This blog focuses on understanding sales incentives for your team, the important role incentives play on team motivation and performance and the specific systems which best motivate teams (such as how gamification can act as an effective incentive).

Understanding sales incentives for teams

In short, sales incentives for teams are important goal-based reward systems designed to encourage your sales team to achieve more sales, increasing your revenue, as well as achieving some benefits themselves.

Motivating your team achieves results regarding sales performance, but also has a positive impact on workplace productivity, workplace atmosphere, employee morale and employee satisfaction. Making sure your team feels adequately rewarded and appreciated for their excellent work is impactful in a number of ways.

Our sales team motivation solutions ensure that every member of your team is accounted for, leading to a workforce which is motivated across the board, and that nobody is left behind. After all, motivating somebody who already thrives is easy, but quality sales incentives for teams also focus on the new members finding their feet, as well as the well-established workers who perhaps need a positive nudge in the right direction.

The importance of incentives when motivating teams

Incentives are very important when motivating teams because they can provide both extrinsic and intrinsic motivation when employed in different forms. Sales incentive games can serve as an excellent form of intrinsic motivation, because they combine elements of competition, collaboration and personal growth, leading to employees developing a sense of passion and fulfilment upon completing tasks.

This makes it possible to turn tasks which employees feel they have to do, into ones that they want to do, and this difference increases the quality of work as well as employee satisfaction.

Incentives can also act as positive reinforcement for best practices in your organisation. Employees receiving rewards for utilising their best skills when it comes to sales means they are more likely to internalise these techniques and continue to secure business for you. This positive cycle of reward and recognition also leads to a permanent increase in motivation for your workforce, who have been shown that you really appreciate the work they do.

The sales incentive systems that motivate teams

At BI WORLDWIDE we consider sales incentives through the lens of inspiration not compensation. While commissions and stock options can be considered sales incentives, we believe they are more closely related to salary and remuneration. These methods are typically tied to everyday business activities and are less effective at motivating incremental behaviour change.

• Sales contests – Easy to understand and execute sales contests allow representatives to engage in healthy and beneficial contests between each other, with the end goal of reaching specific targets first to receive a reward of some variety. These rewards could include financial bonuses, aspirational gifts, team outings, personal experiences, or professional development opportunities.

• Gamification – Gamification can be used to boost employee collaboration, motivate sales teams and accelerate employee development. Adding game mechanics into non-game environments has been shown to increase engagement and performance consistently.

• Travel incentives – Group travel incentives are a great way to give your team something to work towards. Promising your team members an unforgettable travelling experience as a result of excellent work us proven to be the most motivational reward option and will encourage them to realise untapped potential. As a leading incentive travel provider we can provide end-to-end support, from sales incentive design and delivery through to travel incentive management and operations.  

How incentives using gamification can motivate teams

Incentives using gamification can motivate teams by adding a unique element to recognise employees and their hard work. Competition has always been an effective tool to drive improved results, and being able to harness the competitive nature of sales professionals through gamification encourages positive work behaviour and increases learning and retention.

Another benefit of gamification is the healthy nature of competition that it encourages. More traditional incentives can be seen to promote unhealthy competition, in which employees feel the need to outdo each other to earn rewards. This is different with proper gamified techniques.

Gamification can reflect individual improvement as well as team accomplishments, meaning that sales professionals feel compelled to work as a member of a larger unit, or feel as though they can challenge themselves against themselves, with motivation to improve.

Can cash-based incentives motivate teams?

Cash based incentives are a traditional way of motivating sales teams. Cash rewards, be it through bonuses, commissions, or otherwise, are a simple and transactional way to encourage your team to secure more business for you. Directly linking improved performance to higher cash incentives allows employees to see the link and internalise an association between high quality work and rewards.

Cash incentives can be especially useful when operating on tight deadlines, but aren’t necessarily the most effective at motivating behaviour change. Our webinar titled ‘Is cash king?’ dove into the effectiveness of cash incentives when compared to many of the alternatives we offer.

Cash rewards are one way to motivate your team but to increase productivity and long term performance, non-cash rewards such as travel, experiences, aspirational merchandise and recognition rewards can be transformational, more personalised and be better placed to boost engagement and motivate enhanced results.

An effective employee recognition programme relies on active participation from both employees and leaders. But how can a company ensure participation? Recognising people early in their tenure is a proven strategy to boost employee engagement.

Early recognition can have a major impact on employees. 

BI WORLDWIDE’s Insights Lab analysed over 500,000 employees who received at least one recognition across 12 different recognition programmes. These employees were divided into three equal-sized groups based on the number of days between their first day of employment and when they received their first recognition.

The goal of this analysis was to compare the behaviour of these groups on key measures of engagement. The measures were indexed to the highest rate group, meaning that engaging at the same rate would have an index of 100, engaging at half the rate would have an index of 50, etc.

