and we've seen that incentives are also used to either launch a new product or push a lagging service or product that they want to sell more of or even to help push for a good quarter end, where maybe the numbers aren't where they want them to be. So incentives really drive sales over and beyond what the salesperson's responsibilities are, to take them to the next level and to go over that 100%.
Janice Burke: So, we're going to look at the types of incentives and I'm going to share with you the most common incentives as well as a few that aren't so common. So the first one is money and gifts. So this is the most common. It's the easiest to provide to people and people like to get it, so cash, gift items, merchandise. It could even be some gift cards that are super easy to get markets these days. This is probably the number one incentive that we see provided.
Janice Burke: The next one is a recognition and this can be in the form of awards, trophies, plaques, a little bit of that pat on the back or maybe, I've even seen organizations do like a leader board. People want to see their names up the lights. So recognition is a second type of incentive and that's a very common. Next is venture and trips and this one is super fun and exciting. Typically this type of incentive is an annual incentive and it's tracked based on your achievement of quota, over and beyond the annual goal that you have, something like a president's club. So these are trips and adventures and it's again, very common type of incentive that is given.
Janice Burke: This next one is not as common, it's conference and education, but we are seeing this become a bit more common for folks that really want to have some time off, paid time off to attend a conference or to take a course in their field. So the benefit to this incentive is that the company actually pays for them to go to this. So this is another incentive that we're seeing. Lastly, this one is unique, becoming [inaudible 00:04:56]. Again, it would be the company to offer time off of work for that person to go out and either work at a charity or do some community service. So this is a kind of an up and coming incentive that we're seeing on the rise. So these are the five key topics of an incentive. Now that we understand the different kinds of incentives, Drea, can you share with us the underlining motivators behind the different incentives?
Drea Douglass: Sure. So when we're talking about motivation, it's important to understand that different people are motivated by different things. The number one concept that comes up to me when it comes to offering incentives is offering choice so that you can be sure that you're tapping into what truly drives and motivates your people, whether you realize that that is what's in their heart of hearts or not. So if you've ever felt like you were banging your head against a wall trying to motivate your people, you may have been falsely assuming or associating your own motivators, which is very common. People assume that others are motivated by the same things they are because we feel these things very strongly, viscerally, even you feel in your gut the things that are exciting to you, the things that move you to action are powerful. So you really want to make sure you're offering choice to your sales reps to ensure that you're tapping into what drives and motivates them in particular.
Janice Burke: Drea, this brings up a really good point because there is a lot of information and data about understanding your people and really learning more about their motivators. Unfortunately, the purpose of this Briefinar is to be brief and we don't have the time to really go deep into the subject of this. We're really here to provide these nuggets on driving sales through incentives. So I wanted to let everybody know that we are holding a sales management symposium class next month, which will really go into understanding this subject a lot deeper. So we'll learn about the motivating methods that works for your team, in addition to other areas, sales coaching and how to hire top performers.
Janice Burke: So I just wanted to let everybody know that again, here we're just going to be doing a very brief overview on the subject, but if you're interested in learning more, you can contact us at the number below or on our website. We're happy to talk about that. So now we're going to go over each type of motivator. So we talked about giving you those nuggets. So that's what we're going to go do now, really go deeper into each one of the motivators and how those map to the incentives.
Drea Douglass: Right. So with sales jobs, sales jobs reward two things in particular. So most of your sales reps will be incentivized by the top two and that first one is money. So sales reps need to be driven and motivated by financial incentives. It's just a fact of life for those folks and it's a part of the nature of their role and it's baked in, it's built into their position by their compensation plan. So if they aren't driven and motivated by financial rewards, they're really going to struggle. So people who are driven and motivated by this dimension, by this area are motivated by financial incentives. So Janice, can you tell us a little bit about the incentives associated, the specific incentives associated with that?
