Improve Your Sales And Profits With A Data-Driven Spiff Program

For any company using SPIFF programs in its sales channel, consider the following observations and suggestions for improving its performance.

A Sales Performance Incentive Fund (SPIF) is a short-term, performance-based incentive program that encourages sales reps (in-house or channel partners) to perform more effectively. It is often spelled with an additional "F".

A SPIFF is a bonus incentive given to salespeople if they meet certain goals during a specified period. Most SPIFFs are monetary, but can use non-monetary rewards like trips, gifts, and recognition instead.

SPIFF programs can be a powerful tool for motivating your team members and helping your company achieve revenue goals and get ahead in the short term.

A salesperson's compensation is usually a percentage of the sales they earn, whereas an incentive plan is a one-time cash payment or prize for doing something well.

A key difference between commission salespeople and SPIFFs is that while sales reps get their paychecks every two weeks, at most companies, SPIFFs are typically paid out weekly or even daily.

However, it's essential to remember that both commissions and SPIFFs are taxable income and must therefore be declared. In some instances, SPIFFs are considered employee wages, even if they originate from a third-party source, such as a manufacturer, rather than being directly paid by the company itself.

While SPIFF programs can be very successful if properly structured, they often have three key flaws:

1. They tend to be overly simplistic, with a one-size-fits-all mentality.

Salespeople must manage a significant amount of details and data each day. They need to know as much as possible about each customer or account they call on and research prospective accounts. They also need to know a great deal about the products and services they sell.

So, requiring them to learn the rules for multiple short-term "start and stop" SPIFF programs can be a turn-off and negatively impact program participation, engagement, and results.

Many sales organizations subscribe to the notion that "cash is king" when it comes to SPIFF programs; however, the reality is that non-cash rewards have a greater impact on sales performance and are much more cost-effective than cash.

A study by The Aberdeen Group found that cash rewards are three times as expensive as non-cash rewards, costing $0.12 for every incremental sales dollar, while non-cash rewards cost only $0.04. This is primarily because most sales reps will mentally lump cash SPIFFs in with salary or commission, resulting in the company offering the SPIFF needing to use increasingly expensive cash values to maintain engagement and motivation.

Despite these program limitations, SPIFF programs remain popular because they are relatively easy to use and understand, and many companies are reluctant to migrate away to anything new. However, reluctance to change with the times often results in SPIFF programs that are less effective than data-driven programs, which utilize historical sales data to guide program focus and sales optimization. Less effective programs obviously have a negative impact on sales and revenues for the company offering them.

You might be surprised at how easy it is to take your old SPIFF program to the next level by simply changing a few basic program features:

Drive program participation, engagement, and results by using program rules that invite enthusiastic involvement by everyone. Instead of using only "sell X, get Y" rules, consider using historical sales data to customize the program potential for each rep. A simple growth-tier format can help ensure that each rep is motivated to outperform their past sales behavior, rather than competing head-on with other reps.

Lift & Shift can make this easy with our state-of-the-art data analytics and personalized participant communications that feature dynamic content and motivating program reward tier levels.

Our industry-leading dynamic content platform ensures that all your SPIFF program participants receive personalized reward offers tied to your strategic sales objectives, driving both sales retention and growth for your business.

Our proprietary reward rules engine enables us to manage an unlimited number of program rules and offers for each participant. Our personalized monthly reward statements keep them informed of their program status, upcoming special earning milestones, and numerous other important engagement metrics.

When creating effective incentive programs, it's crucial to consider the reward attainability the program offers each participant. If a sales rep feels they can't earn a reasonable reward value by participating in a program, they will not participate—or at least not very enthusiastically. Many programs will focus on a single product or product line, which can be very limiting for some reps. Similarly, a SPIFF program that runs for only 30 or 90 days can have an equally disengaging impact.

The reality is that most organizations have numerous items they'd like their sales team to sell more of over time, so consider expanding the scope of the program to include multiple sales goals and products or product lines. This will help ensure each rep has a greater program earning potential and drive higher engagement and results. Another benefit of including more "things" in your program is the ability to reduce the value of the SPIFFs, as participants can earn in multiple ways, not just one. This increases the total earning universe, even if individual offer values are reduced, thereby enhancing the cumulative SPIFF program ROI.

Another consideration is to make the SPIFF program a year-round sales asset. The reps will be more engaged if they don't have to learn the ins and outs of a new SPIFF program each month or quarter. Instead, use an ongoing program and rotate different short-term SPIFFs through the program. This will simplify participation and dramatically enhance program reward attainability—while addressing any corporate sales objectives you have for the reps throughout the fiscal year.

Ensure your SPIFF program includes a wide array of reward options and not just cash. Non-cash rewards will be much more appealing to many participants than you realize—and they are far less costly to use than cash. Lift & Shift has one of the widest arrays of popular reward options in the industry, and you can easily tap into them all.

In addition to popular merchandise, experiential travel, live events, and gift cards, we can certainly include cash payouts, as well as your own products and branded merchandise, if you would like.

A good program evolves along with the needs of the company that offers it. To ensure your program is set up to deliver optimal results, it's important to review each unique SPIFF offer promoted through the program and calculate the ROI of these offers to ensure they align with your expectations —and are financially sustainable. Was a certain SPIFF dramatically more successful than another? Question why this is. It is possible that one SPIFF was unnecessarily rich while the other was undervalued, thereby reducing take-up.

Another often-overlooked program measurement is participant feedback. Be sure to solicit candid input from the sales representatives and, if possible, take this feedback to heart to adjust program features down the road. People tend to respond better to programs they identify with.

The Ultimate Guide to B2B Loyalty Programs

This article is part of a series covering how growth-based loyalty programs can elevate sales and company profits by incentivizing current customers to spend more, attracting new customers with appealing rewards, and motivating your sales team.

If you'd like to learn more about B2B Loyalty Programs, then please read the next article in the series: "5 Ways to Drive Incremental Sales Using Your Data and B2B Customer Loyalty Program."

For an overview of all articles in the series, please visit our resource page, "Maximizing Retention: Your Comprehensive Guide to B2B Loyalty Programs".

Lift & Shift™ offers a powerful B2B reward platform that can help your company leverage its sales data to drive incremental purchases with customers and channel partners or motivate sales staff. We work with manufacturers, distributors and service providers to analyze sales data, identifying purchasing gaps and other valuable targeting opportunities. 

We create and deliver highly relevant offers to customers, in-house sales staff or sales associates, motivating your target audience to respond, using a wide array of appealing reward options as influencers. Our performance-based reward structures deliver an unparalleled return on investment, with absolutely no wasted budget. 

Our customizable reward platform enables clients to easily benefit from a robust loyalty reward program. It's affordable and includes Lift & Shift’s turnkey professional program administration. We take care of everything so you can focus on your key initiatives.