The primary objective of a sales incentive is to increase productivity and the firm and to align the sales strategy to the company’s philosophy by passing messages to the sales force. It is a necessary tool for a sales manager to set sales expectations and exceed them. Having known the direction of sales and prospective audiences, a sales incentive can then be designed with appropriate incentive method and scheme.
The dangers of employing a mediocre incentive method
An indifferent incentive scheme poses a significant threat to the progress of the company. This is because it brings no positive impact on the sales and consequently the result suffers it. This system causes limited influence on sales person and fails to send the appropriate message to the sales force and for an apparent reason; sales people would ignore. It can be so complicated that it makes it difficult for people to follow it, or it can also be a system that doesn’t give a fair reward.
A problematic incentives scheme comes with consequences
The negative results of a lousy incentive scheme become more evident over time, but the big question is; can the company run such a risk? Although the ineffectiveness worsens some part of the company, it might also help improve some. It might drive up the revenue stream or derail profit margin. Perhaps it is worth it?
However, experienced personnel should quickly point out the condition of a scheme, whether it is going haywire or in the fruitful direction. Nevertheless, a thorough analysis of a system should be carried out before implementing to discover potential anomalies before it occurs. When the sales management starts experiencing low productivity, various questions start popping up to know the reason for the inefficiencies. Some questions like; is it the lack of training, a bad product offering or wrong commercials against the competition what leads to poor results? These can be some causes of the problems.
A lot is at stake!
The motivation system portrays the value of the company to the general public, and the objective of the scheme is to strengthen it. Whether or not the system is standard, it affects the system in the long run either on a positive note or otherwise. Running an indifferent system negatively affects the company because it doesn’t affect sales behaviors and doesn’t align them with the strategy of the company. The revenue of the company eventually sufferers a setback as a result. A typical example of a bad system is one that focuses on landing new clients without an increment in income. Another worrisome situation is also when it doesn’t incentive all salespeople equally with the wrong target allocation makes it difficult for salespeople to earn fair commissions.
A motivation system is bound to have its loopholes as it is practically impossible to have a perfect one for all salespeople. It is however required of the company to assess its efficiency against an average sales person’s behavior and not panicking if a minority of salespeople are deviating from it. So, a system has not failed because of some sales people’s failure because the strategy might have a positive impact on some sales people’s activity.
An alternative definition of efficiency
There is no motivation system with 100% efficiency. The need for an alternative explanation arises because salespeople come with different capabilities and skills. This is necessary to determine the effect of the motivation scheme on the salespeople.
An efficient motivation system is one that when targets are passed, and past performances are outperformed. A new implemented system is an improvement if it brings about a significant increase in returns. Although, the positive change could be due to luck and other external factors, in most cases, the motivation system deserves the credit. It is not a miracle; the scheme is designed to bring improvements to the individual and team.
Contrary to come beliefs that it has no impact, a poorly designed system poses a threat to the growth of a business. The earlier the problems are identified and eliminated, the better. Evaluating a motivation scheme is majorly down to two directions which are; the impact of the system on the salespeople, and the business. It is however imperative that the system is changed if necessary.