Creating Inventive Sales Incentives

Among the many elements of sales management, incentives are fundamental. They can serve many useful purposes by motivating the salesforce, improving performance in specific product or service areas, or even moving the business in a new direction.

When I was appointed national sales manager of business credit information company Dun & Bradstreet South Africa, the company won the Hemispheric Sales Competition (a worldwide sales competition) for three consecutive years from 1976 to 1978. I put that victory down to what was probably the best sales incentive scheme that had ever been run in that industry. What’s fascinating is that the rules that applied then continue to this day.

The environment at the time was extremely competitive. Sales people in their late 20s were earning almost as much as the MD in incentives and commission. As they reached their targets, the escalating commission structure ensured that they earned even more.

The company conducted ongoing incentive programmes. Depending on what outcome we were looking for we would use various structures to encourage our sales people to deliver the desired results. The appropriate type and structure of each incentive programme was dictated entirely by business strategy and objectives.

Finding the Big Idea

The competition had countries and regions competing against each other. Determined to win, we devised a scheme that was exciting and practically unheard of in South Africa. We asked our salespeople what they believed would be a truly exotic holiday destination, and they decided on Hong Kong. We agreed that the best sales performers against budget would win an all-expenses paid trip for two to the city. At that time, travel was not common, the destination was completely out of the ordinary, and the rand value of the trip was high.

Keeping the Dream Alive

The entire competition was Chinese-themed and comprised several components. Monthly “sprints” were targeted at the sales of a particular product. Winners were announced at the office – the walls decorated with posters of all the sights in Hong Kong – and Chinese take-aways and fortune cookies were ordered. The qualifiers and their partners were taken to a Chinese restaurant. These dinners were festive and added to the creation of a wonderful vibe in the company.

Creating ongoing interest was key. There had to be smaller incentives along the way, from the time the programme launched to its conclusion. We also targeted spouses, boyfriends and girlfriends. Beautifully wrapped, elaborate parcels were delivered to them, each containing one chopstick or one silk slipper. The other would be sent to our salesperson. That worked exceptionally well because we were encouraging the partners to egg on our sales people. They’d go home and say: “Are we winning? You’d better get out there and sell!”

Setting Achievable Goals

The top performers reached their budgets and then exceeded them by massive margins, closing so many new deals that the cost of the prizes was liquidated. In an annuity business, with an 85% renewal rate, we were prepared to give away the profits achieved in the first year, writing that off to the cost of acquiring the customer.

The best move we made was to open the incentive up and put the goals within reach of the entire team. Give away more money, create more spirit, close more deals. That’s how it works.

The greatest mistake companies make is that most set the bar too high. Set realistic targets and then stretch them slightly, so that even the juniors can achieve them. This is critical. The budgets we set were attainable. If no-one can achieve targets, instead of trying to, they just become demoralised and your sales figures may actually drop. We knew we were growing by about 25% per year, so that’s the margin we added.

Be Clear in Determining and Communicating Your Goals

You have to be clear and realistic about what you want to achieve. Goals cannot be vague, and the goalposts must never be changed once they have been set.

This will demotivate top performers and set a precedent indicating that the company does not live up to its word. Once you are clear about your objectives, decide how much you are prepared to spend to achieve them. That’s how you define the budget.

Applying the Lesson

Ongoing incentives drive sales. It’s even more critical in tough times to ensure that targets are met. There are many things that can be done on a limited budget. Start by identifying what would wow the sales team. Depending on what’s going on in their lives, some people may prefer money to prizes. Always be prepared to give them the cash value of the incentive.

It does not always have to be about huge prizes. We used to give our top performer a Kruger rand. This was presented at a gala dinner, where the top sales person shared a raised table with the non-executive directors and was feted for the evening. The top sales person had already made thousands on commission. Yet, the event and the handing over of this small prize gave him/her the recognition they craved.