One key measure of engagement is the giving and receiving of peer-to-peer recognition. Looking at the percentage of employees who ever gave a recognition to a co-worker, the index is much higher in the group that received recognition the earliest in their tenure. 

Those who didn’t receive recognition within the first four months of employment are half as likely to engage in giving recognition.

An even stronger pattern emerges when looking at the frequency of giving peer-to-peer recognition. 

The employees in the Early Recognised group give recognition at a higher rate than those in the Late Recognised group.

Employee logins to the programme are also a measure of engagement, as it shows that employees are aware of the programme. Employees who are engaged in the programme will log into the programme site, increasing the prominence of the programme. Those in the Early Recognised group log in much more often during their first year of employment.

Lastly, effective recognition also inspires more of the same behaviours that are being recognised. The Early Recognised group receives recognition more often throughout their employment.

Research has proven that strategic, best-in-class employee recognition programmes can have many benefits, including reduced turnover, improved company culture and increased productivity. These benefits can’t be realised until employees across the organisation are engaged in the programme.

Recognition early in an employee’s tenure is clear in driving engagement, as those employees are more fully engaged in supporting a recognition-rich culture. They’re more likely to recognise co-workers in general and at a higher rate, and they’re more engaged with the programme platform. They also repeat recognised behaviours, so they receive recognition at a higher rate.

---

What is your organisation doing to ensure that new employees receive recognition early in their tenure? 

Driving early recognition significantly aids in developing a recognition-rich culture and increasing programme effectiveness.

In recent years, AV and technology costs have surged, creating a ripple effect on your budget. As cited by the PCMA, several factors are contributing to this increase:

1. Inflation and supply chain issues – Inflation hit a four-decade high of 9.1% in June 2022, driving up prices across the board. Supply chain disruptions have also led to higher costs for AV equipment, with prices for items like screens and video projectors increasing by 15 to 50%.
2. Travel and transportation costs – The cost of travel for technicians and transportation of AV gear has risen significantly. This includes expenses for trucking and logistics, which add to the overall cost of AV services.
3. Labour shortages – A sudden talent shortage post-pandemic has made it challenging to find skilled AV technicians. This has led to higher labour costs, as you often need to pay premium rates for experienced professionals.
4. Venue fees and exclusivity agreements – Many venues mandate the use of their exclusive AV suppliers, which can limit flexibility and drive-up costs. These agreements often come with additional fees for rigging, power distribution, and in-house labour.

Given these challenges, you need innovative strategies to manage AV costs effectively. By reading on, you’ll learn:

• Creative ways to balance budget constraints with delivering unique experiences
• Cost-effective AV/technology solutions to ensure impactful events
• Tips on negotiating with venues, and strategies to offset other expenses
• Insights into emerging technologies and sustainable practices
• The value of partnering with a trained and experienced team

Navigating exclusive AV supplier agreements

Navigating exclusive AV supplier agreements can be a complex task. It’s important to carefully examine these arrangements during the contracting stage and negotiate with venues to ensure as much flexibility as possible. This can be challenging, especially when finalising costs before booking the venue. One effective strategy is to use trusted AV partners who meet specific quality standards. In some cases, a hybrid approach can be beneficial, where trusted AV partners handle main plenaries while the venue’s approved partner manages breakout sessions. This method helps maintain the quality of the production while keeping costs under control.

Strategic AV and technology choices

AV and technology budgets incorporate an extensive list of equipment, often consolidated into a single line item. The complexity of AV and technology provision can lead to a lack of understanding of the equipment needed to deliver the event successfully. For instance, LED walls may seem expensive, but they offer a flexible alternative to traditional set and stage setups, allowing visuals and branding to be changed at the touch of a button. This customisation can transform an environment from product launch to plenary, from daytime breakout to evening awards, helping you to maximise the use of the space you have with limited additional spend. It’s also more sustainable. The same principle applies to other AV equipment too. With careful planning, schedules can be designed to reuse equipment for multiple scenarios, reducing the need for additional equipment hire.

Leveraging digital tools for engagement

Incorporating digital tools into event planning can significantly enhance delegate engagement and streamline event management. Apps can be used as engagement tools, carefully designed to weave interaction throughout the event and enhance the overall experience. A cost-effective, well-curated app can contribute greatly to meeting event objectives by offering features such as live polling, Q&A sessions, and networking opportunities. These tools not only keep attendees engaged but also provide valuable insights and feedback, making them an essential component of modern event planning.

Aligning AV decisions with event objectives

Because technology and AV can be complex, you may seek guidance on what’s necessary to deliver your event vision. To realise your vision, we begin the design of any event with a discovery session to uncover your strategic objectives and determine your desired outcomes. This holistic approach ensures that our AV and technology choices align with your needs and goals.

Emerging technologies

Incorporating emerging technologies can also be a game-changer for you. Virtual and augmented reality, for instance, can create immersive experiences without the need for extensive physical setups. AI-driven event management tools can streamline operations and reduce labour costs, while remote participation technologies can expand your audience without significantly increasing expenses.

