In the fast-paced world of sales, finding effective strategies to drive motivation and performance is a perpetual quest. In this post, we’ll delve into the world of sales spiffs, covering everything from what they are to their advantages, disadvantages, and types of spiffs that are most commonly used.

What are SPIFFs?

SPIFFs, or Sales Performance Incentive Funds, are short-term sales incentives or targeted rewards designed to motivate sales representatives to achieve specific behaviors or outcomes. These incentives can be in the form of monetary bonuses, non-monetary rewards, or unique experiences, designed to boost motivation and drive sales representatives to achieve predefined goals.

Advantages of Using SPIFFs

There are many pros to using SPIFFs in sales, including:

a. Precision Targeting and Alignment with Objectives: Spiffs can be tailored to align with specific goals, whether it’s selling a particular product, reaching a certain sales volume, or acquiring new customers. This ensures that the incentive directly influences the desired behavior and contributes to overall organizational success.

b. Instant Motivation and Competition: Unlike annual bonuses or long-term incentives, spiffs offer immediate gratification. The allure of extra rewards or recognition encourages sales reps to put in that extra effort and exceed their usual performance. Additionally, healthy competition often emerges when spiffs are in play. Sales reps strive to outdo one another, leading to increased productivity and innovation as they seek creative ways to meet their goals.

Disadvantages of Using SPIFFs

There are also a few cons to using SPIFFs in sales, including:

a. High Costs: Running a spiff program can be expensive, particularly if the rewards are substantial. Balancing the costs against the potential benefits is essential.

b. Short-Term Focus: Spiffs can inadvertently lead to short-term thinking, as sales reps focus on achieving immediate goals at the potential expense of building long-lasting customer relationships. This also means that once the novelty of spiffs fades, the sustained motivation they provide might wane. This can lead to short-term spurts of performance rather than lasting improvement.

b. Quality Sacrifice: Sales reps might prioritize quantity over quality in their eagerness to achieve spiff targets quickly. This can compromise customer satisfaction and tarnish the company’s reputation. Additionally, if spiffs are not thoughtfully designed, sales reps might channel their efforts toward incentives that don’t necessarily align with the company’s overall success strategy.

c. Inequity Concerns: If not distributed fairly or transparently, spiffs can foster feelings of favoritism or inequality within the sales team, leading to dissatisfaction and diminished morale.

SPIFF Ideas

Here are some SPIFF Ideas to consider depending on specific objectives you are hoping to achieve:

