Join 90,000 of your peers

Don’t miss out on the latest tips, tools, and tactics at the forefront of customer support.

All you need to know about sales incentives

Parijat Lamba
18 Min read

Sales isn’t the same as it used to be. The times have changed, and so has technology. And with this change in technology, advancements in sales methodologies have also taken place. 

For example, the way salespeople used to interact with customers has changed drastically over the past decade, thanks to the introduction of new calling methods and emails.  

Similarly, many other practices in sales have changed with the changing world around. 

One such practice is that of providing sales incentives to the salespeople. 

What are sales incentives? 

“Call it what you will, incentives are what get people to work harder.” – Nikita Khrushchev 

A sales incentive is a reward/compensation (cash or non-cash) that’s given to a salesperson for performing up to a level, mainly for selling a particular amount of goods or services. 

In simple terms, sales incentives are something that motivates your team to wake up in the morning and get to work. 

Motivation is not something that is easily found by all. It’s the matter of personal choices and the matter at hand that makes a person decide whether he’s interested in that work or not. However, sometimes, extrinsic motivation can be provided to the person for him to complete a task. 

Sales incentives are such advantages given in exchange for the work done while boosting the morale of your sales team higher. 

According to a study by Incentive Research Foundation, it is found that incentive programs can boost performance by up to 44% if built correctly. 

Let’s look into what type of sales incentives can be provided to your sales reps to grow their performance. 

Types of sales incentives 

There are various multifaceted compensation options available to provide to the team and several factors that must be considered while creating a sales incentive program of your own.  

Here are the five types of sales incentives that can become the building blocks of your sales incentive scheme. 

1. Role-specific incentives 

Just like there are various sales methodologies that help the sales reps navigate through the sales process similarly, your sales incentive program should be helping reps to perform to their core strengths.  

The best way to do this is to plan an incentive program based on the rep’s capabilities. 

For example, let’s say you are selling a “product.” Now, it may not be a physical product but a service that requires an ongoing relationship with the customers even after the deal is closed. Whether the service is cloud-based software or a mobile app, additional expertise is always required to assist the frontline salespeople in their sales process.  

For instance, you want a specialist seller who can help with the complex sales and solution architects to aid the sellers with the know-how of the digital or otherwise intricate products. 

Other roles that you’d like to consider in this case would be customer-care experts for attentive aftersales support and advisory salespeople who have a thorough knowledge of the industry and can provide presale guidance to the customers on what type of solution to buy. 

Once all necessary roles are identified for every step of the sales process, you need to decide on a specific goal for each of them to fulfill. However, you need to keep in mind that since every employee has a different role to play, their behavior and goals will be different.   

This means that the importance and intensity of each role would not be alike either. Hence, coming up with a different incentive plan for each role is necessary so as to avoid any conflicts or internal competition between the employees. 

This is how a role-specific incentive plan works. 

2. Split incentives 

Sales processes can sometimes be complex than the others, and so they may require two or more reps working on the same team simultaneously. This team-up is decided according to their roles.   

Let’s say your company sells a SaaS product that rolls out new features now and then. These features are all technical in nature and not always easy for the salesperson to understand. 

Hence, you introduce a specialized product manager in your sales team to help out your sales reps with the complexities of the new features. This product manager will assist the sales rep with in-depth explanations of the product’s new capabilities. 

Now, two stakeholders get involved in such a case- the sales rep and the product manager. So, how do you decide on incentivizing both of them? 

The answer is a split incentive program. 

This method encourages your reps to work together and collaborate on their efforts. The incentives are either split down to the middle or are in pre-decided proportions. However, you need to keep the proportions clarified beforehand to reduce the tension between the reps and promote fairness. 

3. Pre-sales incentives 

We cannot say this enough – today’s sales is more complex than ever. With a plethora of options available in the market, and every company reaching out with detailed marketing programs, customers are subjected to endless confusion.  

This makes each customer do detailed research on each product in the market, even take multiple demos, and then decide which one works best for them. This way, the entire customer journey is elongated because of the extended evaluation period and can take up to a year or even longer. 