Sustainability and cost optimisation

Sustainability is becoming a crucial consideration in event planning. Choosing AV/technology solutions that are energy-efficient and environmentally friendly not only reduces your carbon footprint but also appeals to eco-conscious clients. For example, LED lighting is not only cost-effective but also consumes less power compared to traditional lighting options. By integrating sustainable practices, you can often find cost savings while also meeting the growing demand for green events.

The value of a trained team

Having a highly trained and experienced team is crucial for optimising AV/technology costs and ensuring the success of your event. Experts who are well-versed in the latest AV and technology trends can handle any challenges that may arise, ensuring that every piece of equipment is used to its fullest potential. This not only reduces waste but also maximises value, leading to exceptional event experiences. A trained team can provide professional management, streamline operations, and deliver high-quality results, making them an invaluable asset for you.

Top 10 tips for maximising AV / technology impact on a budget

1. Understand rising costs – Be aware that AV and technology costs have surged due to factors like inflation, supply chain issues, travel and transportation costs, labour shortages, and venue fees. Knowing these can help you plan better.
2. Negotiate early – Start negotiations with venues early to explore flexibility in AV supplier agreements. This can help you secure better terms and manage costs effectively.
3. Use a hybrid approach – Consider using trusted AV partners for main plenaries and the venue’s approved partner for breakout sessions. This strategy helps balance quality and cost.
4. Break down AV budgets – Break down your AV budget into specific equipment needs rather than a single line item. This helps in understanding what is essential for your event and optimising costs.
5. Leverage flexible solutions – Invest in flexible solutions like LED walls, which can adapt to various event formats. This reduces the need for multiple setups and saves costs.
6. Reuse and repurpose equipment – Plan schedules to reuse equipment for multiple scenarios, reducing additional hire costs. This ensures that equipment is utilised to its fullest potential, maximising value and minimising waste.
7. Choose the right digital tools – Select cost-effective apps that align with your event objectives. Incorporate features like live polling, Q&A sessions, and networking opportunities to enhance delegate engagement.
8. Explore emerging technologies – Consider using virtual and augmented reality to create immersive experiences. Implement AI-driven event management tools to streamline operations and reduce labour costs.
9. Promote sustainability – Opt for energy-efficient AV/tech solutions like LED lighting. Incorporate green practices into your event planning to reduce costs and appeal to eco-conscious clients.
10. Partner with a trained team – Choose a provider with a highly trained and experienced team. This ensures professional management, maximises equipment use, and delivers exceptional event experiences.

Partner with experts for unforgettable events

In the face of rising AV and technology costs, you need innovative strategies to deliver exceptional experiences without overspending. At BI WORLDWIDE, we combine our extensive expertise, trusted partnerships, and cutting-edge solutions to help you navigate these challenges. Our commitment to sustainability and our client-centric approach ensure that every event is tailored to your unique needs and goals.

The success of your sales incentive programme hinges on its ability to tap into the diverse motivations of your sales team and how it can adapt to the dynamic nature of sales environments and the specific goals you aim to achieve. Whether you’re aiming to boost individual performance, foster teamwork, or navigate complex sales environments, the right incentive structure can make all the difference.

In this blog, we’ll dive into the fundamentals of sales incentive structures, their strengths for your business, and key considerations to implementing them effectively, as well as touching on the benefits of both financial and non-financial reward strategies.

What are the different types of sales incentive plans?

To be successful, your overarching sales incentive plan should be influenced by the objectives you’re trying to achieve and the audience you’re targeting to motivate. The most common types of sales incentives are:

• Role-specific sales incentives – The most effective incentives are those that are targeted at an individual – the more personalised the better. Typically, these will be designed to reward activity based on your role or function. 
• Team or split sales incentives – In highly technical or complex solution sales environments, these incentives foster teamwork and recognise everyone’s contributions, ensuring all parties are acknowledged for their combined focus on the customer and shared success.
• Pre-sales incentives – In industry sectors or with products that typically have a longer sales cycle, pre-sales incentives can help to sustain engagement by rewarding key milestones. 
• Omnichannel sales incentives – In complex sales environments where a customer may be engaging across multiple channels, incentivising the steps to a sale and rewarding the relevant stakeholders along that journey can help to reduce points of customer friction and increase sales performance.
• Analytics-based sales incentives – Where accurately forecasting performance is less possible either due to a complex sales process, new product launch or new market entry, insight-based predictive modelling is often the most appropriate sales incentive plan. In these scenarios, large data sets are required to be able to provide strong predictions. Alternatively, analysing the activities and behaviours that trigger success and pivoting your incentive focus from the transaction towards replicating these. 

How do you structure sales incentives?

