Sales incentive programs boost performance and focus participants on the goals of the organization. Add the fact that, unlike most marketing investments, you typically get the results before you incur the bulk of the cost, and it’s clear why many top-performing companies use incentive programs to drive growth and maximize the achievements of their sales force.
When designing a sales incentive program, there are a number of key questions that must be answered. How much sales revenue do you expect to generate? What is the most effective time frame? What level of reward is needed to motivate the team? The purpose of this document is to identify these decision points, and provide some rules of thumb to help calculate the parameters.
How to determine the rules and budget for your program to help you achieve a positive ROI.
The design of the program can be divided into three main areas – Setting the Budget, Designing the Program, and Driving Engagement.
Setting the Budget
How much should I invest in the incentive program? That is often the first question in the planning stage, but it misses the point. Since you would only design a program that will have a positive ROI, the starting point should be how much incremental revenue you expect to generate from the campaign. This will tell you how much additional profit is created, which is then the basis for your program budget. Don’t forget that, even without the incentive program, some growth will be achieved using traditional marketing channels such as advertising and sales tools. Make an allowance for this in your calculation.
Rule of Thumb: The cost of the program should equal…