It’s not easy to keep the reps motivated in such scenarios, where the sales process is prolonged. Hence, it’s best to reward the reps at certain stages of the sales process to keep the ball rolling and stay high on energy.  

Of course, you also need to make sure that every sales rep gets a portfolio mixed with both short-term as well as long-term sales accounts so that at least certain accounts promise a near future reward. However, in situations where long-term sales are inevitable, presales incentive programs are the best solution for you. 

4. Omnichannel incentives 

It’s a digital world, and many digital channels and AIs continue to develop every day. More customers are interacting with both humans as well as computers at various stages of a buying cycle.  

However, no matter how smart computers get, they can never replace human emotions. Sales reps will always be needed as a part of the consultative process to listen to the prospects’ needs, identify pain points and provide a viable solution. Only humans can nurture long-lasting relationships with the customers.  

Today, humans and computers are working shoulder to shoulder in order to sell more. Omnichannel incentives come into play where both a human and computer are involved in a particular deal.  

Omnichannel incentives help a sales rep see computers as an asset rather than a competitor. These are the rewards that are paid based on the part that a rep plays in the overall sales process.  

For example, if a prospect engages with a rep because of an automated targeted email series and then closes the deal with the help of the sales rep, then this representative will be rewarded for his efforts post lead qualification stage. 

5. Analytics-based target incentives 

It is difficult to predict the customer demand in many complex sales scenarios and set reasonable objectives and quotas. 

In turn, this can also make curation of a sales incentive plan difficult. However, this is where data can serve as an asset. 

You can use big data analytics to help create more accurate sales projections. The system will evaluate past data and come up with a predictive model for customer demand in the future. And the high side of data analytics is that the more you use it, the more accurate it gets by the day. 

This can help you create a sales incentive plan that rewards sales reps on metrics and value-driven behavior. 

For example, you can evaluate how a rep’s actions helped to push the deal forward in the sales pipeline and then replicate the results with the help of activity tracking. Activity-based selling places more value on each step that a rep takes throughout the sales process rather than on the final outcome and results. 

It’s more about quality than quantity – rewarding reps based on how they close the deal rather than how many deals they close. This approach can not only help you create more meaningful incentive goals but also standardize your entire sales process. 

Traditional vs modern sales incentives 

Way before the internet took the world under its umbrella, prospects relied almost entirely on the expertise of a sales representative to make the final buying decision. 

Sales reps played a considerable role at the very beginning of the sales process – the role of educating the prospects about the product and building customer relationships. This structure made it easy to predict the sales and set broad-scale objectives that were easy to measure. 

For example, incentives could have been purely based on the number of units of a certain product sold in a month, quarter, or year. The other factors like customer experience and the influence of the competitors were not necessary to be taken into account during the decision-making process. 

The sales reps owned the relationships with the customers and had an easier time closing deals, which in turn made it easy for the companies to forecast outcomes and standardize the KPIs. However, this method also over, or under-rewarded the reps based on the factors that were out of their control. 

In these times, the sales incentives were completely based on quantifiable profit rather than behavioral performance. This is not the case anymore. 

“We cannot be effective if we continue to cling to the old ways, the old strategies, the old assumptions.”- George Barna 

As we mentioned already, today, the buyer’s persona has changed and it’s difficult to predict their behavior since the buyer’s journey, as well as the sales process, has become more complex than ever.  

Today’s customers are empowered with piles of information available on the internet and many options for the same product. This means that they rely on reps for supplementary information at the later stages in the buying process. This is happening in both inside and outside sales tactics

Because of this, the sales reps are not in full control of the buying process. They are competing with the treasures of information as well as a large amount of competition in the market.  

Today, customers don’t just rely on a single rep to make a decision since they care more about the product as well as the company they are buying from; they want to talk to multiple people in the organization so that they can build a sense of trust.  

Sales managers, thus, have to focus on both individual-selling as well as collaborative-selling to determine the ideal ratio for success. 

This is the base of the innovative incentive program. Sales managers need to keep in mind the individual characteristics, strengths and weaknesses, and specialties of each rep to figure out how to incentivize them. 

The following image briefly shows the difference between traditional and modern/ innovative incentive programs. 