1. Quick-Conversion Bonus/Linearity Spiff:
   • Objective: Encourage reps to kick-off the quarter/month strong
   • Spiff: Offer a bonus for sales reps who close deals within a specific timeframe (first month/week, Second month/week etc), encouraging them to expedite the sales cycle.
2. Renewal Rate Incentive:
   • Objective: Motivate reps to achieve a specific renewal rate, with a bonus for meeting or exceeding the target.
   • Spiff: Provide a bonus for every subscription renewal secured within the next specific number of days (30 days/7 days etc)
3. Flash Sale Frenzy/Daily Deal Dash:
   • Objective: Spark urgency and quick action to tide over a slow start to a month.
   • Spiff: Create a limited-time flash sale where reps receive higher commissions for deals closed during a specific window. eg: Incremental commission or a spot bonus for reps who close deals within the next 48 hrs or who close a deal every day for a week.
4. Demo-to-Sale Spiff:
   • Objective: Increase demo conversion rates
   • Spiff: Offer a bonus for reps who convert a higher percentage of product demos into signed contracts.
5. Deal Velocity Spiff
   • Objective: Improve deal velocity and reduce average sales cycle.
   • Spiff: Reward reps for pushing deals through the pipeline faster than the average sales cycle. eg: On a sliding scale, sales reps earn an incremental bonus from 5% to 15% for every deal closed faster than the average sales cycle. Care should be taken to closely monitor deals that qualify for this spiff to avoid reps from gaming the system and entering only late stage deals into the pipeline.
6. High-Value Deal Bonus/Large Deal Spiff:
   • Objective: Closing larger sized deals
   • Spiff: Provide a bonus for closing deals above a certain threshold, motivating reps to target larger accounts. eg: A flat $5000 bonus on top of existing commission for closing a $1M deal
7. Multi-Year Deal Spiff:
   • Objective: Closing deals with multiple-year contracts.
   • Spiff: Reward reps for closing deals that involve multiple-year contracts, providing a higher commission multiplier. eg: Reps earn a 1.5x commission multiplier for every deal closed with a two-year subscription commitment.
8. Win-Back Warrior/Churn Chaser Spiff:
   • Objective: Win back lost customers
   • Spiff: Motivate reps to win back lost customers by offering a bonus for successfully re-engaging churned clients. eg: Sales reps who successfully reactivate a churned customer’s subscription within 6 months earns a $250 bonus.
9. Bundle Booster/Cross-Sell/Upsell Spiff:
   • Objective: Encourage reps to sell bundled products or upsell or cross-sell additional products
   • Spiff: Offer a bonus for selling a specific combination of products or services. eg: Sales reps earn a 10% bonus for each customer who purchases software and support services or for upselling an existing customer to a higher-tier subscription plan.
10. End-of-Quarter Sprint:
    • Objective: Run a sprint toward the end of quarter
    • Spiff: Reps earn higher commissions or bonuses for hitting ambitious targets. eg: Reps qualify for a bonus for hitting >110% quota.
11. Partner Power Incentive:
    • Objective: Strengthen partnerships by rewarding reps for securing deals with strategic partner organizations within the next month.
    • Spiff: 2x or 3x multiplier on commissions for securing deal with a specific partner
12. Referral Contest:
    • Objective: Encourage reps to refer potential customers,
    • Spiff: Offering a bonus for every referral that converts into a paying customer.
13. Revenue Milestone Bonus:
    • Objective: Incentivizing rep tenure and longevity.
    • Spiff: Offer bonuses for hitting revenue milestones, such as achieving a certain revenue amount in a short period. eg: Spot bonus of $5000 for hitting $1M in lifetime revenue secured
14. Lead Quality/Prospect Conversion Challenge:
    • Objective: Incentivizing SDRs/BDRs to generate higher quality leads.
    • Spiff: Run a contest where reps earn bonuses for converting a specified number of leads into paying customers within a defined period.
15. New Market Expansion Bonus:
    • Objective: Incent reps to break new ground and penetrate potential green space
    • Spiff: Provide a bonus for reps who successfully enter a new market or vertical with significant revenue potential.

Spiff payouts do not have to be limited to cash/spot bonuses and commission accelerators, and can take additional forms such as:

• Gift cards: Gift cards are a popular option for SPIFFs. They’re a great way to let your sales reps choose their own rewards, and they can be used for anything from groceries to electronics.
• Travel and entertainment: If your sales team is always on the go, they might appreciate a travel or entertainment related rewards. This could include tickets to sporting events, concerts, or theme parks.
• Offsite activities: An offsite activity is a great way to get your sales team together and motivated. This could be anything from a team-building retreat to a day at the spa.
• Subscriptions or memberships: If your sales team is passionate about a particular hobby, you could offer them a subscription or membership as a SPIFF. This could include a gym membership, a Netflix subscription, or a membership to a professional organization.
• Status symbols: Some sales reps are motivated by status symbols. You could offer them a luxury watch, a new car, or a parking spot with their name on it.
• Personalized rewards: If you know your sales reps well, you can personalize their rewards to their interests. This could include a gift certificate to their favorite restaurant, tickets to a concert they’ve been wanting to see, or a piece of jewelry with their initials on it.

SPIFFs can be a versatile tool for motivating teams and driving results. However, their implementation requires careful consideration of the potential benefits and drawbacks. Short-term boosts should ideally complement your long-term goals and maintain a positive customer experience. By crafting spiff programs that are strategic, fair, and aligned with long-term goals, businesses can harness the power of incentives to propel their sales teams to greater heights.