Do Sales Spiffs Work?

The topic of the sales spiff has always been a mysterious one.  Most sales organizations have some sort of "spiff program" that they have designed to motivate sales professionals to perform certain duties.  Perhaps they're looking to create competition within the sales force to drive revenue or they just want to see an increase of sales in a certain sector of their business.  Spiffs have been designed to drive activity for a number of different reasons but the bigger question always remains: Do spiffs work??

Companies have implemented thousands of different strategies to keep their sales people motivated to sell.  Some companies have spent an astronomical amount of their budget on spiffs, awards and company contests.  Classically speaking, the main motivator for sales teams has often been an end of the year "President's Club" trip for being 100%+ of their quota (that is, of course, in addition to the obvious motivator of commissions!). But, I have worked with companies that would take all their employees, regardless of their individual role, to a tropical island if the organization hit their overall company goal.  Another company would give a brand new Porsche to the Top Sales Rep while other companies would give days off or give small cash prizes for achieving weekly goals. 

I wouldn't deny receiving a luxury car or a tropical vacation for achieving my sales goals but I personally don't understand how a small spiff at the end of the week or month can motivate a sales person to go that "extra mile."  Typically, if a sales rep is a top producer, their commission earnings should far outweigh any spiff, thus being the greater motivator (if this isn't the case, perhaps it's time to look for a new opportunity).  Also, if the spiff is extremely lucrative, then why wouldn't the company just roll it into the commission plan? 

When a company implements a spiff do they actually see their return on investment?  A sales person should be motivated through their commission plan and the company vision that is instilled in them.  Companies who mainly incentivize their employees by weekly and monthly spiffs, in the place of a commission plan, have a tough time retaining their employees.  Not only will the sales team eventually lose motivation to sell but they will be conditioned to always chase the money in order to win a spiff instead of building a strong organization.  Their loyalty will begin to fade and there's a good chance they'll consider looking for other opportunities if the spiffs slow down.  However, in a rare success story, Mary Kay built the majority of her sales plan on awarding diamonds, Cadillac's, and trips and grew her sales from $198,000 to $2.4 Billion.

So what works?  Could the answer be as simple as creating a REALISTIC commission plan based on the sales you generate?  Or are spiffs the answer?  What drives you to hit your quota?

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