7 winning sales incentives ideas 

Is it enough to offer pure cash rewards to every sales representative? Or are there any other sales incentives that can boost up the motivation of your sales team? 

Not all sales compensation is the same. Structuring incentives using these building blocks can improve your bottom line. Let’s have a look at these innovative incentive ideas you can apply to your sales team! 

1. Cash prize 

Let’s face it. Your sales team is here to earn money, and there’s no denial of this fact. This is the main reason why cash prizes work.  

Cash incentives are, well, a set amount of money given as a bonus for hard work. To make this incentive work, you can set up a clear commission structure that helps the sales reps focus on a specific goal.  

For example, you can give a set amount of money to a rep to reach a quota, exceed the quota, close a certain number of deals, or hit a sales activity goal.  

However, don’t take it as a given that your team only loves cash prizes. As per a study, 85% of people will choose a reward other than money if the other option is something they really love.  

2. Product-based prize 

Physical products are a fun reward. Giving away products that your team might love will encourage them to work harder and add a fun element to their work. 

You might offer: 

  • Any latest tech gadget like an iPhone or a smartwatch. 
  • Products for their home, like a smart TV, a high-end coffee maker, or an advanced sound system. 
  • Hobby products like rock-climbing equipment, or something as simple as a bicycle. 

Product incentives are great because they are physical reminders of your reps’ achievements. They are what stay with them for a long time, and they might even get asked about them, which would help the reps relive their glorious moments of winning. 

However, make sure your prize is appealing to your team, and to make sure of it, you might offer a choice between two or three different products, so that it caters to all the other people of your team.  

3. Courses and training 

Sales reps, and every other person really, are all always eager to improve themselves. Hence, personal and professional training can be a great motivator for your team. 

You can offer professional development opportunities like: 

  • Special sales training from a professional coach. 
  • Passes for an upcoming sales event. 
  • Sales courses to develop advanced sales techniques. 

You can even offer opportunities for personal development that might appeal to your team, such as: 

  • Hobby classes. 
  • One month membership to a fitness club. 
  • Access to online course websites. 

When you offer a development program to your reps, you tell them that you believe in them and want to see them grow, both personally and professionally. 

4. Activity-based rewards (Entertainment, travel, adventure, etc.) 

Sales is a tough field, won’t you agree? And what better way to unwind after a hectic month of back-to-back deals than a lavish spa or a trip to the countryside? 

You can invest in any kind of activities that your team would like to do together or even go on an adventure trip, whatever suits everyone’s best interests. 

Research shows that travel incentives have much higher ROI than any other kind of non-cash rewards since they produce a much higher level of motivation. 

Of course, the kind of activity you decide to take up would depend on the ongoing conditions of the world. 

5. Paid time off 

Time is money. If that’s true, then your reps would consider a paid time off as an incentive too! After all, they work so hard every day to reach their targets and hit the necessary metrics for an incentive. So, why not reward them with some time off from work altogether? 

This type of incentive also encourages a better work-life balance within your team. It’s a way to remind them that there are more important things in life, and working hard would mean they would get more time for their families. 

6. Recognition within the company 

Although most employees are satisfied with their overall job, there are as many as 44% of employees who say that they aren’t happy with the recognition they receive from their employers.  

In fact, almost 50% of employees are more focused on how their reward is presented to them than the reward itself.  

So that means that recognition itself is a huge motivator.  

You can use some of the below-mentioned methods to implement this incentive without hanging the employee’s photo on the wall:  

  • A lunch with the CEO of the company.
  • Specific praise in the company’s chat channel. 
  • Praise in front of their team members. 

7. Self-chosen rewards 

Let them choose their own incentive (within reason, of course). 

Your team is made up of many individuals who have their own tastes, hobbies, and choices, and so, not every reward will suit each one of them. Letting them choose their own reward within a certain budget will give them the freedom to pick what motivates them the most. 

In fact, if you encourage the reps to visualize what they want at the beginning of the month, they’ll stay motivated and push harder for the reward of their imagination. 

How to implement the right sales incentive program to your business? 

Most of the sales reps are born competitors, and adding a compelling reward makes them even more enthusiastic. But you need to choose a reward that not only motivates your sales reps, but also promotes the right behavior that your organization seeks. 

