The idea of an incentive scheme is to motivate salespeople to break grounds and achieve even more objectives. The technicality of the program is terms and conditions that align with the objectives of the company.
Let’s have a quick look at the process
The basis of all incentive schemes is majorly on the aspect of technical decision making. Perhaps, it is even 100% about it. It follows a carefully outlined sequence to arrive at a format that suits the company’s objectives.
However, the decision-making process should be sequential in order to be effective. The first set of business is to define for the eligible role for the incentive. Team like but not limited to sales, pre sales team are entitled to the incentive team. The net order of business is to determine the payment levels in the scheme, and this is where real brainstorming is needed. The fixed and variable part and the targets required to unlock them should be decided as+ well as the disbursement process.
Talking about bonus payment as a credible alternative to variable parts of incentive. Because bonus is a sum of money added to a person’s wages as a reward for good performance, it can be used as a different technical payoff in an incentives scheme. It is distinct from commission because of the required performance.
Some bonuses types that can be utilized
- Can be paid if a salesperson hits a landmark based on performance measures, achievements should be praised, and bonus is one perfect way to do that.
- Bonus could be granted to motivate salesperson; bonus can be used for encouragement to perform extra task.
- To encourage sales person to bring in more customers, it can be paid for every successful referral.
The level of amount to give
The amount that is paid got attaining a certain success level is a bonus. It can be a percentage of the salary either monthly or annually. For instance, a company can decide to give 10% of basic salary if the sales person brings the anticipated results in a month
We have established there’s a difference between bonus and incentive scheme. Now let’s highlight why bonus is applicable in some cases instead of the latter.
- Measures and goals are difficult to quantify and out them in numbers
- There is more attention to the quality of the work and not just the numbers.
- Company gain more in the long term rather than a short-term revenue.
- The role of the sales person is towards more strategic goals including account management.
- The company explores new territories where it is difficult to set fair targets.
- The company cannot easily assign in a fair way territory for the sales people. There is unequal sales opportunity for sales people
What if the sales person reaches half of his objectives?
A frequent situation that shows up is when a sales person meets half of the target. In this scenario, what is the bonus amount that should be paid by the company? Well, it is logical to think half of the bonus should be paid but it is not ideal. Like others, it Is a situation that needs careful deliberation. The bonus needs to be flexible enough to accommodate this kind of performance scenarios to pay either all or part of agreed amount.
The company retain the right to weigh the achievement levels of the person with regards to the expectations of the salesperson. Ideally, the payment will be paid accordingly taking in note the goals and achievements. If its half done, the salesperson could get 50% of the bonus accordingly.