Janice Burke: Yeah, sure. So we talked about earlier, but go a little bit deeper. So that the key elements here in money, people like money and that could be cold hard cash and it's really easy to provide. A lot of folks give cash because it's the easy incentive to give, whether it's a gift card or just cash, money. There's luxury items. I know a lot of people like to get the latest in technology, electronics, iPhones and iPads and all sorts of devices that seem to be the top motivators these days. So these types of things that will motivate those folks that have those motivators this type of incentives.
Drea Douglass: One thing that I've heard though is that cash is not necessarily king, right? So there's kind of a flip side to this. Most companies want to offer cash, but that the residual value of that can decrease over time. I've heard you say that before Janice. Would you agree?
Janice Burke: Yes, absolutely. So the downfall here on cash is that if it's just $100 bills going into your pocket, you go to lunch, then you buy lunch and maybe you go somewhere else, you go to the market, you buy some groceries, you pick up something for your kids and at the end of the day you've spent the cash, but you have no inherent value of that, that you worked hard to earn that. You're not looking at that every day on your desk or using that item and saying, "Wow. I worked hard for that. I pushed and I made over my quota to get this reward." So cash is easy and it's easy and people say they like it. But at the end of the day, it loses its inherent motivator value because they can't see or touch or feel what they actually earned.
Drea Douglass: Right. So it sounds like we'll solve the immediate, maybe an immediate problem for that sales rep, they can pay their phone bill or whatever. But when the company and the residual value in the long term reward that their company is going to get out of that reward, that something solid is better than liquid cash, potentially.
Janice Burke: Yeah. That' what we're seeing for sure.
Drea Douglass: Excellent. Well, for the second motivator here, this is also one area that sales jobs reward inherently and that's recognition and that sales reps really need to be driven and motivated by this area. It includes recognition. So people who are driven and motivated in this area are driven to win. They tend to be very competitive and ambitious people. They take the lead naturally, that's just who they are and they often like to be recognized for their contributions.
Janice Burke: Yeah, so these guys, they want the pat on the back, as you said and the trophy is a great type of incentive for these folks or special treatment or reception. I've even seen where people get super motivated with her name at the top of the leaderboard, so it might be they're the top dog for the quarter or the month and they have bragging rights. So based on what you just described, if this person is high in recognition in their motivation, they're going to want this big shiny trophy on their desk saying, "I'm good, look at me, look at me." So trophies, special treatment, receptions. A lot of times people do 100% dinner where they get a special dinner with the president or the chairman and they come back with bragging rights.
Drea Douglass: Great. There's a flip side to this and you talked about earlier about offering choice and I really am a strong believer in offering, allowing folks to choose their incentive as opposed to saying, "This is the incentive. Everyone's gunning for it," because there are some folks out there who do not like to be in the spotlight. They may have that competitive nature, but they're not interested in standing up on stage and being in the spotlight or being called in front of a crowd. So you definitely want to make sure that that's something that truly motivates them because if you make that the incentive, some people are going to be deincentivized.
Janice Burke: That's correct. So, yeah, that's why choice is important. Okay.
Drea Douglass: Next we have three areas, two in particular that people may not think about as much and the experience is incentive may seem a little overwhelming to some organizations. This is often associated with trips and folks who are driven and motivated in this area love the opportunity to travel, to have adventures and unique experiences. They love to go to exotic destinations, turn off, relax, try to maintain some or achieve some form of balance in their life.
Janice Burke: Yes. These are the people that would absolutely love the vacation trips, the outings. As I mentioned earlier when I was describing it, and these are usually the annual trips were set up in advance. Everybody knows about these. They are big, they're grandiose and they are ... People really strive for these. It's typically where you have to be over a percentage of your annual goal. So typically we see over 110%, 15, even up to 120% of your goal, just helps fund the trip because they're going over their goal. So they're making the company money as well as basically funding the vacation.
Janice Burke: Again, it's exciting because in many cases you're allowed to bring your spouse. So then there's a secondary motivator at home that's pushing you all the time saying, "Win the trip. Win the trip." Many of the trips I'd have firsthand experience of this where I've won some trips to Costa Rica, Antigua, Hawaii and others. So very motivating, very exciting.