When structuring your sales incentive, to secure engagement and support success, the critical components that should be considered and included are:

Programme rules

Programme rules should clearly outline the specific goals of the incentive and what measurement criteria will be used to determine success. It’s important that your programme rules align with your wider business strategy and ways of working. Ideally these should be simple and easy for participants to understand and should not only target your top performers but also create motivation in your mid-performers, as this is where the biggest opportunity for growth resides.

Communications

Critically, an incentive you run should be fair in its design and transparent in its communication of the objectives, rules, rewards, and progress to ensure maximum engagement and impact. Leveraging existing channels and offering various communication options will maximise your reach and engagement. Consider how the cadence of your communications can help to build momentum and enhance motivation – for example, increasing communication frequency during busy periods or as your incentive plan is coming to an end can help to accelerate performance.

Training and education

Incentives are only effective if the participants feel they can succeed. Consider what support is available to enable people to develop their skills and maximise their opportunity for success. For example, is training available and will it be easily accessible.

Measurement

Considerations around how and what activities will be tracked, measured, and reported should be made and, importantly, how participants in the incentive will be updated on their progress to the objectives and the results. Real-time dashboards and regular progress reports ensure sales people are informed and can remain motivated throughout the duration of the incentive.

Awards

Choosing the right awards is critical to motivating sales teams. Award options can include:

• Cash and cash equivalents (such as gift cards and vouchers)
• Tangible rewards (such as merchandise rewards)
• Experiential rewards (such as personal and group travel or personal development opportunities)
• Recognition awards (such as trophies, certificates, and employee benefits, e.g. additional holiday).

Be clear on the dynamics of your sales teams and what type of awards will be most effective.

Sales environments can change rapidly, and your incentive programme should be flexible enough to adapt to these changes. This includes being able to adjust rules, communication, and rewards as needed to stay relevant and effective. Ensure within your plan you schedule regular reviews on your incentives performance to ensure it remains aligned to your goals and market conditions.

Financial vs non-financial incentives

The choice between monetary and non-monetary incentives can significantly impact the effectiveness of your sales incentive programme. Before exploring specific sales incentives structures, we briefly want to explore the benefits and drawbacks of each and how they can influence your incentive success.

Monetary incentives

Monetary incentives are cash rewards given for specific actions or behaviours, such as achieving the highest sales in a quarter. These incentives aim to boost productivity and effort.

Examples include commissions, target bonuses, profit-sharing schemes, gift cards, and stock options. Monetary incentives can significantly boost employee morale, reward efforts, motivate employees to take on less enjoyable tasks, cultivate loyalty, and provide financial security. They’re also cost-effective when structured around targets. However, they can lead to a short-term focus, diminish intrinsic motivation, create negative competition, and encourage unethical behaviour.

Non-monetary incentives

Non-monetary incentives are value-based rewards like recognition, feedback, travel, experiences, or merchandise. These rewards focus on personal and professional development, job satisfaction, intrinsic motivation, and organisational loyalty.

Non-monetary incentives are more effective at tapping into people’s emotions and therefore more impactful at enhancing employee engagement, creating lasting memories, and offering personalised recognition, and are more likely to be discussed and celebrated publicly. They’re also cost-effective as they’re often perceived as higher value than their actual cost. However, their effectiveness can vary among employees. They may miss the mark for those primarily motivated by money, and they require a targeted strategy to implement effectively.

Using both monetary and non-monetary incentives

Studies show that non-monetary incentives can significantly impact motivation and loyalty. Combining both types of incentives, such as using points systems, can bridge the gap and offer a balanced approach to incentive rewards. Point systems act as a type of currency that can be redeemed for merchandise, experiences, and personal development rewards, providing a higher level of recognition and satisfaction. This balanced approach can lead to long-term job satisfaction and effort, fostering a positive workplace culture and driving business success.

Sales incentive structures that work for business

In the competitive world of sales, keeping your team motivated is key to driving success. A well-executed sales incentive can be your secret weapon. In this section we’ll dive into a variety of sales incentive structures that can help boost performance and keep your sales force energised and aligned with your organisation’s goals.

Commission-based

Commissions are a traditional sales incentive structure that rewards salespeople with a percentage of the sales they make. This can be designed as either a flat rate percentage or in tiers based on performance levels.

The benefits of this type of incentive are that they’re easy to understand, calculate, and directly tie earnings with performance, motivating salespeople to sell more.

On the flip side, incentive earnings can be unpredictable and have the potential to encourage aggressive sales tactics, a short-term focus on gains, and cause salespeople to neglect non-sales activities. Furthermore, typically rewarded as a monetary incentive and built into employment contracts, earnings can easily be confused with salary, reducing the long-term efficacy of this type of incentive to drive specific behaviours.

Bonus-based

This sales incentive structure rewards salespeople for achieving specific targets or milestones, such as closing a significant deal, sustaining target achievement quarter on quarter, or onboarding new clients.

This is a great structure for promoting and focusing salespeople on the achievement of specific goals and can be tailored to align with the changing landscape of your business and the needs of a sales team or channel.

