Measuring Success: Sales Incentive Programs and ROI

Sales incentive programs can be an effective way of generating revenue when implemented correctly.  This can be done for channel sales incentive programs as well as direct sales.  However, it is important to have measurable goals in place prior to the program being launched in order to measure and adjust the program if necessary.

This executive summary, authored by i-Myth and published by the IRF, does an excellent job of explaining how to create a baseline ROI for a sales incentive program.

Many companies struggle with establishing measurable goals at the beginning of a sales incentive program. It is often stated that the goal of the sales incentive program is to “increase sales.”  That simply is not good enough.  How do you plan on increasing sales?  Increase last year’s sales by at least 10%.  In this direct sales case study, you will be able to determine last year’s sales figures because you have access to that information, something that may not be available in a channel sales incentive program.

With this information, you can determine a threshold or goal for each salesperson.  We recommend that the salesperson earn something before they hit the threshold to keep them engaged, but use the majority of the budget once they pass the threshold.  You can even add bonus earning opportunities once they have passed the threshold because the client will be funding this portion of the program with incremental sales revenue.  For example, in our points based solution once the salesperson is 10% past the threshold, they can earn double points, 25% would be triple points, etc.  Salespeople are competitive by nature, and designing a program like this can be lucrative for them as well as the company.

Contact us to find out more about designing effective sales incentive programs.

by Mike Sullivan

Mike has more than 15 years of experience designing and implementing incentive and recognition programs. He specializes in employee recognition and multi-step channel sales incentive programs. When not tending to his clients’ needs, Mike can be found wetting a line on a local waterway or traversing a hiking trail with his wife Michelle.