Sales incentives

Commission structures

Salespeople often receive a percentage of the sales revenue they generate as commission. Higher sales volumes or achieving certain milestones may result in higher commission rates.

Bonuses

Reps may receive bonuses for reaching specific targets, such as exceeding quarterly sales quotas or acquiring new customers.

Performance-based rewards

Sales incentive systems may include rewards based on performance metrics such as customer satisfaction ratings, sales growth rates, or the number of new accounts opened.

Recognition programs

Acknowledgment and recognition of top performers within the organization can be a powerful motivator. This recognition may take the form of awards, public praise, or inclusion in prestigious groups or clubs.

Non-monetary incentives

Incentives such as trips, gift cards, merchandise, or exclusive experiences can motivate salespeople.

Training and development opportunities

Offering opportunities for skill development, training programs, or career advancement can improve performance and achieve higher levels of success.

Clear goals and targets

Well-defined sales targets and goals are essential for an effective incentive system. Salespeople need to understand what is expected of them and how their performance will be evaluated.

Regular performance evaluation and feedback

Regular feedback and performance evaluations help salespeople understand where they stand in relation to their goals and allow for adjustments to the incentive system if needed.

Energize your team members with exclusive sales incentive ideas! Our expertise drives motivation and results. Contact us.

One of the primary challenges is finding the right balance between various performance metrics and incentives. Companies often have multiple goals they want to achieve, such as revenue targets, customer acquisition, and product penetration. Designing a scheme that adequately rewards all these aspects without overcomplicating the system can be tricky. While aligning sales incentives with company objectives is essential, it's equally crucial not to overwhelm sales teams.  

If the criteria for earning incentives are unclear or constantly changing, it leads to frustration. Sales incentive programs need to be clear and transparent to avoid confusion and dissatisfaction. Incentives should strike a balance between rewarding short-term results and fostering long-term growth.

When designing a sales compensation scheme, you need to combine multiple variables carefully and correctly. Companies often try to include many variables that reflect every single one of their corporate targets. But while it is important to always keep company goals in sight, these systems shouldn’t become too complicated either.

Reward your high performing sales reps with clear-cut compensation structures! Let Simon-Kucher design the perfect incentive plan. Contact us.

"To reach my targets, I have to sell product X first and then service Y, but I can’t sell them in conjunction with product Z.” If you hear your sales people saying something along these lines, you have probably crossed the line with your sales incentive plan. Sales managers shouldn’t have to perform mental gymnastics to juggle the criteria. Too many variables only lead to confusion and frustration.  

In our experience, sales teams perform best with three variables. They are generally able to deal with a maximum of four. If they have to consider any more, their motivation fades, and they stop trying. Ultimately, target achievement decreases after that.

We also know that salespeople do want to succeed. They are intrinsically motivated to achieve their company's and customers' best results. So, as well as paying attention to the number of variables, it's important to avoid conflicting, ambiguous, and subjective targets.  

Sales reps need to be able to easily evaluate the variables, particularly during sales pitches. If the incentive program becomes too complex, the salesforce will primarily consider the simplest and most effective variables, ignoring other goals like customer satisfaction or margin.  

Motivate your sales team with the right sales incentive variables! Trust Simon-Kucher to design incentives that drive results. Contact us. 

How does your organization think about the money used to pay the salesforce? Do you think about it as a cost, a budget, or an investment? We’ve come across lots of schemes where companies aimed for double-digit growth but the budget requirement was cost-neutral.

How you view the money used to pay the salesforce can lead to different approaches in designing incentive plans.  

For example, viewing sales compensation purely as a cost implies that the primary objective is to minimize expenses. While controlling costs is important for profitability, this may lead to incentives that overly focus on short-term savings. Such schemes may fail to attract and retain top sales talent or adequately motivate them to achieve sales targets.

Alternatively, you manage sales compensation as a budgetary constraint, and must set limits on how much you allocate. Of course, budget constraints are necessary for financial planning. However, rigid budgetary approaches may restrict the ability to invest in competitive incentive schemes that drive growth. You may miss out on opportunities to capitalize on market potential and outperform competitors.

Treating sales compensation as an investment shifts the focus from mere expenditure to strategic value creation. Here, you acknowledge that the money spent on compensating the salesforce should generate returns in the form of increased revenue, market share, and customer satisfaction.  

But is the sky really the limit?

A remuneration committee will be able to monitor the exact number of really big individual pay-outs. Too often though, the evidence is anecdotal. These occurrences are easily remembered, while the bulk of more moderate cases don’t stand out.  

This fear can cause a watering down of the scheme, often resulting in a pay-out cap. The outcome: a demotivated salesforce, the exact opposite of an effective incentive scheme.

When sales incentive programs are truly investments, you need a more strategic and forward-thinking approach to compensation design. This reinforces the alignment between incentive plans and your company's growth objectives. It also encourages you to evaluate the return on investment (ROI) of your incentive plans.  

Invest in both your top performing employees and your company's future. At Simon-Kucher, we design incentives that promote growth. Contact us. 

As businesspeople, we’d like to think that our decision-making is wholly rational. However, studies of how people make decisions show that this is often not the case. We are heavily influenced by a range of biases.

For example, people generally dislike losing things more than they like receiving them. If used wisely, this loss aversion can be a powerful ally. In addition, “present bias” tells us that people place more weight on things that are happening now compared with at some point in the future.  

We’ve helped numerous companies deploy incentive schemes where the more discount the salesperson uses, the more of their pay-out is sacrificed. We also incorporate the incentive calculation into a salesperson’s quoting tool. That way, as they vary the parameters of the deal, they see live what their return will be.

Incentive scheme design requires a deep understanding of both traditional economic principles (e.g., supply and demand dynamics) and behavioral economics (e.g., cognitive biases and decision-making heuristics). We integrate insights from both disciplines, providing rational economic incentives but also accounting for the psychological factors influencing salesperson behavior. Contact us.

While many sales incentives are based on rules of thumb or gut feel, there really is no substitute for detailed analyses. Before making any changes to your incentive scheme, conduct a detailed analysis of your current scheme's performance. This may include evaluating salary benchmarking to ensure competitiveness, assessing quota attainment versus payout, and gathering feedback from the salesforce through questionnaires.  

Once you've thoroughly evaluated your existing scheme, the next step is to design and stress-test the new scheme. This involves estimating the return on investment (ROI), assessing potential payout variance under different scenarios, and modeling the impact on individual sales reps (winners vs. losers).  

These data-driven insights will help you finalize your new incentive scheme. The next step is to prepare comprehensive communication collateral to explain the changes to the salesforce.

Communication should clearly articulate the rationale behind the changes, how the new scheme will benefit sales reps, and what actions they need to take to maximize their earnings under the new scheme. Transparent and well-structured communication facilitates a smooth transition and garners buy-in from the salesforce.

Motivate reps to embrace the new incentive structure and drive results with our expert guidance. At Simon-Kucher, we support your company with change management and communicating new sales incentives to your sales force. Contact us today to ensure a smooth transition and maximize the effectiveness of your sales incentive program.