What is a sales quota and how to set one for your team
How is a sales quota different than a sales goal and how do you set an effective one for your sales team?
In today's super competitive business landscape, organizations are constantly looking for innovative ways to boost their sales team's performance. One particularly popular method is using a sales SPIFF, also known as a sales performance incentive fund.
But here’s the question: Do sales SPIFFs actually work? And if they do, what does it take to have a successful SPIFF program? That's what we're about to explore.
In this article, we'll tell you the accurate definition of sales SPIFFs, the benefits and drawbacks they carry, and how you can make a SPIFF program that works. Let's get into it!
<a href="#what-is-sales-spiff" class="anchor-link">What is a sales SPIFF?</a>
<a href="#sales-spiff-vs-other-campaigns" class="anchor-link">Sales SPIFF vs. other campaigns</a>
<a href="#benefits-of-sales-spiffs" class="anchor-link">Benefits of sales SPIFFs</a>
<a href="#downsides-of-running-spiff-program" class="anchor-link">Downsides to running a SPIFF program</a>
<a href="#create-successful-spiff-program" class="anchor-link">Creating a successful SPIFF program</a>
<a href="#level-up-with-streak-crm" class="anchor-link">Level up with Streak CRM</a>
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The acronym 'SPIFF' stands for many synonymous terms, including the following:
All of these terms boil down to the same idea — giving sales reps short-term rewards for specific sales they make or objectives they reach. These can be cash, coupons, vacations, or something else.
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There are many forms of sales incentives other than SPIFFs, and many people confuse them. Here are a few comparisons between sales SPIFFs and three of the most famous incentive systems in sales.
A commission is a percentage of the revenue generated by a sale that goes into the sales rep's salary, which means it's directly tied to the value of the sale.
Meanwhile, SPIFFs are short-term, targeted rewards that team leaders grant only once, not on a regular basis. Also, they're usually a flat-rate amount of money or a non-cash reward, not a percentage of a deal.
In essence, commissions are continuous rewards based on performance, while SPIFFs are temporary rewards meant to drive immediate action. One can't replace the other; instead, sales professionals use both commission structures and SPIFF programs to boost their team's performance.
The only difference between a SPIFF and a SPIV is their spelling. They both have the same meaning and relate to sales performance incentives. However, SPIFF is the more common term because it stands for a specific sentence, while SPIV doesn't.
Sales SPIFFs and bonuses are similar in the sense that they're both immediate rewards. However, bonuses are often given based on the overall performance of a sales rep, while SPIFFs are tied to specific actions, like succeeding in a target number of activities or making a certain amount of new sales in a short window of time.
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If you implement a successful sales SPIFF program in your business, you'll reap a myriad of benefits. Here's a list of the four most important ones.
SPIFF programs motivate sales reps to achieve short-term objectives, which is a perfect way for your company to achieve short-term sales goals. By offering an immediate reward to your sales team, you can accelerate your company's progress and drive a sense of urgency and focus among reps.
SPIFFs introduce an element of friendly and healthy competition, which can boost morale and keep your sales team motivated to reach pre-defined goals. As each sales rep strives to earn an immediate reward, your team’s performance will naturally improve, which translates to a more successful sales organization.
Short-term incentives are an excellent way to increase team effectiveness. When a reward is dangling like a carrot in front of your sales reps, each one of them will actively pursue more opportunities, try to close more deals, and promote sales. In the end, they'll reach more sales objectives, and you'll see clear signs of increased productivity.
Believe it or not, having a SPIFF program in place can significantly enhance your customers' experience. Sales teams are driven by these incentives to deliver better results, which means they'll deliver more attentive service to your customers. In the end, your company will enjoy higher customer satisfaction and loyalty.
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Yes, of course, just like anything else in the world, SPIFFs aren’t without their risks. Running a SPIFF program comes with a few drawbacks you should consider. Here's a roundup of the most important ones.
If sales reps know a SPIFF is coming up soon, sometimes, they’ll deliberately slow down a sale until the program starts so that they can get the rewards. This action can affect your company's sales and customer satisfaction negatively, but luckily, it has an easy fix.
