Sales Best Practices

How to Structure Successful Sales Incentive Programs

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Serena Miller

Editor, Sales Best Practices

Most sales leaders and managers understand the value of incentivizing their teams, but building an effective and appealing program can be challenging. No two reps are exactly alike, so implementing an incentive program that entices everyone on the team isn’t always an easy feat.

Managers struggle to find creative ways to motivate disengaged team members, boost rep performance, and inspire their high-performers to maintain their momentum—which turns retention into a constant, uphill battle.

A traditional sales rep salary structure alone is likely not enough to keep your reps on their A-game. In fact, 90% of top-performing organizations use sales incentive programs to motivate their sellers. To remain competitive and profitable, companies must offer compelling rewards that ensure high levels of satisfaction and engagement. And since happy, engaged employees are 14% more productive than their disengaged counterparts, failing to offer compelling rewards can mean a less efficient team and, ultimately, missed targets.

Here, we’ll take a deep dive into different types of sales incentive programs, some creative ideas for motivating your team, and how to build a foundation for success.

What are sales incentives?

Sales incentives are rewards that organizations offer their reps when they reach certain goals or outcomes. An Incentive program is a structured system that clearly ties particular actions or achievements to specific rewards.

The end objective for any leader who offers incentives is, of course, better business outcomes. By implementing an effective sales incentive program (alongside a successful performance management strategy), leaders can reach a 79% success rate in achieving their established goals. But just dangling a metaphorical carrot in front of reps isn’t what makes strong incentive programs work.

Sales incentives are all about discovering the best way to increase rep engagement. Flexible, creative incentives boost employee engagement by reinforcing positive behavior and performance, aligning workers’ individual objectives with higher-level business goals, and demonstrating an employer’s appreciation of their employees’ efforts. And since a highly engaged workforce results in 21% greater profitability, strong engagement is a factor most organizations likely can’t afford to ignore.

42% of workers consider an employer’s rewards and recognition opportunities as they evaluate jobs, and successful programs have motivated 66% of employees to stay at their jobs. By leveraging a personalized, thoughtful approach, companies can attract and retain top talent—enabling them to boost their competitive edge and their bottom line.

But it’s important to remember that not all sales incentive programs are created equally; nor will any run-of-the-mill program work for every team. There are several different structures and types of incentives (e.g. monetary vs. non-monetary) from which managers can choose, each with its own objectives and costs. It’s crucial for managers to evaluate their team’s preferences, motivators, and goals against their options, then personalize the incentive program to achieve optimal results.

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Structuring Sales Incentive Programs

As the complexities of today’s selling environment continue to grow, sales managers must carefully consider how they’ll best motivate their teams to drive engagement and performance. To implement an effective program, managers should first determine how each structure might align with their team’s unique needs and goals.

Role-Specific Incentives

The act of selling has drastically evolved from the days where one salesperson simply sold a product or service to a single customer. B2B sales, in particular, has grown more complex, with typically higher price points, more intricate processes, multiple touch points across various channels, and several key stakeholders.

To progress any deal through the sales cycle, organizations generally require the help of a variety of sales team members. Sales reps, account managers, operations managers, SDRs, account executives, sales engineers, solution architects, and customer-care experts might all have a hand in pushing any given deal across the finish line or ensuring customer retention. Each team member has a specific role in the sale and therefore a specific stake in its success.

Thus, it’s essential to incentivize each individual to perform their function at the highest possible level. Doing so requires an in-depth understanding of how their efforts contribute to the larger win, and how each role can be further motivated to reach (or exceed) their goals.

Sales reps and SDRs, for example, must efficiently and effectively prospect, initiate contact with, and acquire potential buyers. They might be most inspired to perform through traditional incentives, like commission, as they reach their goals and objectives.

Solution architects and sales engineers, on the other hand, aren’t as directly impacted by revenue, so their rewards should be more focused on the support they provide to their colleagues. Managers can incentivize people in these roles by offering bonuses that align with overall team performance, which will motivate them to collaborate and share their expertise whenever possible.

Territory-Based Incentives

Depending on your organization’s product and total addressable market, your sales teams might be assigned to several different territories. Each territory offers a different level of market opportunity, value, and challenges, so crafting an incentive program that reflects these factors (and aligns with specific goals) is vital.

For example, one of your territories may have been recently established or have a limited number of potential buyers, and therefore your reps must work to crack into new accounts. In this case, you’d likely find success in motivating sellers to acquire as many new customers as possible.

