How to make a sales incentive plan that motivates

Posted May 31, 2023

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By Serena Miller

Editor, Sales Best Practices at Outreach

Most sales leaders and managers understand the value of a sales incentive plan. In fact, 90% of top-performing organizations use them. Strong sales incentive programs can motivate disengaged sellers, boost rep performance, and inspire high performers to maintain their momentum.  

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 easy.

Here, we'll explore 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?
  • Types of sales incentive programs
  • Monetary vs. non-monetary sales incentives
  • How to choose the right sales incentives
  • Powerful tools for more motivated sellers

What are sales incentives?

Building a strong sales team is a crucial step in growing business. So, sales leaders and managers work hard to recruit the best reps. But the next step is motivating them towards a common goal. That’s where a sales incentive plan comes in. 

Sales incentives are rewards organizations offer their reps when they reach certain goals or outcomes. Incentive programs are structured  so that particular actions or achievements, such as sales win rate, are tied to specific rewards.

Any leader who offers incentives is, of course, aiming for better business outcomes. But 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, and fun sales 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.

But it's important to remember that not all sales incentive programs are created equally. There are different structures and types of incentives 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.

Structuring sales incentive programs

Sales managers need to think carefully about how they can best motivate their teams to boost engagement and performance in today’s selling environment. To start, they should assess how each sales incentive structure aligns with their team's individual needs and goals.

1. Role-specific incentives

B2B sales has grown more complex, with typically higher price points, more intricate processes, multiple touch points across various channels, and several key stakeholders. 

Getting any deal through the sales cycle generally requires 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 deals across the finish line or ensuring customer retention. 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 each person’s work contributes to the bigger picture 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.

On the other hand, solution architects and sales engineers 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 tied to overall team performance. That way, they’ll be motivated to collaborate and share their expertise whenever possible. 

2. 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. Therefore, 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; 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.

3. Split incentives

Incentives can get tricky when multiple reps are working on the same deal. Here, the objective is for team members to collaborate and offer their individual expertise to reach the same end goal: A closed deal.Though, when one rep does not carry their own weight throughout a collaborative deal but is compensated just the same, it can lead to a negative sales environment.

Some teams implement split incentives to avoid resentment, dissatisfaction, and overworked reps who feel they've been taken advantage of. In this sales incentive structure, sellers are encouraged to work together on deals but are compensated based on their actual, individual contributions.

This structure works best for teams that use sophisticated tools 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. 

4. Presales incentives

It's no wonder why today's sales cycles last months (or even years). The typical buying group for a B2B solution involves 6 to 10 decision-makers. That requires a near-heroic amount of effort from sellers to convince each of those individuals that their product or service is the best solution for their pain point. Plus, 83% of buyers cite the quality of customer service as the most important factor–outside of price and product–when deciding to make a purchase. Therefore, rewarding that effort is critical for ensuring excellent experiences and closing more deals. 

Presales incentives keep your salespeople driven and engaged throughout the 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, with rewards incrementally increasing in value until they receive a much larger incentive once the deal closes. 

5. Omni-channel incentives

An omnichannel customer engagement strategy is essential for any sales organization. In fact, companies with a strong omnichannel 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. Often, sales leaders find it difficult to track and measure reps' customer interactions. And 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 engaging with and selling to customers through several different channels. Second and perhaps more importantly you need a powerful sales execution platform that allows reps to communicate with customers across all your key channels while automatically syncing sales activities. Sales managers can then easily measure their progress and reward them for their efforts.

6. Analytics-based incentives

Traditional sales forecasting is manual and error prone. Disparate tools and dashboards filled with unreliable or siloed data make it impossible to understand pipeline health. The result is thatteams are always at risk of surprises and lack the transparency to establish realistic goals. 

Modern businesses are leveraging tools that deliver real-time pipeline data and buyer engagement signals in one unified place, making it easier to accurately forecast outcomes. 

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. That way sellers know what they are 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.

Monetary vs. non-monetary sales incentives ideas

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

Graphic summarizing the monetary and non-monetary sales incentives listed in the article.

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. Plus, they recognize 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 with rewards that reps 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 expenses for a vacation getaway
  • One-month subscription to a food or wine club

How to choose the right sales incentives 

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

1. 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. 

So, 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 specific incentives affect them.

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

2. 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. And 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 they think the parameters you've set are fair. 

3. Lean in to social pressure

A little competition can ignite any fire, push them out of their comfort zone, and improve team morale. If sellers' performance within your incentive program is not 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 rep. Encourage team members to cheer each other on (or challenge one another) to push them further toward their goals.

4. Allow for multiple winners

Chances are your team 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.

Instead, give reps at every level an opportunity to win. Structure your program to celebrate several top performers across multiple categories. That way, everyone will feel motivated and resentment won't build.

5. 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 just keep getting better.

6. 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. 

And for those that may not be hitting rewards often, consider setting up sales mentorships to help them grow their skills.

Powerful tools for more motivated sellers

Consistently engaging and motivating your sales team to perform their best 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.

Outreach’s Sales Execution Platform gives sellers the power to increase the impact of their activities without adding manual effort. With tools for 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.

Want to learn more about how to motivate your sales team to generate more pipeline and close more deals? Get the complete sales manager guide to increasing sell productivity. Or,  request a demo to learn more about Outreach.


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