While planning your SPIFF programs, you should keep them secret until they're ready for application. Also, you should apply them spontaneously without following a specific pattern. For example, avoid offering a SPIFF during the same month every year; otherwise, your team members will know when it's coming.
There's a fine line between healthy and unhealthy competition, and most of the time, overly motivated team members cross it. One way to avoid this and maintain a healthy work environment is by giving your sales reps equal chances to win the SPIFF reward.
For instance, you shouldn't set a sales goal that only senior employees can reach because then, the junior employees will back out of the competition. Ideally, you should develop separate SPIFF programs for different positions in your company (managers, senior employees, junior employees, etc.)
If planned absentmindedly, SPIFF programs can eat up your profits. To reap their benefits and minimize their drawbacks, you should confine them to short timeframes and do them only as often as your business can handle. You shouldn't offer SPIFFs every other month throughout the year. Instead, you should apply these incentives a maximum of two times per year.
Complicated SPIFF programs don't result in the same success that simple ones do, and the reason is crystal clear. When sales reps see too many conditions they need to follow to reach their reward, they get demotivated and don't participate as actively as they should.
While reaching the SPIFF reward shouldn't necessarily be easy, the goals and rules you set should be straightforward without too many details. On top of that, you should address any confusion early in the competition to keep all team members engaged and aligned.
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Now that you know the definition, benefits, and drawbacks of short-term incentives, all that remains is learning how to make a successful SPIFF program. Below are the steps we recommend you follow.
The first step you should take while designing a SPIFF program is to set clear goals that your team can reach and your company would benefit from. Be sure to keep the broader, big-picture business goals in mind.
Whatever you decide, you should keep the objectives simple and easy to understand for your team members, preferably with clear and attainable numbers.
After deciding on the goals you want your team to hit, you should think about how they'll accomplish them. This step is important because it'll help you determine whether the goals you set are applicable during the appointed timeframe or not. You don't want to spend a long time planning a SPIFF program only for it to fail because of unrealistic goals. Doing so will demotivate your team.
If you find that the goals are too challenging to achieve, you can break them down into smaller ones to make them more doable.
SPIFF rewards are either cash or non-cash, and deciding on which to go with is challenging because you want them to be worth the effort, but you don't want them to eat up your profits. To help you, here's a list of some motivating reward ideas that range in budget.
Your SPIFF program can be organization-wide or targeted for just a few eligible members or teams. Organization-wide programs are hectic, but breed better results since you have more team members achieving goals and, thus, more success for your company. Meanwhile, targeted SPIFFs make it easier to design the program, as you'll set goals in a specific team's area of expertise instead of generic ones.
In the end, it depends on your personal preference. However, if you decide to set eligibility criteria, you should be flexible and make sure a decent number of sales reps can meet them.
SPIFF programs are meant to be short-term, so you need to decide on a reasonable expiration for each SPIFF you plan. Also, while setting the deadline, you should keep the goals you set in mind. Will this timeframe be enough for reps to reach these goals? Or will they be stretched too thin?
Communication is key when it comes to a successful SPIFF program. After deciding on all of your terms and conditions, you should explain them to your team in detail and leave space for questions. By the end of your meeting, each sales rep should have a clear idea about the goal they need to reach, the timeframe during which they need to finish, and the rewards they'll get if they win.
Now, you need to decide on how big of a budget you'll set aside for your SPIFF program. To calculate it, you should count the number of sales reps who will participate in it and how much the cash or non-cash SPIFFs will cost you. Ideally, your budget shouldn't be airtight in case you want to reward an extra employee or boost the reward.
After the SPIFF program is over, you should evaluate the results to see whether your company benefited from it or not.
More than that, you should evaluate the program's impact on the performance and morale of your team. Was it too stressful for them that they lacked motivation to try it? Or was it so enjoyable that it boosted their motivation and job satisfaction?
Once you reach a conclusion, you should adjust the next program accordingly so that you increase its benefits.
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Maximizing your SPIFF strategy's success requires having the right CRM tool at your disposal, like Streak.
With its user-friendly interface, convenient plans, and top-notch features, Streak can help you optimize your SPIFFs, coordinate with your team, and monitor their results. Best of all, you can get started in only 30 seconds.
If you're ready to take your sales incentive game to the next level, try Streak today for free.