But in well-established territories where you already have a significant customer base, incentivizing reps to retain clients, identify up- or cross-sell opportunities, or improve customer engagement should be your top priority.

Split Incentives

Incentives can get tricky pretty quickly in instances where multiple reps are working on the same deal. The objective in these cases, of course, is for team members to collaborate with one another and offer their individual expertise and value to reach the same end goal: A closed deal.

For some, though, the task of collaborating efficiently and successfully can conjure bad memories of school projects, where everyone takes credit for the presentation only one group member worked tirelessly to complete. The same issue sometimes holds true in the professional world, where one rep doesn’t carry their own weight throughout a collaborative deal, but is compensated just the same.

To avoid resentment, dissatisfaction, and overworked reps who feel they’ve been taken advantage of, some teams implement split incentives. In this particular structure, sellers are encouraged to work together on deals, but are compensated based on their actual, individual contributions rather than the total generated revenue.

This structure works best for teams that use intelligent software to precisely track reps’ activities. That way, managers can avoid disputes that might otherwise arise from sellers who disagree on who accomplished what with the customer.

Presales Incentives

It’s no wonder why today’s sales cycles last months (or even years), as the typical buying group for a B2B solution involves 6 to 10 decision-makers. It takes a near-heroic amount of effort on the seller’s end to convince each of those individuals that their product or service is the best solution for their pain point. And since 84% of buyers consider the quality of customer service before they even make a purchase, rewarding that effort is critical for ensuring excellent experiences and closing more deals.

Presales incentives keep your salespeople driven and engaged throughout the entirety of each sales cycle by compensating them along the way. Once a rep reaches a certain stage, they receive a reward that recognizes their progress. This might continue throughout several stages of the sales cycle, with rewards incrementally increasing in value until they receive a much larger incentive once the deal actually closes.

Omni-Channel Incentives

An omni-channel customer engagement strategy is absolutely essential for any sales organization: In fact, companies with a strong omni-channel approach see 90% higher customer retention rates than those who use a single channel.

But selling across various channels can muddy the waters when it comes to understanding and rewarding reps’ efforts. The flexibility and superior customer engagement offered by an omni-channel strategy can also inhibit leaders’ ability to track and measure reps’ customer interactions. How can you motivate your sellers to engage prospects across multiple channels if their actions aren't recognized?

The solution is two-fold. First, you need an incentive program that enables reps to receive credit for their involvement in engaging with and selling to customers through several different channels. Second—and perhaps more importantly—you need technology that allows you to log each touch without requiring more legwork from your reps.

Powerful sales engagement platforms, for example, provide a centralized, one-stop-shop from which your reps can communicate with customers across all your key channels, without requiring them to manually enter their interactions in a separate system. These tools make it easy to inspire reps to carry out your omni-channel strategy, measure their progress, then reward them for their efforts.

Analytics-Based Incentives

Traditionally, sales forecasting has been more of an art than a science, and organizations have paid the price for relying on guesswork. Disparate tools and dashboards filled with unreliable or siloed data make it impossible to understand pipeline health, meaning teams are always at risk for surprises; and lack the transparency to establish realistic goals.

But modern businesses have started to leverage tools that deliver real-time pipeline data and buyer engagement signals in one unified place, making it easier to accurately forecast outcomes. These up-to-date predictions also mean revenue leaders can quickly intervene if things start going south, giving the team ample opportunity to course correct their at-risk deals.

Precise forecasting enables leaders to consistently set challenging (yet reasonable) goals for reps based on real-time analytics. It allows managers to create incentives that align with more granular objectives, so sellers know what they’re working towards and how it’ll impact the big picture.

For example, instead of simply incentivizing reps to exceed last quarter’s goals by 5%, managers can dig deeper to accurately predict customer demand, uncover issues in the sales process, or identify specific areas of opportunity. Then, they can build tailored goals that are tied to improving those factors and offer relevant incentives for reps who reach their targets.

Sales Incentives Ideas

There are myriad ways to incentivize your sales team, and variety helps keep reps engaged, excited, and motivated to do their best—so don’t be afraid to get creative! Depending on your company’s salary structure, business goals, budget, and your team’s preferences, your program might include monetary or non-monetary incentives.

Monetary Incentives

Monetary incentives are a classic way to light a fire under your sellers. They’re great for demonstrating the direct tie between performance and reward, and they show that your company recognizes how your team’s effort impacts its revenue.