When designing bonus-based incentives, ensure that they balance your sales team’s focus on both short- and long-term targets and that any targets set are perceived as attainable to mitigate disengagement. Furthermore, consider how these bonuses are positioned within the overall total rewards package. To change behaviour, incentives should be perceived as additional earning opportunities, not base salary.

Profit sharing

A profit-sharing incentive structure can align salespeople’s interests with long-term organisational performance over short-term successes and can be designed to reward based on individual, team, or organisation-wide performance. However, used in isolation, it could minimise recognition of individual contributions and be more complex to administer.

Quota-based

Quota-based incentives are tied to meeting or exceeding sales quotas. This can include bonuses, commissions, or other rewards. Quota-based incentives provide clear targets and, when designed effectively, motivate salespeople to meet or exceed them.

They offer great flexibility for organisations, enabling them to be adjusted as required to reflect market conditions. These targets can be either revenue or unit-based. Best practice quota-based incentives are those that are personalised to an individual person. Using historical individual sales performance data and predictive modelling, unique baseline performances should be identified and achievable growth targets set. Better still, enabling sales people to self-select their targets provides an added layer of ownership of the goal, increasing engagement and leading to higher target attainment.

Team-based

This incentive structure is a great way to drive collaboration and share best practices among teams. In this structure, incentives are distributed based on the performance of the team, making it effective in driving overall team performance. However, it requires careful management to avoid creating unintended conflicts within teams or demotivating high performers who may feel their contributions are diluted.

Behaviour-based

Behaviour-based incentives move away from focusing on outcomes and results and focus salespeople on the steps to sale, fostering a culture of continuous improvement by positively recognising and reinforcing the behaviours most aligned with sales success, such as training participation, customer service excellence, and adherence to safety protocols.

Common challenges with this structure can be in identifying appropriate, clear, and measurable criteria to incentivise, and ensuring that it’s clearly and consistently communicated and measured.

SPIFFs  (sales performance incentive funds)

This structure is a short-term incentive, deployed to drive the achievement of specific goals, such as selling a particular product or closing deals within a certain timeframe.

These can be highly effective when used tactically, especially during slower sales periods. However, SPIFFs can be costly, so careful consideration in their implementation and design should be factored to generate a positive ROI. Factors such as avoiding overuse, which can affect engagement, and programme rules to discourage negative behaviours, such as delaying closing deals to qualify for rewards, should be considered.

Hybrid

Hybrid incentive structures enable organisations to leverage a combination of different incentive types, such as commission, bonuses, and SPIFFs, to provide a balanced approach and tackle multiple objectives.

In programmes utilising hybrid structures, additional care should be taken to ensure communication is clear and rules are well-defined to ease administration, maximise budget utilisation, and avoid confusion.

In addition to these core structures, we’d recommend overlaying them with sales incentives tactics and games to help capture attention, drive competition, and increase engagement, such as:

Accelerators

Encourage your salespeople to go beyond quotas or reach milestones quicker with higher reward opportunities when thresholds are exceeded. Careful consideration should be made when applying these to ensure you don’t encourage negative behaviours.

Qualifiers

Qualifiers refer to any activity or threshold that must be achieved before a participant’s eligible to start earning awards. For example, completing a certification or a certain course or selling a minimum number of units. This can be a useful overlay where you want to restrict rewards to your most engaged sales people, but must be implemented carefully so as not to disengage your wider audience by creating too high a barrier to succeed or unintentionally disqualifying a typically strong performer.

Multipliers

Multipliers are overlays that increase incentive results based on a number of actions being completed. They’re particularly effective when a programme may be incentivising a number of activities or products but there’s a desire to give additional weight to one element over another. This can be a great tactic for additional recognition where additional effort is required or where more focus is desired.

These are just a few examples of sales incentive tactics that can drive performance. Incorporating sales incentive games such as leaderboards, bingo cards and badges, for example, can help to create a competitive and fun environment around your sales incentive activity.

How to choose the right sales incentive programme for your business

Most sales organisations, whether selling direct to customers or through complex channels, will benefit from having a sales incentive strategy in place. However, not all sales incentive structures are created equal. it’s a common misconception that designing and delivering an effective sales incentive is easy, especially if you’re trying to incentivise sales teams across multiple regions and markets. Even if you feel you’ve identified the most suitable incentive structure, there are many complexities to its implementation and maximising its effectiveness.

Consider legal and tax implications

When implementing a sales incentive programme, it’s crucial to consider the legal and tax implications in each region. Different countries have varying regulations regarding employee incentives, and non-compliance can lead to significant penalties. For example, in the EU, incentives must comply with GDPR regulations, while in the US, the IRS has specific guidelines on taxable benefits.

Tailor your programme for global implementation

A one-size-fits-all approach rarely works for global sales teams. It’s essential to segment your audience and tailor the programme to meet the unique needs of each region. This includes understanding local market conditions, cultural nuances, and sales practices.

