Sales Incentives
May 30, 2022

SPIFF In Sales: The What, Why And How

SPIFF in sales helps to 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 its 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 precisely where sales 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 in sales is a blatant weapon that can yield wonders if used properly. For example, it once helped a novice Apple become the giant slayer and beat IBM in its own game in the 1980s. Such is the power of SPIFF! Read on to learn more about motivating and encouraging your employees to use SPIFF in sales. 

What is a SPIFF in Sales: Meaning & History 

Before we begin the journey, let's first understand the basics - SPIFF's 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 marvelous hieroglyphics put on the price ticket."

SPIFF stands for Sales Performance Incentive Plan, a specific and time-bound incentive plan to motivate sales employees. It can boost sales performance or even for new product releases. You set aside a performance plan 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. An incentive can be provided depending on the nature of the team's motivation.

We can find mention of SPIFF in the 1940s when salespersons were incentivized to sell electronic goods. The best example is in the 1980s 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. 

Why use SPIFF in Sales?

SPIFF is used to motivate 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 

The biggest worry for sales managers is motivating employees amid stress. 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.

2. 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 and plan specifically addressing such deals. Often salespersons lack the enthusiasm to chase complex but potential deals due to a lack of proper rewarding structure tailor-made for that. 

3. Increasing brand presence and market reach 

With the fiercely competitive market situation, ensuring proper market reach and establishing a dynamic brand presence aren't easy. 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. 

4. Supporting a new product or service launch 

SPIFF incentives are 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 the motivator in their minds to strive and thrive for the success of the product/ service in an early stage. 

5. Improving the dwindling sales numbers 

Every organization goes through an up-and-down cycle in revenue generation, but this is one area they can't afford to be laggards. Boosting the sales numbers requires much 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.‍

Read our next blog on sales spiff ideas to improve sales reps' performance.

What are Sales SPIFF Programs?

Sales spiffs programs are short-term sales campaigns that incentivize the sale of goods or services. Sales spiffs are not compensation plans, nor do they get paid on a commission basis. Instead, the idea behind sales spiffs is to include various perks or incentives to encourage salespeople and channel partners to concentrate most of their efforts on bringing in new business, making more calls, and increasing the total number of deals won.

How to Run Effective Sales SPIFF Programs?

SPIFF in sales is a broad-edged sword that can be cut both ways.  If designed rightly, it can do wonders in boosting the revenue engine; 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 program are:

1. 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 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. 

Example: 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 top line. 

2. 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 correctly, it acts as the reference point for your team.

Example: 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. 

3. Establish the criteria

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

Example: You want junior SDR (less than three years experience) to generate a pipeline with 10 interested leads 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. 

4. 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. Therefore, 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.

Example: 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 (Source: Business Insider).

5. Define a proper timeline and allocate the budget accordingly

You must first define a timeline and pass that message all along so there isn't any confusion. Also, as sales SPIFF works on the trust factor, you must stand by your promise. For example, 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. 

Example: 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 the 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 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 every lead. You need to draw the boundary on how much they will tolerate it 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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