How to Manage SPIFF in Sales Correctly?
Whenever you begin a new business venture, your sales teams must lead the charge. Sales teams hold the success of new products and businesses. Sometimes it takes a little bit of sales motivation to encourage sales representatives to hit necessary sales goals.
Motivating sales reps takes many different forms. One of the most effective ways is to use a SPIFF program. SPIFF most often stands for “sales performance incentive fund” – although you might find other meanings.
This article will detail the steps you need to take to get the most out of your SPIFF program.
What are SPIFFs?
The exact nature of each SPIFF varies depending on each business’s needs. However, broadly speaking a SPIFF intends to motivate sales teams into reaching certain sales goals. As a short-term initiative, businesses implement SPIFFs to deal with employee disengagement.
Morale and motivation sometimes act in a cyclical manner. Sometimes sales teams take on the day with vigor and excitement. Other times they might drag their feet getting out the door. These peaks and troughs happen for all businesses, and SPIFFs help get things moving again.
SPIFFs work with some sort of incentivizing offer or reward. The most basic SPIFF sets a goal and rewards the salespeople who reach and/or exceed it. Rewards can take several shapes, most usually in a monetary form. Other rewards include vacation time, trip packages, prizes or recognition.
Setting up these incentives can often get the boost you need out of your time. However, proper management increases your chances of a successful program. Make sure you set yourself up for success to keep your SPIFF programs delivering the results you need.
What Does SPIFF Stand For?
SPIFF stands for several different phrases. Here are a few:
- Sales Performance Incentive Fund.
- Special Performance Incentive Fund.
- Specific Price Incentive for Final Sale.
- Salesperson Incentive for Fun.
- Special Pay Inceptices for Fast Sales.
- Sales Performance Incentive Funding Formula.
Why Use SPIFFs?
SPIFFs can work wonders for a short-term turnaround and can also give a spectacular launch. The launch of a new product leads to a return on the investment put into developing it. SPIFFs can help get the most out of a new product launch to keep your business on the cutting edge of your industry.
Specifically, SPIFFs provide two huge advantages:
- SPIFFs Incentivize Engagement:
Sales always suffer whenever engagement declines. To keep sales teams on the track for success, they sometimes need a reminder. SPIFFs foster that engagement by keeping sales reps’ eyes on the prize.
Rewards help get your sales teams as focused on making sales as you are. An engaged workforce breeds excitement and competition around the office. This leads to further engagement, lifting morale even higher.
- SPIFFs Help Meet Short-Term Goals:
Every now and then your business needs a kick to get it out of a slump or reach a goal. SPIFFs give a boost toward helping your business reach a nearby goal. To retain their significance, do not overuse SPIFFs. Keep them relatively rare and special to maximize their impact.
To keep management and investors happy, you can implement SPIFFs before a review. The lift in sales helps keep the higher-ups happy and keeps the revenue flowing.
7 Ways to Manage SPIFFs Correctly
To make sure your SPIFF produces the intended result, follow these guidelines:
Create Clear and Well-Defined Goals
For all of your business ventures, determine exactly what you want to achieve before beginning. SPIFFs require the same care. Before “spiffing” make sure you know the location of the finish line. That way you can see whether your efforts succeeded or failed.
Additionally, knowing your goals helps you design a game plan to more accurately achieve them. SPIFFs, as incentivizing rewards, can put a pep in the step of all our sales reps. You can use them to reach a sales goal. But you can also help identify what gets your team moving most effectively. Finally, a SPIFF can show which employees respond best to competition and engagement.
To perform a successful SPIFF, you need to know why you are implementing it. Without this goal, you lose any base to measure its success and you will not know where to take it.
Understand the Methods
Make sure that all of your sales reps know exactly what they need to do to achieve their reward. Explain what they are selling and how you want them to go about selling it. Plus, explain how they can claim their reward and track their progress.
Before you tell all your team members that the winner of the competition gets a reward, give them a guideline. Explain exactly how you want sales reps to achieve their goal. This way, you create an even playing field to keep the SPIFF fair. Any disagreement about the rules of engagement can lead to unhappy employees.
If you require a specific sales methodology, make sure your team knows about it. If you want to focus on an email campaign your team needs to know that before beginning.
Make sure everyone eligible for the incentive knows they can participate. This way you maximize the completion of your goals. Also, giving everyone a fair shot at the prize helps build camaraderie and keeps the competition friendly.
Additionally, you want to make sure that your business continues to function as expected. Ambiguity regarding the eligibility of participation pulls valuable employees away from their tasks. If employees start chasing the reward instead of performing their responsibilities, your business will suffer.
You might only want one specific sales team focusing on the goal if it lies within their specialty. Keeping the program contained limits outside interference. However, be careful when limiting participation. You do not want anyone feeling purposely excluded or overlooked.
