What Are SPIFFs in Sales?
SPIFFs, or Sales Performance Incentive Funds, are short-term, targeted incentives designed to motivate specific sales behaviors or outcomes. These programs are often quick to implement and yield immediate results, making them a favorite among sales managers.
While “Sales Performance Incentive Fund” is the most widely accepted definition, SPIFFs go by other names depending on the industry or organization, such as “Special Pay Incentives for Fast Fulfillment.” Regardless of the name, the essence of a SPIFF remains the same: to energize and reward sales reps for meeting focused objectives within a set timeframe.
But what exactly makes SPIFFs so effective?
The Psychology Behind SPIFFs
It all comes down to human psychology. Sales professionals are naturally driven by competition and recognition. A SPIFF taps into this by offering immediate rewards, creating an irresistible sense of urgency and excitement.
Assume you are a sales rep and are told you could earn an extra $500 this week just by selling a specific product. Wouldn’t you jump at the chance?
SPIFFs play to the intrinsic motivation of many sales reps - the desire to win and be recognized. According to research by Gallup, employees who feel engaged and appreciated are 17% more productive, and SPIFFs deliver both engagement and appreciation in spades.
Example of a SPIFF in Action
To understand exactly how SPIFFs work, here’s an example:
Let’s say your company launches a new product and needs the sales team to push it aggressively. You introduce a SPIFF offering a $50 bonus for every unit sold within the first month.
The result? A surge in sales activity as your team scrambles to capture the incentive.
In another example, a company struggling to clear old inventory might offer a SPIFF like a free weekend getaway for the top-performing sales rep. These targeted sales rep incentive programs and rewards achieve the desired business outcome and make the sales process more exciting.
SPIFFs vs. Traditional Sales Incentives
SPIFFs aren’t designed to replace traditional incentives like commissions or bonuses; they complement them.
While commissions reward overall performance and bonuses recognize long-term achievements, SPIFFs are like a laser-focused spotlight. They shine brightly on a specific product, behavior, or goal that requires immediate attention. Think of it as the adrenaline shot your sales strategy sometimes needs.
For example, if your regular commission plan motivates your team to hit monthly revenue targets, a SPIFF might encourage them to upsell during that same period or focus on a particular product line.
Today, SPIFFs are evolving alongside new tools and technologies. Digital tracking platforms, CRM & PRM software, and performance dashboards make it easier than ever to implement, monitor, and reward SPIFF programs.
How SPIFFs Work: A Step-by-Step Breakdown
A successful SPIFF program doesn’t just happen -it requires careful planning and execution to ensure it motivates your sales team and aligns with your business objectives. The first step is to find a reliable sales incentive platform to help you in your journey. Kademi is a good place to start.
After that, here’s a detailed breakdown of how you can create an effective SPIFF, step by step.
Set Specific Goals
The foundation of any SPIFF lies in its goals. What exactly do you want to achieve? Is it clearing inventory, launching a new product, boosting revenue, or improving customer retention?
The more precise your goals, the better the SPIFF will perform.
For example, instead of a vague goal like "increase sales," focus on a specific target, such as "sell 100 units of Product X within the next 30 days." Setting specific, measurable targets ensures clarity for your team and makes it easier to track progress.
To refine your objectives further, align them with your broader sales metrics and KPIs. Understanding your Sales KPIs and leveraging those insights can help you create SPIFFs that not only excite your team but also support your business goals.
Choose the Right Reward
The reward is the heartbeat of any SPIFF. If the incentive isn’t enticing enough, your sales team may not feel motivated to participate. Choosing the best rewards for your team can drive competition and engagement to new heights.
Rewards can be:
- Monetary: Cash bonuses, gift cards, or increased commissions.
- Experiential: Travel vouchers, event tickets, or luxury dining experiences.
- Physical Goods: High-demand gadgets, branded merchandise, or even wellness packages.
The key is to know your team and what motivates them most. For instance, while one group might respond well to cash, another might prefer experiences that offer a memorable impact.
Communicate the Program Clearly
A SPIFF is only as good as your team’s understanding of it. Without clear communication, even the most generous incentive can fall flat. Make sure every team member knows:
- What the SPIFF is.
- The goals they need to achieve.
- The timeline for achieving those goals.
- The rewards on offer.
Use a mix of team or partner communication channels to get the word out - email announcements, team meetings, and even internal dashboards can help ensure everyone is on the same page. Creating excitement around the SPIFF, perhaps with countdowns or visuals, can further boost engagement.
Track Performance and Progress
Once the SPIFF is underway, it’s critical to monitor progress. How close is your team to meeting the set targets? Which sales reps are excelling, and who might need extra support?
Leverage data management tools and CRM systems to track individual contributions, ensure fairness, and identify trends. This data is invaluable not only for rewarding top performers but also for improving future SPIFF programs.
Deliver Rewards Promptly
Timeliness is everything when it comes to SPIFFs. A delay in delivering rewards can dampen enthusiasm and leave your team feeling unappreciated.
Once the program ends and results are verified, distribute rewards immediately. Whether it’s handing out cash bonuses, sending digital gift cards, or announcing prize winners in a team meeting, quick action reinforces the excitement and trust in your SPIFF program.
Evaluate and Learn for the Future
Every SPIFF is a learning opportunity. After the program concludes, take the time to evaluate its performance. Did it achieve the desired goals? What feedback did you receive from the team? Were there any logistical challenges?
Use these insights to refine your future SPIFFs. Perhaps certain rewards were more effective, or specific goals were more motivating. Using analytics and reporting tools, coupled with continuous improvement will ensure your SPIFF programs become increasingly impactful over time.
By following these steps, you can design SPIFF programs that not only energize your sales team but also deliver measurable results.
Types of SPIFF Incentives
SPIFFs come in various forms, allowing you to tailor your program to suit your sales team and objectives.
Cash SPIFFs
Cash remains king for many sales professionals. A monetary reward is straightforward, flexible, and universally appealing. For example, offering a $50 bonus for each upsell during a promotion can quickly energize your team.
Non-Cash SPIFFs
Sometimes, a non-monetary reward creates a stronger emotional impact. Think gift cards, travel vouchers, or even luxury items like tech gadgets. A study by the Incentive Research Foundation revealed that non-cash rewards often generate greater excitement and long-term satisfaction among recipients.
Tiered SPIFFs
Tiered SPIFFs reward performance at different levels, making them inclusive for your entire team. For example, reaching 70% of the target might earn a $100 bonus, while hitting 100% earns $300. This structure ensures everyone has a shot at recognition and keeps motivation high.
Sometimes, you don’t have to select between just one or another type of incentive. This is because you can now consider implementing a hybrid incentive program, as long as it helps motivate your team.
Get more insights on how to choose the best incentive - between cash or merchandise - in our video below:
