The 5 Essential Elements of a Good Incentive Plan

Sales representatives have complex and multifaceted motivations. It is impossible to create a one-size-fits-all sales compensation programme that taps into these motivations to encourage positive behavior. Instead, spend some time upfront defining exactly what you want your sales incentive programme to accomplish and how you can achieve much better results.

What exactly is a Sales Incentive Structure?

A sales incentive structure is the framework that a company uses to assess, design, and manage its core sales incentive model for its sales team. In managing and directing a high-performance sales team, sales compensation is critical. It can include commission plans, quota levels, bonus plans, sales kickers and accelerators, quota club destinations, and anything else that sales managers believe will focus and motivate their sales reps.

An effective sales incentive management software aims to provide a sales rep with visibility into what their management expects of them, as well as motivation to hit their targets.

Sales reps will receive their sales targets and commission plan at the start of each sales year, so they should know what they can potentially earn if they close enough business. A well-designed sales incentive programme, with a focus on motivating reps, will help maximize sales productivity by providing clear direction for sales team members on what good sales behavior looks like.

Sales representatives should believe that the sales compensation plan presented to them is realistic, achievable, and promotes success throughout the sales organization. To assist the business in meeting its revenue targets, the right sales incentive programme must balance science and art.

Incentive plans are becoming a more popular tool for motivating employees. A well-designed plan can help to accelerate business growth while also attracting and retaining talent. The more and better the employee works, the faster the business grows. Today, we’ll look at five key characteristics of a good incentive plan. 

1. Specific and clear

A good incentive plan should be specific, clear, and simple to understand. Employees must first have a clear view of the plan and its objectives in order to reinforce behaviors that will result in desired business outcomes. Such a plan also makes it simple to administer with few errors, which contributes to system credibility. 

2. Agile

In today’s competitive economy, businesses must constantly evolve in order to remain relevant and innovative. Similarly, a good incentive plan must be adaptable enough to change while remaining effective as a performance driver.

The Smart Nation initiative has a significant impact on how performance should be measured and quantified in Singapore. Many workplace functions have been automated as a result of the use of technology, and businesses must reconsider their key performance indicators (KPIs). Administrative assistants, for example, may no longer be expected to process and track department claims, but rather to take on a more analytical role in producing meaningful dashboard reports. 

3. Appealing and Attainable

A good incentive plan must be appealing enough to motivate performance while also being attainable with hard work so that employees are not discouraged. As a general rule, the average achievement level should be set as the target, with 20% above that as a stretch goal with potential earnings upside. The company can also choose whether to go all-in or consider multiple levels of incentives for different levels of performance.

4. Measurable Outcomes

The primary goal of any incentive plan is to motivate employees to achieve the desired results. Results must be measurable with clear indicators for the plan to be successful, and this begins with an effective goal setting framework. SMART goals, which are Specific, Measurable, Attainable, Relevant, and Time-based, can assist businesses in setting goals and measuring results.

5. Think about non-monetary incentives.

Incentives do not have to be monetary in order to be effective. Businesses must identify the most effective form of compensation to create a successful incentive plan. In the absence of large budgets, businesses can use non-monetary incentives such as paid time off or awards and recognition to motivate employees. Contrary to popular belief, incentive plans which are different from OTE salary do not have to be costly.

If you are looking for a tool to help you determine the activities related to sales activities, Elevate HQ can assist you with the Sales commission structure template. It is now time to review the website.