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No need to assume anything. Incentive plan should be based on performance and within the company's budget.
Margin of profit, volume, effective and satisfied to upper management and sales department.
Make sure:
- It is clear to all stakeholders
- It is fair to all sales employees and it offers them the same opportunities
- It should well prepared and powerful that makes it very attractive for the sales team
- Make the incentives visible to all... that creates competition and challenges
- It should be real and payable. Whatever the employee earns, he should get.
-
Determine your budget
•
A successful program pays for itself. Budget
your cost based on a
best case scenario.
•
It is important to budget for: (includes the percent of the budget)
o
Awards – (60-70%)
o
Training – (10%)
o
Promoting – (10%)
o
Admin – (10%)
Tips for successful incentive programs
•
Roll out the program at a firm event.
•
The managing partner and marketing department can predetermine teams. Other firms use
a draft system.
•
Teams should be comprised of differ
ent staff levels and departments.
•
Each staff should have realistic, achievable marketing goals.
•
Set two or three overall goals and objectives for the project.
•
Typically an Access database was
created to track all activities.
•
Provide training ahead of time and during the program. Some even put activities in the
program that required staff to interact with the marketing department.
•
Provide incentives throughout the program. Exam
ples include gift certificates, vacation days
or certificates of achievement.
•
Most programs did not include partners as members of the team, but as mentors.
Theme examples
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Monopoly
•
Amazing Race
•
CSI
•
NASCAR
•
Love Boat
•
Mission Impossible
•
Seal the Deal
•
True Blue Blitz (Football)
Agree with Ibrahim, the incentive should be tangible, motivating sales team and ensure not to indulge in unhealthy competition and mis-selling trends.
Understand the costs of a benefit plan before you offer it
Incentives and bonus plans need to have clear guidelines to minimize any confusion
You also need to calculate employer payroll taxes into your overall payroll budget
Budgeting is a necessity
Compensating employees is a delicate balance between meeting the employees' expectations and the company's financial goals
1. Offered incentives should be paid in time, monthly payments for cash based sales and yearly payments on credit based sales seems to be little more appropriate from the accounts (receivable) point of view.
2. Two/three tier structure (two/three different % on sales) will give a better performance, as the higher level of achievements are with more efforts and the companies infrastructure expenses are comparatively lesser on higher achievements of sales targets which contribute higher returns at lesser additional costs).
3. On credit sales, as it should encourage higher rate of recovery also, it is always better to calculate incentives on net realized basis annually, otherwise unhealthy practices of dumping stocks and controversy over such issues will hover around, which will demotivate the sales team at later stage which will be one of the major reasons for employee to quit the job.
4. a certain % of total incentives on credit sales may be also be given to collection and follow up team so that there will be a team work among the two different functionaries.
5. all in the team must a get a pro-rata basis for incentives; better to give the correct feedback on their net achievements in the monthly review meetings on sales.
6. In case of emergency requirements, advance payments on incentives may be considered by fixing appropriate limits.
7. the responsibility of credit collection should be d e linked with the sales team except for certain timely help in case of exigencies.
8.Make sure that the incentive system does create unhealthy competition among the team and teamwork.
9.Unexpected achievements are to be separately considered.
10. the achievements/ incentive statistics may be available opened to all and the recognition may be done on a separate function specially meant for that.
Agree with all expert answers.
Incentives should be:
attractive - for all
rational - balanced
motivational - competition, not jealousy
the sales team is the team by which we earn so the sales person who sales above then avg should get above than average and his incentive should be higher than other so other can motivated and try to take sale more than target.
