How to Screw Up Your Sales Incentive Programs

Here are some of the mistakes that we often see companies make when attempting to design an effective sales incentive program.  These mistakes can turn your program into one that is very ineffective at best or harmful at worst.  Implementing bad incentive programs can be money down the drain.

Creating Conflict Within or Between Departments

Make sure that your rules don’t conflict with the other department procedure or worse with performance improvement programs they may have in place. You will always have some conflict, but you can work to optimize operations so that the conflicts are less likely to occur.  Consider rewarding cross-functional teams as a part of the program

Motivating the Wrong Outcome

The easiest of these to check is getting increased sales without corresponding profit, or leaning too heavily on profit that you decrease wanted sales increases.  Look for a balance in what you want your outcomes to be.

Don’t Have a Top Stop

Unless you have a product availability or service issue or will have undue increased operating costs concurrent with dramatic incremental sales results, don’t put a cap on performance.  Top stops will eventually de-incentivize outstanding performers--or at least limit their overall performance.  You can adjust rules structures for “windfalls” that may occur if necessary.

Protect Current Business While Motivating for New Customers.

Salespeople will be the first to see they can earn incremental commissions by focusing on new customers over current customers.  You can and should adjust rules structures to accommodate for this possibility.  One way is to simply set a “must maintain” type of rule in order to earn for new business, or tie the new business earnings structure to the maintenance of current business. 

Reward Behaviors Your Salespeople Control. 

Move your objectives to the lowest possible level that your salespeople can control.  Nothing will kill a sales incentive program faster than tying it to unreasonable objectives or to corporate objectives out of their control. 

Compete Your Salespeople Against Themselves

It has been standard practice for managers to compete their salespeople against other company salespeople.  Don’t!  You should want them trying to beat the brains out of your external competition.  The most successful incentive programs challenge salespeople to want to excel on their own.

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