Understand reward effectiveness and cultural expectations

The effectiveness of rewards can vary significantly across cultures. What motivates a sales person in the US might not have the same impact on a sales person in Japan. Understanding these cultural differences is key to designing a programme that truly motivates.

Overcome communication complexities

Effective communication is critical to the success of any incentive programme. This includes overcoming language barriers and personalising messages to ensure they resonate with the target audience.

Build a robust technology infrastructure

A robust technology infrastructure is essential for managing a sales incentive programme, especially on a global scale. This includes secure data hosting, easy access for participants, and the flexibility to adapt the programme as needed. With stringent rules and barriers to entry in certain regions of the world, ensuring your incentive technology solution can be deployed effectively is important.

Elevating sales performance with tailored incentive structures

Crafting an effective sales incentive programme isn’t just about choosing the right rewards; it’s about understanding the unique dynamics of your sales team and aligning incentives with your business objectives.

By integrating a mix of commission-based, bonus-based, profit-sharing, quota-based, team-based, behaviour-based, SPIFFs, and hybrid structures, you can create a robust incentive strategy that drives performance and fosters a culture of continuous improvement.

The key to a successful sales incentive programme lies in its ability to adapt and evolve with your business needs and market conditions. A well-structured incentive plan can transform your salesforce, turning challenges into opportunities and driving sustained growth.

By leveraging data-driven insights and understanding the diverse motivations of your sales team, you can design a programme that not only meets but exceeds your business goals.

In the competitive world of sales, incentives play a crucial role in motivating teams and driving performance. However, one common pitfall is rewarding “business as usual” activities instead of delivering added value to your business, leading to complacency and stagnation. Sales incentives should be strategically designed to inspire exceptional performances, innovation, and value. 

Read on as we guide you through some of the key considerations for designing an incentive that will help you to maximise impact. 

Before we dive in, we’ll explore key terms such as return on investment (ROI) and return on objective (ROO), and how they can help you calculate the value of sales incentives. 

What’s return on investment (ROI) for a sales incentive programme?

ROI measures the financial return of your incentive program relative to its cost. It helps you understand whether the incentives are generating more revenue than they cost, and is typically displayed as a ratio.

How do you calculate ROI in a sales incentive programme?

The way most organisations calculate return on investment is:

Total incremental sales generated, or gross margin generated minus total incentive cost, divided by total incentive cost.

For example:

Example sales incentive programme cost $100,000	Example sales incentive margin generated $400,000 ($100,000 additional sales at gross margin rate of 40%)
$400,000 – $100,000 = $300,000 (net sales margin generated)
$300,000 return
$100,000 investment = 3:1 ROI Meaning for every $1 invested you received a return of $3

Another way that ROI can be calculated is to look at the total cost of your incentive programme as a percentage of your incremental revenue generated.

In this instance your ROI figure would be x% cost as a % of sales. A rule of thumb is that the programme cost should be in the range of 5-10% of incremental sales generated. However, the appropriateness of this percentage would depend on your gross margin rate. For example, if you’re selling highly profitable products with a highly paid sales team, it may be perfectly reasonable to have a higher percentage of cost to ensure programme effectiveness. 

What is return on objective (ROO)?

ROO measures the success of your incentive programme in achieving specific business objectives, such as increasing market share or improving customer satisfaction. It provides a broader view of the programme’s effectiveness beyond just financial returns.

How do you calculate ROO?

ROO involves setting specific, measurable objectives at the outset and then evaluating the extent to which these objectives have been met. 

For example, if your objective was to acquire 50 new customers and you acquired 60, your ROO would be 120%.

In addition to ROI and ROO, here are some other ways you can calculate incentive value and impact:

• Incremental sales or ‘lift analysis’ – Lift Analysis requires subtracting Base Sales from Total Sales to determine Incremental Sales. Base Sales are the sales that would have occurred regardless of the programme. Incremental Sales are the sales that were a direct result of the programme. 
• Analysis of variance – The Bonferoni correction or Gosset’s “Student’s” t-test can be used to determine whether any difference between a control and test group or programme period and previous period is due to the programme or by random chance. 
  

How do you maximise sales incentive value?

To truly harness the power of ROI and ROO in your sales incentive programmes you need to design a sales incentive with the end in mind. In other words, define the incentive objectives and success measures upfront, and then work back to identify the most suitable incentive structure to align with your business goals. 

Let’s explore the critical steps you should take to maximise your sales incentives value:

Step 1: Define clear objectives

Are you looking to increase sales by a certain percentage? Do you want to penetrate a new market? Or perhaps you want to boost the sales of a new product? 

Clear, measurable objectives are essential as they provide a benchmark against which you can measure success. 

Example objectives could be:

• Increase overall sales by 20% in the next quarter.
• Acquire 50 new customers within six months.
• Boost sales of a new product line by 30% within the first year.
  

