As a CSO, I have been to many pipeline review meetings over the last 30 years and often the discussions focus on the fact that the pipeline is lighter than it should be. When I would query the sales management team on their thoughts and ideas on how to increase the pipeline one or more would suggest that we should run a contest or add “Spiffs” to the compensation plan. My experience with Spiffs has not been very good, but many sales leaders see these types of programs as a way to generate excitement and buzz within their sales team.
The problem is that SPIFFs are usually just a stopgap measure covering up a larger systemic problem.
In most cases the sales reps that win these contests are the same ones that are already your top performers and consistently meet or exceed their quotas without contests. These programs also drive undesired sale behaviors in low performers especially if the prize is substantial. I have seen low performers sandbag deals, split orders between reps who have already won the contest, and submitting orders they know will be cancelled before they can be delivered. Sales morale can be affected when low producers receive the same rewards as high producers.
I do support Spiff’s/contests that run for a short period of time if they boost morale or improve efficiency in departments outside of the sales department. One example that has worked well form me in the past is a contest to reduce Day’s Sales Outstanding. In this contest sales reps were bonused if they were able to reduce DSO in their territories by X days. A pool of money was established based on a simple formula and 70% went to the sale person and the remaining 30% was set aside to pay for a group function with the finance department. If the rep was successful in achieving the DSO reduction he/she was also allowed to attend the group function with the finance team. The result of the program was better communication and cooperation between the two departments and an ongoing focus on the need to collect cash early.
One last comment on Spiff’s and contests, they must be easy to measure and the results announced within a few days. Waiting weeks or months to announce the winners can be a real buzz kill.
What Spiff’s/ contests have worked in your line of business? We would love to hear your thoughts.