Sales Incentives
May 30, 2022

SPIFF In Sales: The What, Why And How

SPIFF incentives boost sales productivity and bolster revenue generation. When SPIFFs are integrated into long-term sales incentive strategies, they deliver several times more ROI.

Every company dreams of becoming a hunky-dory revenue-generating engine and sweeping the market off their feet with its product offerings. However, they get crushed by reality when it comes to sales. Building a dynamic sales team capable of cracking sales deals and achieving their sales targets is no easy task

Having razor-sharp focus on the targets round the clock with enormous stress isn’t easy for any salesperson. And that’s exactly where SPIFF incentives become the catalyst for the sales team and the weapon for sales managers to motivate the team to be the frontrunners for success

SPIFF sales is a blatant weapon that can yield wonders if used properly. It has helped once a novice Apple to become the giant slayer and beat IBM in its own game in the 1980s. Such is the power of SPIFF! To know more about how to motivate and encourage your employees using SPIFF sales, read on. 

What is the meaning of sales spiff?  

Before we begin the journey, let’s first understand the basics - SPIFF meaning and what SPIFF stands for. The concept of SPIFF dates back to 1890 when The Pall Mall Gazette wrote about the sales practices followed in London shops to clear out the remaining stocks. SPIFF meaning back then was “premiums placed on certain articles, not of the latest fashion, indicated by a marvelous hieroglyphics put on the price ticket”.

SPIFF stands for Sales Performance Incentive Plan which is a specific and time-bound incentive plan to motivate the sales employees. It can be used to boost sales performance or even for new product releases. It's a performance plan you set aside to motivate employees to meet and exceed short-term goals.

In simple terms, if you want product X to be sold 5000 units in Quarter 1, then upon achieving the target, you would give your salespeople a certain incentive - cash or non-cash. Depending upon the nature of the motivation of the team, incentives can be provided.

We can find mention of SPIFF in the 1940s when salespersons were incentivized to sell electronic goods. The best example till now lies in the 1980s time when Apple beat IBM in its own game where a salesperson would get rewards for filling out each form for Apple and thus changed the course of history. Later Dell also followed steps in the late 2019s by customizing sales SPIFF to target and retain businesses that might have been lost in fierce competitive battles. 

Types of Sales SPIFF

Sales SPIFF can be of two types:

Cash SPIFF - Sales Incentives can be rolled out in cash. SPIFF incentives in the form of cash allow them to spend money as per their choice. A definite amount needs to be declared and it has to be transparent to keep the entire team in sync. 

Non-cash SPIFF - It might sound astonishing but non-cash SPIFFs are gaining traction everywhere. As per the research, 84% of the American companies now roll out non-cash SPIFFs to their employees. 

The non-cash SPIFF sales incentives include - 

Why use spiff in sales?

SPIFF is used to motivate the employees to perform their best. SPIFF strategy is defined in such a way that it can boost sales productivity in a quick time. 

A few reasons for the widespread use of sales SPIFF are:

  1. Incentivizing engagement - Keeping the employees motivated amid the stress is the biggest worry for sales managers. SPIFF aims to resolve that. Any salesperson would love to achieve quick success and be rewarded immediately. Cash or non-cash SPIFFs both would come in handy for this scenario.
  1. Pushing sales/contract renewals - The deals that have been stuck forever but might have great potential can be addressed with SPIFF incentives. You can push your sales team by devising a sales SPIFF strategy specifically addressing such deals. Often salespersons lack the enthusiasm to chase difficult but potential deals due to a lack of proper rewarding structure tailor-made for that. 
  1. Increasing brand presence and market reach - With the fiercely competitive market situation, it is quite a difficult task to ensure proper market reach and establish a dynamic brand presence. Salespeople are the best frontrunners who can do this job perfectly and outshine the competitors, provided the right incentive is awarded after successfully achieving the goals. 
  1. Supporting a new product or service launch - SPIFF incentives is the best stimulant for the salespersons to go on in an untapped market and gauge the potential of the product/service in the market. Sales SPIFF stands as their motivator in their minds to strive and thrive for the success of the product/ service in an early stage. 
  1. Improving the dwindling sales numbers - Every organization goes through an up and down cycle in terms of revenue generation but this is one area they can’t afford to be laggards. Boosting the sales numbers requires a great deal of toil and hard work from the sales team. As per the SPIFF meaning, it ensures they are rewarded handsomely if they upend the downtrend and put the growth engine in full gear. 