Step 2: Identify key performance indicators (KPIs)

Once you have your objectives, identify the KPIs that will help you measure progress towards these goals. KPIs should be specific, measurable, achievable, relevant, and time-bound (SMART). They’ll serve as the basis for determining whether the sales incentives are effective. Remember, one size doesn’t fit all. If your sales team are operating in different regions, measures of success are likely to vary as well as how you may be able to measure those. Don’t forget to build in regional flexibility if required into your plan to ensure you’re maximising the value across your whole salesforce.

Example KPIs:

• Monthly sales growth rate.
• Number of new customers acquired.
• Sales volume of the new product line.
  

Step 3: Determine the desired behaviours

To avoid rewarding business as usual, focus in on the specific behaviours that will drive your objectives. This might include upselling, cross-selling, acquiring new customers, or closing deals faster. The goal is to incentivise actions that contribute to significant business growth rather than routine tasks.

Example desired behaviours:

• Increasing the average deal size through upselling.
• Cross-selling complementary products to existing customers.
• Reducing the sales cycle time for new customer acquisitions.
  

Step 4: Calculate the financial impact

Understanding the financial impact of achieving your objectives is crucial. This involves estimating the additional revenue generated by the desired behaviours. By calculating the potential financial gain, you can determine how much you can afford to budget on incentives.

Example calculation:

1. Estimate additional revenue: Determine the potential increase in revenue from achieving your objectives. For instance, if your goal is to increase sales by 20%, calculate the additional revenue this would generate. If your current sales are $2,000,000, a 20% increase would result in an additional $400,000. Leverage historical performance data and complete predictive modelling of performance to gain clearer insights on the potential success rate and help to create a range of expected outcomes.  This range can help you understand the best-case, worst-case, and most likely scenarios, allowing for more informed decision-making and strategic planning.
   
   
2. Determine incentive budget: Decide what percentage of the additional revenue you’re willing to allocate to incentives. A common range is 5-10%. Using the previous example, if you allocate 10%, your incentive budget would be $40,000. Consider within this budget how much will need to be attributed to any fixed costs such as management or administration costs vs variable costs such as reward spend. A good rule of thumb is an 80/20 split towards reward.
   
   
3. Allocate incentives: Decide how you’ll distribute the incentive budget across your sales team based on their performance and contribution to the objectives. At this point it’s important to consider that the highest for incremental performance uplift is most likely to come from your middle 60% of performers. Structuring your incentive and reward budget to motivate this segment of your sales team will maximise the value of your incentive. And not only that, according to our research, the companies who find meaningful ways to reward over 50% of their sales organisation in a year not only experience better sales but also higher employee retention than those who don’t.
   

Step 5: Design the incentive structure

With the financial impact in mind, design an incentive structure that’s both attractive and sustainable. 

Considerations here should include:

• Which incentive rewards will be best placed to motivate your team. Ensure that the rewards are significant enough to motivate but also remain aligned with your budget. BI WORLDWIDE believes that incentives are most impactful when they sit outside of any contractual compensation arrangements. As such, differentiating them with the use of personalised non-monetary rewards such as experiences, gifts, recognition, or travel is proven to be more effective at driving motivation.
• How frequently will your sales team be rewarded. For example, will you only reward at the end of the incentive or will you include opportunity to earn interim (monthly, quarterly) or immediate rewards to sustain engagement and provide more regular reinforcement of the desired behaviours throughout the course of the incentive programme.
  

Step 6: Implement and communicate

Once the incentive structure is designed, communicate it clearly to your sales team. A strong visual identity and programme name can be really effective at creating engagement and energy around an incentive. 

Through your communications, ensure they understand the objectives, the desired behaviours, and how they can achieve the rewards. Throughout the incentive, plan regular communication updates which might include personalised performance updates, signposts on how to improve performance, and reminders of the rewards on offer and their progress to achieving them. Transparency and consistency are key to maintaining trust and motivation.

Communication tips:

• Consider designing a visual and copywriting identity to bring your incentive to life
• Hold a kick-off meeting to introduce the incentive programme and provide opportunity for questions. This in turn will help identify areas where more explanation is required.
• Provide regular updates on progress towards goals. 
• Consider communication frequency. For example, as a salesperson is nearing reward achievement, or as the incentive programme is nearing its end date, ramp up communication cadence to build momentum and excitement.  
• Celebrate interim successes to keep the momentum going.
  

Step 7: Measure and adjust

Regularly monitor the performance of your sales team against the KPIs. This will help you determine if the incentives are driving the desired behaviours and achieving the objectives. Be prepared to adjust the incentive programme if it’s not delivering the expected results and be sure to communicate any of these changes to your team. 

Monitoring strategies:

• Weekly or monthly performance reviews.
• Feedback sessions with the sales team.
• Analysis of sales data to identify trends and areas for improvement.
  