Some examples of monetary incentives include:

  • Bonuses
  • Gift Cards
  • Discounts
  • Benefit plans
  • Cash rewards

Non-Monetary Incentives

It’s important to remember that not everyone is driven by cash-based incentives. Non-monetary incentives are a fun way to mix things up and to motivate reps with fun, alluring rewards that they may not otherwise spend their money on.

Some examples of non-monetary incentives include:

  • Retreat or spa day
  • Team night out
  • Tangible prizes (e.g. headphones, tablets, mobile devices, branded apparel)
  • Extra paid time off
  • Development rewards (e.g. free online courses or gym memberships)
  • Trophies or plaques
  • VIP parking spots
  • Gift baskets
  • Tickets to an event
  • Lunch with company executives
  • Free round of golf
  • Discounted airfare
  • Hotel expense for a vacation getaway
  • One-month subscription to a food or wine club

Foundations of a Successful Sales Incentive Program

Your sales incentive program should be thoughtfully crafted to motivate your unique sales force. While there’s no one-size-fits-all solution, you can ensure success by considering these best practices:

Find out what motivates your team

Sure, salespeople may like cash incentives, but most of them also have intrinsic motivation to help customers, make an impact, and feel valued. Throwing gift cards or bonuses at them every time they reach a milestone probably won’t keep them engaged in your company, customers, or their own development.

Before you launch your program, take the time to discover what actually drives your team members to succeed. Managers can set aside five minutes of their one-on-one meetings with each rep to discuss what inspires them and how they’re affected by specific incentives.

Your reps will appreciate the fact that you want to recognize them in a way that actually works for them, and they’ll be empowered to tell you if the rewards you offer just aren't cutting it.

Provide Clear and Achievable Goals

It can be tempting to use an incentive program to see how far you can push your reps. But while this tactic may work for one or two highly-ambitious sellers, most of them will quickly become discouraged, disengaged, and disinterested.

Maximize the results of your program by first establishing clear, reasonable goals that everyone can reach. After all, it’s not fair or realistic to expect that brand new rep to close X number of deals when they’re just getting their feet wet.

Before the program starts, thoroughly explain how it’ll work, how your reps’ performance will be tracked and measured, and how they’ll be rewarded if they achieve their targets. Then, allow sellers to give their input and discuss whether or not they think the parameters you’ve set are fair.

Lean in to Social Pressure

A little competition can ignite any rep’s fire, push them out of their comfort zone, and improve team morale. If sellers’ performance within your incentive program isn’t publicly recognized, they likely won’t feel the adequate pressure needed to kick it up a notch.

During your team meetings, take the time to display the progress and performance of each of your reps. Encourage team members to cheer each other on (or challenge one another) to push them further toward their goals.

Allow for Multiple Winners

Chances are, your team probably has one or two top dogs who consistently outperform their colleagues. Incentive programs can quickly become irritating pageants that only recognize those expert-level sellers if they don’t allow for more than one winner.

To ensure everyone remains in the running—and reps at every level have an opportunity to win—structure your program to celebrate several top-performers across multiple categories. That way, everyone will feel motivated to participate and resentment won’t build.

Don’t Cap Earnings

If you establish a cap on your team’s potential earnings, you’ll also inadvertently cap their potential performance. Your star sellers shouldn’t feel discouraged as they excel or they’ll be tempted to pump the breaks on their own progress.

Instead, build a program that doesn’t include a ceiling. Your low- and mid-level performers will know they always have something to work toward, and your more seasoned, exemplary sellers will just keep getting better.

Combine Monetary and Non-Monetary Rewards

Once you identify how to best motivate your team, mix up your incentives as frequently as possible. Offer a healthy combination of monetary and non-monetary rewards to always keep sellers on track and inspired to reap whichever rewards they most desire.

Powerful Tools for More Motivated Sellers

Consistently engaging and motivating your sales team to maximize their performance starts with a well-planned, deliberately executed incentive program. But if your team still relies on outdated, legacy sales tech — like disjointed point solutions that require manual data entry—then you’re making it harder than necessary for them to do their jobs.

Traditional technologies are burdensome, time-consuming, and frustrating for already-busy reps, and can destroy their motivation before your incentive program even takes off. For any incentive program to succeed, leaders must empower their sellers with intelligent tools that take inspiration-killing tasks out of the equation.

Outreach is an integrated platform that helps managers and reps better orchestrate the entire sales cycle. With tools for task automation, collaboration, sales engagement, deal management, and more, Outreach helps sales teams drive better performance and improve their outcomes; all while enabling them to remain as motivated as possible.

To learn more about how to motivate your sales team download our free ebook, or request a demo to learn more about Outreach. 

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