2 Reasons Why Incentives Aren't Always Great

A new quarter is starting, or the end of a quarter is a few weeks ago. Your organization decides to execute an incentive program to act as a booster for sales. When you crossed the finishing line, the top sales are rewarded. All is happy – but is it? When you look at the intended numbers and program objectives, you are still far from achieving it.

Why is this so?

Many would agree that incentives could work wonders to the performance of a sales team. But an incentive program which is poorly designed could drive unintended consequences as well.

This week, we look at 2 possible areas :

#1 Incentivizing one product over a list of others

Very often a brand or a company will incentivize their employees for a specific product that they sell. They do that for various reasons :

- For retail, it is used to clear excess inventories ;

- Generally, to increase sales for this specific portfolio ;

- To gain an upper hand against competition.

While this approach is understandable, there are potential risks or pitfalls. Employees might not show your prospect the best product but only show the one brand that gets the spiff. That can lead to prospects being led to consider something the salesperson knows isn’t the only or best choice for them.

On top of this, customer experience and company image could be tarnished. Sales people would suggest the incented product at the expense of a customer's real need. Listening to and having a conversation with a prospect will be limited as the spiff will be the back of the sales person’s mind during engagements. This will not be very helpful to your organization in today’s socially digitized world.

#2 Rewarding Top Sales Performers

Incentives are great rewards and can really increase a company’s sales. However for the rest of the crew, the average ones who just want a job or who avoid customers altogether, those who are categorized as B and C players in the team, it just means they would take a step back.

After all, they could not compete with their rock star A-grade colleagues. Sometimes they’ll feel jealous, but most times they’ll lose any sales motivation and stay resigned to being last. Unless your incentive program is designed to also motivate the core performers and laggards, the weaker salespeople will succumb and let the stronger players take over.

Those who felt overlooked before will still feel overlooked and will reduce their efforts. Some even give up trying. Ongoing incentive programs that aren’t tweaked can lead to higher turnover as employees feel it is a pressure cooker of stress to make incentives.

I get the idea. Now what?

We are not suggesting that incentive programs do not work. In fact, there are many evidences that prove that programs like these can motivate the level of performance of sales people and bring incremental results for the company.

However, careful considerations and thoughts need to take place to determine and understand what you are trying to achieve. What will success look like to you? What could potentially go wrong? And how do you know it will work?

Here are 4 tips when using incentives :

Train - The only reason why an incentive is in place is to drive sales. The easiest and best way to increase sales is to invest in sales training in the right way. When you incent salespeople for applying the new skills or changing their behavior after they’ve been through your sales training, you are more likely to get the lift in sales and lift in customer service because you’ve taught them how to do it.

Set guidelines - You need to know exactly what they can and can’t do. For example, if an incentive is on category A products but there you already allow them to discount a certain percentage on some of the products in this same category, you need to make sure that they can’t get incented for selling a paper-thin margin on such products in the same category.

Measure and Monitor - Leaving incentives open for too long becomes an entitlement and they stop working. Either that or they stop working in the manner you expected because employees have learned all the work-arounds. Also, lookout if the program is driving the positive behavior that you planned for. For these reasons, keep the time period short. If you want to go for a month or a quarter, you must monitor every week and feel free to discontinue at any time when you discover abuse.

Watch for loopholes - Always keep a look out for loopholes. Think on the other side of the fence to see how it can be abused or hijacked. Most of the time you just come up with a contest thinking of the prizes or incentives. However, the last you want is a rotten apple that could ruin the whole thing.

What are the loopholes? How could I get around this and still get the prize? Have an employee brainstorm with you about how other employees might abuse the program.

In Summary

Using incentives can be like creating a combustion to spark sales, but it can also be a litmus to some who see it as favoritism or a reason to act non-customer-centric. That culture you create either leaves your brand on shaky ground or embosses an image of neutrality.

When you train your sales to present your products and services ethically through a process that helps the prospects, you’ll build a strong brand. As they master their selling skills, the fun and reward will come from doing a better job. Incenting them will be a small part of their success, BUT NOT the only reason they do their job.

As long as you know why you are using incentives, how you’ll use them, who will get them, and make them equitable and available only for a short term, you can strategically use incentives to help sell your solutions.

A misstep in how you use incentives can damage your brand ... and the trust of the consumer forever.

"When you train your sales to present your products and services ethically through a process that helps the prospects, you’ll build a strong brand. As they master their selling skills, the fun and reward will come from doing a better job."

---

We hope you enjoy this week's topic. If you have any comments or opinions to share, please pen them down. We would love to hear from you.

Cherry-O!

#Awareness