Whether you choose one of the aforementioned incentive schemes, cash or non-cash prize, or a mix and match, you need to choose what aligns with your sales organization’s goals. 

If you have a cross-team collaborative environment in your company, then you may want to choose incentives that are both individual as well as team-based. This will help you promote teamwork and reduce friction among the members. 

If your reps are mostly working alone, then you may want to use tiered incentive programs that will help them outperform themselves and reach new potential. 

You also need to make sure your incentives don’t distract your reps from day-to-day objectives and only motivate them to do better.  

No matter what you decide, make sure your incentive program is designed to promote the desired behavior. Align the team with organizational goals, tailor them for individuals, and make sure the rewards are given for high-value, quality work. 

The do’s and don’ts of sales incentive plans 

There are some ground rules that you can follow while creating a sales incentive plan for your organization. Here are some do’s and don’ts that you can keep in mind while building your program. 

What to do: 

  • No sales compensation package is brilliant; keep revising yours even if it looks perfect. 
  • Show a bit of generosity. Offer salaries and incentives that are attractive to all parties. 
  • Transparency is essential. Write down the compensation package guidelines and avail it to all the employees. 
  • Get every new team member to sign on the sales compensation plan for agreement and to avoid any future conflicts. 

What NOT to do: 

  • Hide the incentive plan from all the team members. Keep in mind that every salesperson wants to know your incentive model from the get-go. 
  • Assume all salespeople are only motivated by cash. 
  • Forget to solicit feedback on your compensation plan from your sales team. 
  • Forgo having a trusted outsider to review your compensation plan for holes. 

Examples of sales incentives schemes that works: 

1) Boosting Sales with Affiliate Programs: 

To encourage our affiliate partners, we doubled the affiliate commission for a limited period of time. This has worked quite well, especially when we included a gift for the customers affiliates refer to us. Offering an incentive will encourage people to talk about your product, boost their engagement with the brand and consequently increase your brand awareness and sales figures. I think that the key element here was limiting the length of the promotion – that makes people work harder, when they know they have a limited time period to work with. 

2) Win-Win Sales Strategy for SaaS Businesses 

At Nifty, we gave credits to potential clients who were using other project management software and locked them into annual contracts. This scenario served as a win-win because we had the opportunity to get new business while not affecting their existing subscriptions.  

  • Jeffrey Kegan, Chief revenue Officer at Nifty 

Summing it up… 

The sales landscape has changed over the years, and so have the sales incentive schemes. The modern sales process is complex, and the sales reps need to be incentivized in new ways to keep them motivated. 

The ultimate goal of sales incentives is to make the sales reps feel motivated and appreciated. Hence, a reward should feel like a well-deserved bonus. 

Sales incentives should encourage self-drive and discipline, as well as teamwork and collaboration. Hence, your incentive program should be transparent and should generate excitement. 

With the ideas mentioned above, you should be able to make yourself an innovative sales incentive program that meets your organizational goals and motivates your sales team optimally. 

Parijat Lamba

Being an avid reader, Parijat developed a keen interest in writing at a very young age. She's passionate about topics like Spirituality, History, Psychology, and Philosophy. Having worked for several niches, she is now carving a space for herself in IT, also striving to write her own novel someday.

You may also enjoy these

Automation

Salesmate’s all-new powerful automation journeys to capture, engage, close, and repeat

When your business starts growing, you need a streamlined process that enables...

5 Min read
Marketing Automation

List of best marketing automation software for 2021

Marketing is what reflects your brand in front of your prospects and...

16 Min read
Product Updates

✌️New Features for the month of June

Better visibility for deal cards and control conversations effectively.  Customize your Deal...

2 Min read
Email automation

A complete guide on Email Automation

You have probably heard of Email Automation if you work in sales...

30 Min read
Sales

All you need to know about sales incentives

Sales isn’t the same as it used to be. The times have...

18 Min read

Join Our Newsletter to Step Up
Your Sales Game

Get the latest tips & tricks you can implement to grow your sales revenue directly in your inbox.

Thank you for subscribing.