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Best Sales Incentives Structure: How To Choose One That Drives Results?

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Rohit Rajpal

Senior Writer:

green tickDate: April 6, 2023

Sales representatives bring the maximum revenue to your business. Giving them a compelling reward can make them even more enthusiastic and encourage them to work harder than they do. Properly designed incentive programs can increase employee performance by around 44%. 

However, motivating them isn’t as straightforward as choosing a goal (like conversion rates or upsells) and rewarding a cash prize to agents accomplishing it. 

It requires careful planning to reward and motivate salespersons for reaching and exceeding their goals. It includes both monetary and non-monetary rewards. 70% of organizations have between three to six different incentive programs. 

With these points in mind, we will describe the types of incentive structures you can use and discuss how to implement the right incentive program.

4 Types of incentive structures

The incentive program you choose must align with your company culture and values. It should also make your sales representatives excited, valued, and motivated to work hard. 

Sales Incentives Structure

1- Milestones-based incentives

There will always be a sales superstar in every team who achieves his sales goals quicker than others. If you set a broad incentive goal, your sales superstar is more likely to achieve it faster than the rest of your team. 

Once he reaches his sales goals and gets incentives, what do you think will motivate him to work at his maximum capacity? It’s human nature to stop once you’ve achieved what was expected from you. 

Instead, you can set milestones based incentives, where each sales representative will be rewarded per subsequent milestone reached. 

2- Split incentives

Many products and services require assistance from multiple sales representatives. For example, if someone created an ad campaign that brought in qualified buyers, and then a representative went ahead and closed the deal. The rep and the ad creator both could be recognized and rewarded for their efforts.  

Or you might want two or more representatives to work together to close a deal. Creating a split incentive program can encourage your team members to work together to close deals.

3- Presales incentives

In today’s scenario, customers have more options than ever. They are anyways overwhelmed with sales representatives from various companies that are trying to outperform each other. 

As a result, customers take more time analyzing and comparing their choices. They may request a free trial (or demo) from each company to better understand their pros and cons. At times, your salesperson may be in contact with a prospect for a year or longer. 

In such extended sales scenarios, it is advisable to reward your salespeople to keep them motivated and prevent them from giving up on the prospect. 

4- Activity-based incentives

At times, it can be challenging to forecast customer demands and set reasonable targets. As a result, it makes it challenging to create a fair and motivational incentive program. 

The best way to overcome this situation is through activity based incentives. Activity-based incentives focus on the actions a rep takes throughout the selling process rather than conversion rates. 

Rewarding reps for the way they close a deal, rather than the number of deals closed, can encourage them to follow the sales best practices every time. 

Types of incentives

Incentives are broadly categorized into monetary and non-monetary rewards. 

Sales Incentives Structure

Cash incentives

This is the most common way of rewarding a sales representative. In cash incentives, you usually reward the employee with a certain percentage of the deal he closed. 

Non-cash incentives

Incentives are a $100+ billion-dollar industry, $46 billion of which is non-cash incentives. 

Here are some examples of non-cash incentives:

  • Gift cards: From eCommerce to restaurants, there is a gift card for everything today. Choose a gift card, depending on what you think will benefit the most.  
  • Travel: Everyone loves a free trip. Gift your top performer a free travel voucher. 
  • Tickets to an event: Is there an event (like ballet or football) happening in your neighbourhood that your top-performing agent loves? Gift them a ticket to the event. 
  • Gadgets: Is there any tech-savvy member in your team? Gift them the latest gadget to boost their morale. 

How to choose the right incentive?

Now that you know the types of incentives and incentive structures, let’s look at how to choose the right reward. 

Sales Incentives Structure

1- Ensure everyone has a chance to win incentives

Your team will quickly get demotivated if the same person wins incentives every time. The best way to combat this situation is by creating different classes of participants. This will ensure that your top, middle, and lowest performers compete with each other rather than with everyone in the team. 

This will motivate everyone in your team, including the ones who normally wouldn’t stand a chance of winning.

2- Ask for personal preferences

The best way to determine what a representative would like is by asking them directly. In one-on-one meetings, you could ask:

  • Would you prefer cash or non-cash rewards?
  • Would you prefer acknowledgment in front of the team or in private?
  • Once you achieve your sales goals, what do you expect from us? Rewards? Recognition? 

Wrapping Up

The right sales incentive structure encourages salespeople to give their best every time they talk with prospective customers. It also helps you retain your best employees for longer. Decide between cash and non-cash rewards and choose an incentive program that aligns with your business. 

Do you have an incentive program in your business? How do you reward your sales representatives? Let us know in the comments.


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