Effective incentive compensation management ensures that sales agents are consistently motivated to generate leads and find new buyers. Unfortunately, many representatives have found ways to exploit the rewards system so that they do not have to work for extended periods of time.
According to Xactly, an ICM software developer, some agents try to earn their sales incentives as quickly as possible so they do not have to do work for the rest of the pay period. For instance, if a company operates on a quarterly schedule, salespeople will hit their quotas in the first month and then take two-month breaks. Alternatively, some representatives procrastinate and rush to meet their objectives at the last minute. This fluctuating behavior is negative and can hurt a vendor's bottom line. Instead of steady revenue, returns will be wildly different based on the actions of its employees.
To combat this issue, Selling Power Magazine writes that companies should create short- and long-term goals to keep salespeople on track. Instead of monthly, quarterly or yearly benchmarks, managers should create multiple objectives to ensure that none of their staff members can stop production at any given time. This ICM strategy ensures that workers can receive generous commissions, while vendors have steady revenue streams.
Cash or gifts?
There are two primary compensation solutions that managers can offer for new goals – cash and gifts. According to Selling Power Magazine, monetary incentives are best for short-term objectives. Employees are more motivated to handle minor tasks if they know they can supplement their income.
Companies should create a hard schedule for cash prizes. Every couple of weeks salespeople should have the opportunity to earn new commissions for tasks such as lead generation. A set calendar ensures that employees always have a project and cannot waste any of their time.
Other presents are more effective as rewards for long-term goals like meeting an annual quota or closing a major deal. Major achievements deserve special prizes, so managers have to find unique ways to recognize their employees' efforts.
Vendors should consider giving away rewards like vacation packages, gift certificates and paid time-off. These incentives are special when compared to standard commission checks and bonuses. Alternatively, supervisors can ask their employees what they would like to receive for their dedication. Managers should keep the feedback in mind when designing an incentive program.