How to use spiff sales incentives?

SPIFF in sales is a broad-edged sword which can cut both ways.  If designed rightly, it can do wonders in terms of boosting the revenue engine but if not, it might create uncontrollable chaos in the sales team ecosystem. 

A few pointers to keep in mind while devising the SPIFF sales incentive strategy are:
  • Understand and visualize the goals properly

The entire journey of SPIFF starts with understanding the vision and defining the subsequent goals to achieve the stated vision. You need to motivate every salesperson for the SPIFF but for that the goals need to be set clearly. If the clarity is given, it paves the way for transparency and sets the motion correct for the sales folks. 

Ex: If you’re handling a team of 10 sales folks, then by the third quarter, you would like to have $30,000 revenue added to the topline. 

  • Articulate how you want your reps to achieve the desired target

A successful sales team needs direction from time to time. Your reps would like to understand the know-how of the entire goal setting and how they can achieve the objective. You need to make sure everything is clear to them step by step. If you articulate and specify the goals properly, it acts as the reference point for your team.

Ex: At the end of the third quarter, you would like your SDRs to drive 50 sales qualified leads individually from LinkedIn and they would be rewarded $500 extra if they successfully meet the target within the deadline. 

  • Establish the criteria

Probably, sales SPIFF incentives are not for anyone and everyone. You need to decide who is eligible for the SPIFF and by what medium. Both the pointers need to be explained in clear terms to the team.

Ex: You want junior SDR (less than 3 years experience) to generate a pipeline with 10 interested leads in each quarter. On the other hand, you want senior folks (> 3years experience) to close 5 enterprise deals in each quarter. If they meet the target, they will be entitled to a $1000 bonus on top of their reimbursement structure. 

  • Determine the incentive structure as per your team’s need

SPIFF can only be effective if your salespeople desire to have it and they feel motivated in the journey to achieve it. You need to discuss, introspect and see what motivates them the most - is it money, gift cards, or more? Once you understand their key drivers, you can have the SPIFF sales incentive tailor-made for your team's needs. 

Ex: Tour Group lets the employees who complete 1year with them choose 1 all-expense-paid trip to anywhere of the 700 destinations. These are called FAM or Familiarization trips so they can all rejuvenate and spend quality time with their family members. G Adventures will pay $3,000 for tours up to 17 days/16 nights and flights up to $750.

  • Define a proper timeline and allocate the budget accordingly

You need to first and foremost define a timeline and pass that message all along so there isn’t an iota of confusion. Also, as sales SPIFF works on the trust factor, you need to stand by your promise no matter what. If you define a $500 bonus for achieving 50 SQLs, then you better be prepared to shell out several $500 checks if multiple employees achieve the target

Ex: 100 SQL at the end of Q1 will attract a bonus of $1000 for anyone who achieves it. 

Potential SPIFF problems and how to overcome

In absence of a SPIFF sales incentive strategy, SPIFFs can prove to be detrimental. A few problems management encounters are: 

  • Sandbagging - SPIFFs are known as the element of surprise. Unpredictability drives the sales guys off their seats. But if they get to know about the upcoming sales SPIFFs, they might sandbag the deals to earn the extra bonus. For that reason, SPIFF incentives have to be time-bound and with a surprise element. 
  • Budget constraint - Once in a while SPIFF incentives can do wonders and fit your pocket at the same time, but having too many might end up burning your cash flow a lot. Limited, time-bound SPIFFs should be maintained and managed.
  • Toxicity in work culture - Sales SPIFF can create internal tension amongst the top performers and rather than cooperation in the team, there might be fierce competition regarding each and every lead. You need to draw the boundary on how much they will tolerate and where the fine line ends.

Conclusion

In a nutshell, sales SPIFF meaning is to reward a salesperson for selling a particular product/number of products. SPIFF incentives boost sales productivity and bolster revenue generation. Salespeople tend to keep their eyes on the prize and are motivated to achieve their targets when the right incentives are in place. 

When SPIFFs are integrated into long-term sales incentive strategies, they deliver several times more ROI. 

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