Drea Douglass: Excellent. Well, we've got a couple more minutes left and we got quite a bit to go through. So we'll try to make sure we end on time here for you guys today. The next one we have is knowledge, and this is one area that folks tend not to really know about and people who are driven and motivated in this area are naturally very curious people. They love to learn, they love to add new skills.
Janice Burke: Yeah, and again, these are the folks that will be motivated by offering some time off to go to a conference or training or get a extra certification. That's going to make them feel good because these are just what's driving them.
Drea Douglass: They see it as an investment in their future or their career too oftentimes.
Janice Burke: Yeah, that's true.
Drea Douglass: All right. The final one here, another one that people don't often think about as offering it as a choice is to offer the opportunity for these folks to engage in their cause that they feel strongly about or service. So folks who are driven and motivated here love the opportunity to give of their strengths to help other people.
Janice Burke: Yeah, so if this is their motivation, then they would love to, instead of getting a prize for themselves, they might say, "I want to take that money and donate to my cause." They want time off to go volunteer and really help people. We've seen this kind of on the uprise. Everyone still loves their money and trips and prizes but we're seeing a lot of folks that are really interested in doing some work outside of themselves and really giving back. So yeah, this is becoming a new trend we're seeing. So in summary, I know we have a few more minutes left. I will just go through it. This really was a Briefinar to talk about the do's and don'ts. So we just want to recap here. The gift offer choices. Make sure you're not just going in with one fits all.
Janice Burke: Also make sure that your incentive aligns with your business initiatives. So again, you might look at what you need to accomplish, whether it's a new product or relaunching something or driving to a certain dollar amount over what you need in a certain quarter, align that. Set cost limits, so make sure that you're not providing money for one category more than somebody else. Everybody has the same chance. Then I think super important here, the message is really understand your people and what's driving them and what's their motivators. Then quickly, the three don'ts are don't assume all sales reps are motivated by the same thing. Don't be afraid to offer year end trip, even if you're a smaller organization and you have 10 sales reps, don't be afraid to offer that because maybe one might win and go off to that trip. They're going to come back and they're going to talk it up and that is going to drive everybody in your organization or every other sales folks to want to earn that the next year. It's a huge motivator.
Janice Burke: Then the last thing is don't get tunnel vision with just an easy choice of cash. We talked about kind of that it loses its value after a certain point of time. So yeah, at this point, think we have a few minutes still left that we'd like to hear from you guys if you have any questions on sales incentives. We're happy to answer those in the last few minutes that we have.
Drea Douglass: Yeah. We do have one question here, Janice. So how can you tell what motivates your people? That's the first question.
Janice Burke: Okay. Yeah, it's a good question and I know it's hard. We're talking all about how do we motivate your ... To understand motivators, but then like how do we do that? It's really, it can be as easy as doing an assessment and there online assessments that can measure and look at individual motivators. In fact, we at Brooks Group have one. Many of you who are on the call might've already been using our TriMetrix assessment and there's a component of that which 100% tracks, measures motivators and we provide a report in a snapshot where you can look at those.
Drea Douglass: Yeah. We have-
Janice Burke: Drea, are there any other questions? Oh, I'm sorry, go ahead.
Drea Douglass: Yeah, someone's asked, how can I get to Costa Rica? You seem to have the secret here, Janice. You got there, well, maybe you can help out.
Janice Burke: Yeah, well, you know what, a good setup, a good investment plan, and be 120%. I had to be 120% of my goal to earn Costa Rica and I went with my husband and my daughter and to this date it's the trip of my lifetime. So, it motivated me. I worked super hard to earn that. Great question. Thank you for asking. Any other questions?
Drea Douglass: So get 120% of your goal is the moral of the story. That's all the time we have for questions, though. Thank you guys all for joining us here today. Like we said, we promise to be brief and bright and gone. So again, thanks for joining us and be sure to join us next time. Our next Briefinar will be in October. Have a great day, everybody.