< back

The Future of Sales Incentives

Oct. 22, 2015 · Jeremy Boudinet · 8 Minute Read

The advent of the Millennial sales force is creating an increased demand for new sales incentives. It's time to look at the new mentality behind rewarding your elite sales performers.

In consecutive days this month, USA Today and Inc published articles touching upon the exact same subject: Finding new performance incentives for Millennial workers. Our take:

 

The subject of millennial-tailored sales incentives is fast becoming mainstream. Sales leaders are using inventive, new ways to create more powerful, attractive, and in many cases, cost-effective sales incentives for their Millennial sales reps.

Let's read the tea leaves and take a glimpse into the future of sales incentives.

Sales Incentives: Guiding Principles

When evaluating the best sales incentive framework for your company, it's critical to take a step back and identify the nature of your sales organization, process and selling strategy.

Aon Hewitt's visualization below provides a great breakdown to use in making this determination.

sales incentives strategy

As the above graph illustrates, the sales incentives you should be providing a "Big Game Hunter" vary drastically from those given to an "Account Service Rep." If your sales organization is comprised of multiple personas in this framework, you should be segmenting your sales incentive structure accordingly. 

Once you figure out where each segment of your sales organization falls on this chart, you can drill down into the sales incentive strategies for each one.

Sales Incentives: Best Practices

A critical emerging development affecting sales incentives is the increasing shift towards the inside sales model. More and more companies are opting to transition from a field sales model to an inside sales model. 

The cultural impacts occurring as a result of these shifts align strongly with the below chart, visualizing two types of cultures in which sales reps operate and the points of emphasis in each one.  

sales incentives culture

For a great treatise on the shifting values in sales incentives, check out the chart's corresponding Harvard Business Review article

The definitive must-read article on sales incentives, however, continues to be Thomas Steenburgh and Michael Ahearne's outstanding Harvard Business Review article, Motivating Salespeople: What Really Works.

It's as comprehensive a read as there is on the subject at hand, covering proven sales incentive methodologies across the entire spectrum of sales performers and identifying a number of key best practices.

One example of the latter: Remove caps on commissions. Citing to another HBR study, Steenburgh and Ahearne reference a pivotal instance where a U.S. contact lens manufacturer, "by eliminating [caps on commission] and making other changes to the compensation plan, kept its salespeople motivated and increased revenue by about 9%."

The moral of the story: Don't be stingy when it comes to putting a ceiling on sales commissions for your highest performers. 

Another critical topic for sales organizations to evaluate is commission payouts. For a great analysis on lump-sum commission payouts versus alternative payout programs, check out this Forbes article by Lisa Quast.

Quast has some great analysis on the subject and can help you decipher which commission structure and sales incentives are most appropriate not only at the rep level, but the management level.

Sales Incentives vs. Behavioral Incentives

Finally, it's important to differentiate between a sales incentive and a behavioral incentive.

A behavioral incentive is positive feedback given to a sales rep throughout a sales cycle. The image below from SpearOne presents a good visualization of this in a channel sales context. 

sales incentives

As the cultural shifts continue to turn from an "Incentive World" to a "Balanced World," as alluded to in the earlier HBR chart, behavioral incentives take on an increasing level of importance.

As such, it's important for sales managers in those cultural environments to place a greater emphasis on adding behavioral incentive programs to correspond with their sales incentive programs.

Forecasting the Future of Sales Incentives

For some sales managers, the past few years may have felt like a journey into the Twilight Zone when it comes to sales incentives.

Barely a year ago, people were scoffing at the thesis proposed in this Hubspot article: "Millennial sales reps prize non-monetary awards over cash."

Fewer people are laughing now. The reality is - sales incentives still boil down to money. It's just that many Millennial sales reps would rather their leadership go a step further than the thousands of years old industry standard.

It's very simple, actually. There's an increasing demand for sales incentives that go beyond just commission. These new types of sales incentives that are en vogue with the Millennial crowd have 3 common characteristics:

  1. A public announcement.
  2. Personalization.
  3. Non-monetary manifestation.

If the last one seems illogical, rest assured, you still have to spend money. Let's look at a few examples of traditional and non-traditional sales incentives, and how each one is trending.

Trending Downward: Gift Card Rewards

Remember the forced smiles your Dad used to give when he unwrapped the 5th consecutive tie you gave him for Father's Day? That's where we're at with gift cards. 

