SPIF Program Best Practices – 8 Steps to Success
SPIF programs (Sales Performance Incentive Funds) are a great way to ignite a sales organization and achieve a goal. They can also present many challenges from administration, funding, entitlement through measuring ROI.
Executing effective SPIF programs requires planning to overcome these challenges. Some challenges can be headed off with program design while others need to be addressed during execution. This article is focused on the up-front planning required for a successful SPIF program and outlines eight best practices we’ve learned, working with customers on hundreds of SPIF programs over the last decade.
The following steps will help you avoid common pitfalls and increase your odds of achieving SPIF success.
1. Define Clear SPIF Program Goals
The biggest mistake many brands make when launching a SPIF program is jumping to implementation without taking the time to clearly define the program goal. A good SPIF program begins with a clear goal.
Tip: If you need to increase share, build a stronger pipeline, or improve customer service, understanding your goals enables you to design an effective SPIF program.
2. Modify Sales Behavior
All good incentive programs are designed to influence specific sales behaviors. Ask yourself what behavior(s) need to change to achieve your goal? This is an important step as a SPIF program offers a reward for the change in behavior.
Tip: If you don’t clearly understand the behavior you’re trying to modify, you won’t be able to achieve goals. A good incentive program can influence sales behaviors align program objectives.
3. Know Your Audience
Spend some time observing and talking to those you’re trying to influence. What motivates their current behavior? How will you overcome that motivation? What reward will work best with this group? Do they have any attitudes or opinions that need to be changed?
Tip: The better you understand those you are trying to influence the higher likelihood you’ll be successful.
4. Choose the Best Award Types
When it comes to SPIFs cash is often king. First, in most industries sales people inherently are cash/commission driven. They tend to respond well to more cash in their pocket. They also tend to focus on the immediate gratification achieved by closing a deal. Another reason cash is frequently used is it takes the complexity out of choosing an award to fit every participant. Whether you’re trying to assemble a merchandise catalog or a trip it can be really challenging to find a blend of merchandise and travel that meets the diverse needs of a large sales organization. Keep in mind that when it comes to cash there are also choices. Sending checks is old school. Today, you have choices of single load or reloadable cards, gift cards, and virtual rewards. With debit cards you can also brand them to your company and program. These choices help you tailor and market the program to the audience.
Tip: For the sales person you’re trying to influence it is all about the award, so take the time to do this right. There are several reasons why cash works well, but there are other choices for rewards such as merchandise and travel. Again, knowing your audience becomes very important to choosing the right award.
5. Determine Best Program Duration
How do you know if you are providing enough time for the audience to know your SPIF program exists, understand the rules, and for it to influence their behavior? This can be a challenge if your SPIF programs are too short or too long. SPIF programs that are too short i.e. a month or less, risk having little to no impact. On the other hand, programs that are too long run the risk of burnout or entitlement.
Tip: Keep SPIF programs to no greater than three months. You should also not run more than two programs per year or you’ll run the risk of SPIF burnout. To avoid entitlement, consider making the programs unpredictable. Try to avoid annual cycles of starting or ending a year with them. Have a short build-up time but don’t skimp on the promotion.
6. Set-up a Budget
When it comes to SPIFs, a best practice is to set-up a budget between 3% and 7% of the total incentive program. How much you allocate depends on the importance of achieving your SPIF goals in relation to the other incentives in the mix.
Tip: Your objective should be to optimize the entire incentive budget without losing sight of the overall program goal. This requires understanding the impact that each incentive has on both the audience and the other incentives being offered.
7. Develop SPIF Program Guidelines
Clear and concise SPIF program guidelines are critical to a successful program. Your guidelines should identify who is eligible for the program, the SPIF available on each SKU, the process for claiming the SPIF, approval and payment processes, and support available for the program. As a best practice, also set timing expectations and be clear about start and end dates for claim submission and the program.
Tip: Clear and concise guidelines are key to avoiding the confusion and frustration that often plague SPIF programs.
8. Measure Success
Once you’ve determined a clear goal and have set a budget, it’s time to ask the question: How do you define and measure success? As a best practice, implement Key Performance Indicators (KPIs) associated with the program. The first thing that you’ll want to measure is ROI. How much did it cost and what was achieved? This ties directly back to your goal and budget. What is it you’re trying to achieve? How will you know you are achieving it? Second, you will need a clear method for measuring ROI, using KPIs designed to track things like the level of engagement, how the program influences the perception of your brand, and the sentiment around the program itself. Third, you will require a set of KPIs to measure program performance. These typically gauge the ease of submitting a claim, time to process a claim, time to pay, etc.
Tip: All of these measurements need to be monitored throughout the program to ensure the program stays on course to achieve the desired result.
This article discusses best practices for designing a successful SPIF program and is the first installment in our blog series which outlines all you need to know about planning, executing and measuring sales performance incentive funds. Incidentally, there are a number of best practices associated with executing SPIF programs which include: claim submission, processing and auditing claims, managing fraud and compliance, program communications and so much more. Stay tuned for these recommendations in a future post, but in the meantime learn more about the 360insights SPIFs module by visiting our website.