The impact of effective sales incentives 

Well-designed sales incentives can significantly boost business performance and employee satisfaction. For businesses, they can lead to increased sales, higher ROI, and enhanced productivity. For employees, sales incentives can improve job satisfaction, motivation, and team dynamics. By recognising and rewarding achievements, sales incentives create a motivated, high-performing sales team that drives growth and success.

BI WORLDWIDE has numerous examples of successful incentive programmes that have delivered impressive ROI and ROO:

1. One client surpassed sales goals by 150% in the first year of incentivising a new product. By combining training participation, sales performance incentives, and a mix of non-monetary rewards (points, travel, and recognition), they achieved an impressive ROI of 34:1, showcasing significant financial returns.
   
   
2. Another client utilised our patented GoalQuest® methodology to set personalised sales targets, resulting in a 4.1% overall sales lift and an average 12.2% performance increase over individual baseline. This targeted, data-driven approach also reduced incentive costs per unit by 40% compared to previous years, highlighting the effectiveness of insight-led incentive design and self-selected goals.
   
   
3. A client who implemented a group travel incentive and fostered competition among similarly performing teams providing their whole network with opportunity to win, saw a 250% increase in sales during the incentive period. What’s more, the incentive created a halo effect, with sales continuing to double in the two months after the incentive ended showing that experiential rewards can drive substantial and sustainable performance improvements.

Source: BI WORLWIDE client programme results

Creating high-impact, high-value sales incentive programmes

Calculating the value of sales incentives isn’t just about assigning a monetary value to rewards. It involves a strategic approach that aligns incentives with business goals, encourages exceptional performance, and avoids rewarding routine activities. By focusing on ROI and ROO, sales directors and marketing leaders can design effective incentive programmes that drive significant business growth and keep their teams motivated and engaged.

Get more value from your sales incentives

BI WORLDWIDE’s expertise and data-driven approach provide valuable insights into creating incentives that truly inspire and motivate, no matter where your sales team are based.

By continuously evaluating and refining your incentive programmes, you can ensure they remain aligned with your evolving business objectives and market conditions, creating a dynamic and motivated salesforce that consistently delivers outstanding results.

What are the most effective sales incentive rewards?

As humans we’re typically bad at understanding what truly motivates us. When we’re asked the direct question, ‘Would you like a cash reward?’ our automatic response is most likely to be “yes”. This is true around the world. Studies by Ed Deiner from the University of Illinois have concluded that the desire for more money exists among both the poorest and the richest people on the planet. However, if we’re not presented with the choice but instead rewarded for our performance with a luxury experience, research such as that by Scott Jeffrey and Victoria Schaffer shows that our motivation increases, it’s called preference reversal. 

All incentive programmes are built on the premise that people can be motivated extrinsically.

 

But what rewards are best to positively impact performance?

• Hedonic rewards – these rewards have a high emotional value. They can be expressed as travel, experiences or merchandise rewards.
• Luxurious rewards – a luxurious reward can be described as something that you want rather than need. Whats considered a luxury will vary from person to person depending on circumstances.
• Social rewards – things that can be discussed and shared in social circles often carry more value. Whilst it’s often considered inappropriate to talk about pay cheques, incentives such as a luxury trip are more likely to be talked about and therefore gains additional value.
• Re-consumptive rewards – rewards that can be re-consumed, such as every time you turn on the TV that you were awarded or sharing photographs of a trip that you earned, are likely to carry a higher emotional value and be linked back to your employer.
• Wants versus needs – needs are defined as the things that we need to do such as paying the mortgage or buying groceries. If there’s money left over this can be spent on wants – the luxuries. However, if you’re rewarded with a want, we can enjoy it in a different way to being rewarded with cash which is more closely aligned to need.

Testing different sales incentive types in the workplace

Testing different types of sales incentives can be highly beneficial for organisations looking to optimise employee performance and boost revenue. By understanding what motivates employees, organisations can tailor their incentive programmes to achieve the best results.

A global telecommunications firm conducted a study with support from BI WORLDWIDE to increase sales within its call centre division, which had been experiencing a decline in revenue. The study aimed to test the impact of various incentives on employee performance. Employees were divided into groups with either merchandise (non-cash) or cash rewards, and goals were either self-selected or assigned. A control group received no additional incentives.

The study concluded that non-cash rewards were more motivating than cash, and giving employees ownership over their goals significantly improved their performance. This highlights the importance of understanding employee motivation and tapping into what they truly want, rather than what they think they need, to effectively drive behaviour change and performance.

Boost your bottom line with tailored sales incentives

Both sales commissions and sales incentives play pivotal roles in driving sales performance, sales team engagement, and overall business success. While commissions provide a direct financial reward for sales achievements, incentives offer a broader range of motivational benefits that can enhance job satisfaction and loyalty. By strategically combining these elements, businesses can create a dynamic and motivated sales force that’s aligned with their goals.

Ready to take your sales team’s performance to the next level?

Let’s discuss how managed, tailored sales incentives can drive your business growth.