Trending Upward: Bold, Public and Exciting.

Every time I get on Facebook, my newsfeed is full of the most ridiculous, self-congratulatory status updates. "Being a brand-new homeowner has its downside. Saturday yardwork, for example. Here's a pic of our newly-trimmed hedges!"

15 minutes later: 944 likes. That's the world we live in nowadays, sales leaders.

If hundreds of our friends can take the time to recognize us for completing most asinine accomplishment within minutes of it happening, we expect similar (if not far superior treatment) from you when we close that huge deal we've been slaving over the last 4 months.

Trending Downward: Nominal Rewards

If it's your organizational policy to hand out "x" amount of cash for "y" achievement, it's time to start rethinking that approach. Handing your internal Don Draper the same $100 check you handed your internal Roger Sterling a week ago isn't exactly appealing to his inner sense that he's a special snowflake.

Sales incentives of the future will come with a little extra dash of personalization to enhance their impacts on recipients.

Trending Upward: Experiential Rewards

We've covered this subject at length here on the Ambition Blog, and it's amazing how much more prevalent it's seemed to become over such a short time interval.

Experiential rewards are the antithesis of nominal rewards. They cater to their recipients, provide something many Millennials value more than a little extra money (a memorable experience) and are easier to access than ever. Download our Cell Marque case study to learn more.

Trending Upward: Team Incentives

Vorsight VP of Sales Steve Richard said it best in a recent AA-ISP webinar: "We found that team sales competitions tend to work best in motivating our Millennial reps."

As documented in this March 2015 case study by the Harvard Business Review's Ethan Bernstein, team competitions and sales incentives can profoundly reshape the dynamic in sales organizations. 

team sales incentives

By making team success the rallying point for a sales organization, a sales manager can reach more of his or her organization and create sales incentives that scale the entire range of performers in his or her organization.

As the industry model continues to shift towards inside sales and a "Balanced Culture," expect team sales incentives to gain in both effectiveness and popularity across the sales landscape. 

Other Helpful Guides to Sales Incentives

For more great reads on the topic of sales incentives, here's a list of 6 great articles that we mentioned in this post. 

Best of luck in crafting your sales incentives strategy. Contact us to learn how Ambition incentivizes sales force personnel to reach activity and objective goals at companies like UPS, Lyft, PriceWaterhouseCooper, Wayfair, and more.

The Sales Incentive, Tracking & Recognition Platform

Ambition is a sales management platform that syncs every sales department, data source, and performance metric on one system.

Ambition creates clear, compelling and real-time performance analytics for your entire sales organization. Using a drag-and-drop interface, non-technical sales leaders can build custom scorecards, contests, reports, and TVs and tie KPIs to specific sales incentives.

Ambition is endorsed by Harvard Business Review, AA-ISP (the Global Inside Sales Organization), and USA Today as a proven solution for managing sales personnel, performance, and incentives. Hear from our customers below.

Watch Testimonials:

  1. FiveStars: Adam Wall. Sr. Manager of Sales Operations . 
  2. Filemaker: Brad Freitag. Vice-President of Worldwide Sales.
  3. Outreach: Mark Kosoglow. Vice-President of Sales.
  4. Cell Marque: Lauren Hopson. Director of Sales & Marketing.
  5. Access America Transport: Ted Alling. Chief Executive Officer.

Watch Product Walkthroughs:

  1. ChowNow. Led by Vice-President of Sales, Drew Woodcock.
  2. Outreach. Led by Sales Development Manager, Alex Lynn.
  3. AMX Logistics. Led by Executive Vice-President ,Jared Moore.

Read Case Studies:

  1. Clayton Homes: HBR finds triple-digit growth in 3 sales efficiency metrics. 
  2. Coyote Logistics: Monthly revenue per broker grew $525 in 6 months.
  3. Peek: Monthly sales activity volume grew 142% in 6 months.
  4. Vorsight: Monthly sales conversations grew 300% in 6 months.

Contact us to learn how Ambition can impact your sales organization today.

About Ambition
Sales Leaders, HR Professionals, and C-Level Executives use Ambition to recognize, motivate, and develop employees into more engaged and productive versions of themselves. Funded by Google, used by the Fortune 500, endorsed by the Harvard Business Review.
chat