Clearly Explain All Incentives
All participants need to know the exact rewards should they reach their goal. This way, they will remain excited upon earning the prize. Additionally, it retains trust around the office. A winner who feels duped might not participate in the next program. You never want to create any feelings of negativity regarding your SPIFF program.
Having a set goal also helps get more employees to participate. Provide a clear and solid and well-defined reward. If you offer a financial reward, tell participants the exact value. Do not give vague statements like “more vacation time,” but state the exact amount of time.
A set goal increases excitement and removes any doubt regarding the reward. Giving a vague goal will not give you the excitement or participation you need.
Set a Timeframe
The short-term nature of SPIFFs means you need to set an amount of time for representatives to achieve the goal. This timeframe acts as a deadline to push sales reps into action. If employees think they have plenty of time to complete the task, they will not reach their sales quotas when you need them to.
When setting the time constraints, keep them realistic. You want to push your teams but do not make it impossible to achieve. This will keep them from even attempting the challenge.
If only one employee can win, make sure you set a time to announce the winner. This way everyone will know when the program ends and will not work past the deadline. You can keep the winner a secret until a certain time to keep the energy going as long as possible.
Stay within Budget
All businesses need to stay profitable if they want to stay alive. Sometimes you use a SPIFF to increase sales in order to meet a financial obligation. If the reward neutralizes the ability to meet this obligation, the program fails.
If you make a promise to your team, you need to fulfill it. When they reach their goal they will expect the reward immediately. Make sure you can hold up your side of the bargain to keep their trust. So, if you promise $1,000 to the winner, make sure you can afford to pay it out.
If you expect multiple winners, overestimate the total amount of awards you expect to give out.
Will Your Efforts Pay Off?
You never want to sacrifice long-term success for a short-term goal. If the program costs more than it brings in, hold off on implementing it. Sometimes you might need a sales SPIFF just to get your team engaged again. Most times, however, you need a SPIFF for the economic advantage they produce.
Before you jump the gun and end up hurting your bottom line, take time to consider the consequences. If you simply want to close more deals, then a SPIFF at any cost will reach your goal.
Problems with SPIFFs: What are They and How to Deal With Them
All programs have some sort of disadvantage. Before you implement a SPIFF, consider the drawbacks. Some of them might just tip the scales in favor of ditching the idea. Plus, you might want to give some of these warnings to participants beforehand:
SPIFFS are Taxable
Make sure that your employees know that the IRS can tax all monetary rewards. Since these count as income, they are subject to all the same taxes as regular pay. So, when an employee receives the reward check, make sure they expect taxes to already be taken out.
Sometimes an employee might border a certain tax bracket. Earning the reward might come with some bad side effects. It might push someone into a higher tax bracket, negating all benefits of the reward. Keep everyone in the loop before causing anyone a potentially huge inconvenience.
Depending on your specific SPIFF reward, you might open the door to problems with fraud. First of all, make sure you can accurately and fairly track progress. You do not want your employees to cheat when trying to win.
Additionally, certain instances have occurred where fraud has been serious. A Florida case revolved around an employee stealing from the company by putting funds on prepaid credit cards. Take care to make sure your program does not open the door to any malicious activities.
Take Care to Stay Within Budget
Sometimes you want to spike sales to reach a goal. However, when the program exceeds its profitability you need to make a change. Offering too many rewards will break your budget and keep your business from succeeding.
Thoroughly account for the cost of each SPIFF program before implementing them. First, make sure you can afford the rewards for distribution. You also need to consider whether or not the program makes sense from a financial standpoint. If you wish to impress the higher-ups with more sales, going over budget will probably fail.
Beware of Toxic Competitions
Do your best to keep all workplace competitions friendly. You never want any employees to feel threatened or uncomfortable at work. Sometimes the idea of a reward gets overwhelming and might lead to toxic behavior.
Look out for any negativity and establish safeguards to protect against them. Make sure you can track all progress to reduce the risk of cheating. Also, set disqualifiers for any unwanted behavior including unprofessional behavior.
The SPIFF needs to create a more productive work environment, and any negative actions hurt that goal. Do your best to specifically disallow any negative behavior you can think of. Make sure all participants know the fouls and their consequences.
Get Help Managing your SPIFF
No matter your experience level or industry, getting a SPIFF to work can be difficult. When you need help with any aspect of your sales process, contact Selling Revolution. From getting more leads into your sales pipeline to recruiting top talent, Selling Revolution has your back.
Schedule a 20 minute introductory phone call today, and start setting you business up for success. Our professional consultation has improved countless businesses, and we wish to help you next. Give us a call, and join the revolution.