• Increase Sales
• Introduce a new product or a new model
• Open new accounts
• Aid in evaluating a salesperson’s performance
• Increase market penetration
• Gain more mind share with Retail and Dealer sales people and managers
• Measure sales results and sales achievement 24 x 7
• Reduce administration costs and headaches of operating quarterly and/or annual incentive programs

1. Target Audience/Participants (Who)

What is the nature of the sales groups? Are they sophisticated or down to earth? How are Retail and Dealer channel sales recorded?

A good sales incentive program incorporates the answers to these basic type questions and others into an overall program. Requirements may differ based upon the specific role of the sales person. A company’s direct sales people are a captured audience. Your Retail and/or Dealer sales people need to be captured and motivated enough by the program to gain more sales, mind-share and market share for your products and services and to take sales away from your competition’s products which may be sitting right next to yours on your dealer’s shelves.

2. Program Objectives (What)

The first step in program development is to state the objective(s). What does the incentive reward program need to accomplish?

Program Objectives:

• Clearly state measurable and/or observable performance, i.e., sell 15 number of “x”, “y”, and “z” units per month, unit sales per month = so many points per month. Points are redeemed for awards, etc.
• The program functions as a basis for analyzing program impact and results are measured 24/7 for each sales person who is registered and who is entering their sales results, or whose sales results are being automatically input from an ERP or POS system.

A goal statement must reflect action, measurable results, and time frame. Goals are spelled out in program rules and in the formulas that are built into the incentive program. The sales incentive program transfers your company’s sales objectives into viable program objectives.

Keep it simple, realistic and measurable, whatever the goal of the program. Be realistic. Unreachable qualifying targets will demoralize the audience and reduce participation. Make it measurable by choosing goals that the database tracking system has the ability to measure.

Some Common Client Objectives:

• Increase monthly, quarterly, annual sales production
• Improve existing client sales
• Sell x number of “abc” models per week, per month
• Strengthen loyalty of channel
• Gain community of dealer sales people who will now be visible to you and with whom you can communicate through the incentive program

Examples of Program Objectives:

• Increase total product sales by 15% during the program period
• Increase Q3 and Q4 sales
• Increase sales in each region by $10,000,000/mo./region in Q3
• Reduce customer maintenance / support calls by 20% by August 1
• Sell new Fiber D4100 Channel Switch model during promotion

The better defined and more specific your program objective(s), the simpler it will be to plan your strategy and measure performance.

3. Timing and Duration (When)

The program timing and duration are built into the rules that are displayed for the participants within the “Rules” section of the online program. Timing for when sales will be counted and when they can be entered, duration of a promotion, spiff payouts, or umbrella program completion and award point redemption time-tables are all spelled out in the rules, FAQ’s and in the pre-marketing of the program to the direct and indirect participants.

4. Program Structure & Rules (How)

The program structure is developed to achieve the program objectives. It is essentially an outline of rules that tells participants what they need to do to earn awards throughout the program.

Rules must define:

• Participants
• Program dates
• How awards will be earned, how to make Circle of Excellence trip, etc.
• When award points or certificates will be issued
• How to redeem points for rewards

Structures may ask participants to compete against a monthly objective, climb sales levels to earn points or move up through plateau levels, etc.
Bonus enhancements should be used monthly or quarterly to add excitement to the program, reward consistent behavior, and incorporate additional performance goals into the program. Fast starts, customer/salesperson of the month, sales team of the quarter, “Strong finish,” and product promotions are all examples of bonus enhancements.

Common Program Structures:

1. Checkbook Approach
   Accumulate points or "virtual" dollars for product or services sold
   Example: Sell enough to earn different awards or promo items

2. Per-Unit Awards
   This structure uses a fixed payout per increment
   Example: $10 (or points) per unit sold

3. Hit & Win Awards
   With this structure, you set the goals, hit that goal and win!
   Example: Sell 100 units of “X” or sell $XX worth of “Y”
   (Participants earn when the goal is attained)

4. Step-Up Awards
   This structure requires that you establish a “baseline” and “steps.”
   Examples:

   • First 50 units earn 1,000 points each
     51-100 = 2,000 points each
     101+ = 4,000 points each

5. Budget

Creating the Budget Plan

The program’s award payout is calculated on an overall and individual participant basis. A successful sales incentive plan pays for itself by increasing sales and profits. Budgets are determined prior to the program roll-out.

Overall: Analysis of internal factors

• Identify the importance and profitability of each activity
• Determine percentage of sales which can paid out to award achievers
• Achieve certain performance levels
• Add bonus awards and fixed communication/administrative costs to predicted core award budget

Individual participants: Analysis of demographics

• Examine your participant groups
• Award types and values are based upon what will motivate behavior and stay within the program budget

Budget considerations: “Rules of Thumb”

1. Company payout

   • 1% - 2 ½% of total sales
   • 10% - 20% of incremental sales through the program

2. Participant earnings

   • 5% - 15% of annual income for 12-month program
   • Dealer sales people are budgeted based upon their projected sales and increases in sales (see our ROI analysis for dealer sales)

3. Budget breakout

   • Awards = 80% - 90% of budget
   • Promotion/administration = 10% - 20% of budget

Closed - vs. Open-ended:

Program objective, profitability and program length must be taken into consideration in determining the program budget.

6. Awards

The most influential determining factors in selecting program awards are: budget, audience demographics, size, and program length. If you are going to use merchandise as an award, our online catalogs are available as the vehicle to motivate your participant to achieve the program’s objectives.

Point vs. Plateau:

Because incentive awards are distinctly different from regular compensation or cash awards, it is essential the program use high-quality merchandise to:

• Capture participant interest
• Encourage participants to extend their efforts to earn their desired award

Determine issuance and redemption schedules:

• When can awards be redeemed?
• Will redemption be ongoing, or only at program's end?

7. Administration

Reporting requirements are determined by target audience, reporting frequency, and format.
Administrative requirements are determined by analyzing details of the following program aspects.

Overall Objectives:

• Capture critical information on each participant through online registration for channel sales people. Direct sales or direct sales people can be bulk loaded into database
• Track participant performance 24/7 by individual online input by channel sales and downloading direct sales system
• Communications can be automated or ad hoc
• Calculating and issuing points and awards is done automatically
• Provide meaningful program activity reports to management 24 x 7. Reports are viewable based upon permission levels issued by the administrator
• We provide administration or company administrators will be trained to manage the program.

Pre-program Activity:

• Designate a Program Administrator to coordinate program activities internally
• Establish listing of all eligible participants
• Assign goals/baselines as required

Enrollment:

• Employee’s location and department
• Code number or employee ID specific to employee
• Email Address
• Home address for offline communication and awards fulfillment
• Shirt size if T-shirts or other apparel are part of “kick-off” or ongoing themed or quarterly promo’s
• Birthday – in order to send birthday greetings – to personalize and build community especially with channel sales people
• Individual goals (if applicable)
• Team number and goals
• Any additional information

8. Communication and Program Promotion

Common elements of a good pre-marketing, marketing and promotion of a successful sales incentive program are:

• Talk-it-up 30 – 45 days in advance, in meetings, channel conference calls, email blast, sales incentive site “coming soon” notification on a branded home page
• Teasers – email attention grabbing program announcement, create theme poster or banners for offices, send out theme oriented choch-kie to direct and indirect sales people
• Set “kick-off” date and tie it into sales campaign, give 1000 - 5000 extra points for registering by a certain date, built-in program email functionality can send out emails by title, role, region, etc.
• Online newsletter promotion, etc……
• Ongoing promotions and motivational communication to participants once the program is rolled out