Annually, American companies spend roughly $800 billion for the compensation of their sales teams. This compensation includes salaries, commissions and incentives, all of which are designed to increase the productivity of each member of the sales force.

In utilizing an incentive scheme for your sales force, it is essential to design it properly in order to achieve an increase in sales numbers without compromising other important aspects of the business, including the delivery of quality customer service.

In an ideal scenario, your sales incentive program should be cost effective, allowing your company to get more customers commensurate to your investment. Also, you should have ample resources to support the influx of new customers your sales team brings in.

But what are the key differences between a successful incentive program and one that has failed?

The objectives of the program have been clearly defined

Before designing the incentive program, the key personnel responsible for it have thought things out and narrowed down the objectives for the program which deliver the best value for the organization.

Instead of simply increasing sales numbers, a good sales incentive takes into account the resources the individual members have to spend as well as the quality of the customers they bring in.

An effective program structure

Prior to the actual implementation of the incentive program, participants and their managers are made aware of the rules. This helps eliminates any misunderstanding that may arise between the members of the sales team and their company.

This does not simply mean that all participants are evaluated using the same metrics. Beyond that, the special circumstances, like territory size, are taken into account. Ideally, sales team members should be awarded points each time they perform the desired behavior. Simply put, the incentive program should be designed to eliminate any unfair advantage top performers may have.

Choosing the right rewards

One final key component of a successful incentive program is the use of the right rewards. Often, companies succumb to the mistake of thinking that "cash is king." The reality is that in some cases, cash makes a poor choice for an incentive.

One type of reward that you might want to consider for your organization is an experience-based reward. This type of reward takes advantage of the fact that many people are enticed by experiencing new things, some of which may not be within easy reach. One key advantage of this reward is that it gives your team an opportunity to bond with one another.

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