Do you dangle the carrot or show your reps the stick? At Slintel, we’ve thoroughly experimented with using positive reinforcement to improve results in sales and have a bunch of success metrics to show for it.
SPIFFs and other sales incentives are a phenomenal way of getting the absolute most out of your AEs and SDRs, but only if used the right way.
So, unless you have the perfect sales engine that cannot be further improved or you’re not interested in improving your sales numbers, this post is for you.
A company can only be as ambitious as its employees, and this is doubly true for your sales reps. So how does Slintel manage to drive ridiculous amounts of ambition using one simple tool — SPIFFs? To answer that, we need to dive deeper into what SPIFFs really are.
What are SPIFFs?
Firstly, don’t confuse or substitute a SPIFF for your general sales incentives. SPIFFs are monetary incentives that go on top of the general sales incentives included in your reps’ contracts.
A SPIFF or SPIF is short for Sales Performance Incentive Fund. The fundamentals behind a SPIFF sales incentive is that it allows you to drive desired behaviors and best practices that in turn drive revenue, all with just a dangling carrot.
So why did we at Slintel choose to take the carrot route? Our formula is quite simple — we take care of our employees, and in turn, they take care of the company.
For instance, at Slintel we make sure our SPIFFS are so lucrative that SDRs and AEs that hit our reasonable targets are even able to outearn their managers and directors. Spending all that money to motivate your reps to go the extra mile can yield exponential increments in your monthly revenue, provided you’re able to build the perfect SPIFF.
An added advantage is that it also makes it a breeze for us to attract the industry’s best talent from the other organizations whose incentive structures pale in comparison. And if you think you’re the best of the best, then here’s your chance to join our rocket ship:
If you have the budget, then ultra-lucrative, realistic SPIFFs are the best way to nurture healthy competitiveness and ensure the highest productivity from your reps. Who doesn’t like extra money? Well, sell the right way, and all that extra money is yours!
But to build the right SPIFF sales incentive you need to understand the right behaviors that are conducive towards exponential growth.
Good Behaviors to Drive Using SPIFFs
Using lucrative spiffs with no objective behavior to drive is like shooting a gun with no target in sight. And when each bullet is a fat stack of cash, that isn’t going to be a whole lot of fun.
Here’s a list of good behaviors and best practices that we drive using SPIFFs to successfully achieve hypergrowth at Slintel:
1. Going Beyond Your Quota
The first step is always, always setting an achievable basic quota. An achievable quota is one that at least 80% of all your reps can achieve month in, month out, while every rep hits 100% at least once every quarter. Setting an unrealistic quota that’s above this level is like shooting yourself in the foot.
While your quota is covered by your basic incentives, you want your reps to go that extra mile. This is where you dangle the carrot. Most reps choose to settle with 80-100% of their quota and this can be a stumbling block for their performance, self-belief and ambition.
Through lucrative SPIFFs we can alter this behavior by motivating them to go beyond their usual 80-100%. Offering additional SPIFFs for every extra quota milestone whether it’s 100% or 200%, would seem measly in comparison to the extra revenue generated.
For instance, reps that have gone beyond their quota before the end of the month tend to kick their feet up. But show them a SPIFF and now they’re motivated to turn that 120% into a 200% — a ton of money for both parties.
2. Hitting Your Targets Within the First Half of the Month
An end of the month sales team scurry is a common sight for a lot of businesses out there. This adds a ton of uncertainty as to whether a business will be hitting their targets for the month. But you can mitigate this issue by using SPIFFs to drive your reps towards achieving their targets within the first half of the month.
So now your reps are not just trying to hit their numbers, they’re trying to hit them within the first half of each month. A tactic reps can use here is instead of hurrying prospects into deals closures at the end of this month they can incentivize them to close it within the half of the next month (after they’ve hit 80-100% of this month’s targets to take home the usual incentives, of course).
Since implementing the two previous SPIFFs, we’ve been able to smash our targets within the first half of each month, successfully having some of our reps achieve their targets within the first half of the month, before aiming to reach 200%.
3. Increasing Your Average ACV
Making sure your reps manage to continually increase their average ACV or Annual Contract Value will help you steadily scale your revenue over time. SPIFFs for the biggest deal in each segment will motivate your AEs to close bigger deals.
This SPIFF has seemed to work wonders for us as we’ve managed to grow our ACV by almost three times!
4. Each Rep Chasing the Highest Revenue
This one’s pretty straightforward, the rep with the highest revenue collected at the end of the month gets this bonanza SPIFF. This can help bring in some healthy competition and added encouragement to go above and beyond.
5. Annual Upfront Deals
Annual upfront deals are the way to go, unless of course, you’re able to bag those multi-year deals, because the last thing you want is chasing customers at the end of each month/quarter. Monthly and quarterly deals tend to be a common recurrence in B2B Tech/SaaS, especially if you’re an early-stage startup. SPIFFs are a great way to overcome this problem.
Giving out SPIFFs to reps that managed to get over 80% of their deals signed annually helped us 5X our annual upfront deals until we were able to scrap monthly and quarterly deals altogether in just our third year!
6. 75% of AEs meeting/exceeding their quota
While the previous SPIFFs were more towards driving individualistic behaviour and a competitive spirit, this one ensures your AEs work together as a team and help each other reach that 75-80% goal month-on-month.
As I said before, if 80% of your team aren’t hitting their quota you’re setting it too high. As a result, your team is going to lack that basic motivation.
To combat this we’ve added a SPIFF that motivates our AEs to work as a team and reach that basic 75-80%. This is almost an assured SPIFF (since you’ve set your quota at a level that 80% of your reps are able to reach MoM) before they can move onto chasing their individual SPIFFs.
7. Reps Leveraging their Own Network to Prospect and Close Deals
It isn’t common practice for most reps to look within their own network to prospect and close deals. This can be a goldmine of prospects and revenue that your reps are missing out on.
So, to nudge your reps into making this a habit, a SPIFF like this can work wonders and enable you to harness the power of your AEs own networks.
SPIFFs + Sales Incentives?
Make no mistake, you want to keep your regular sales incentives at the same level, with SPIFFs being the big fat icing on top. The whole point of these SPIFFs are to be so over-the-top that your revenue can be just as high-flying.
While it may seem to come at a price, it’s negligible considering that it enables your entire sales function to evolve and operate using the best practices while generating a LOT more revenue.
What We’ve Learned So Far + Pro Tips
Our experiments have proven that a whole lot of money in the form of behavior-driven SPIFFs can certainly get your reps to destroy their quota all year long. SPIFFs have also helped us cultivate the right behaviors and best practices that have enabled us to systematically scale our sales engine.
- Make sure that at least one or two of your reps are able to achieve each SPIFF every month. When reps are able to win those SPIFFs, the other reps get the motivation to chase after them as well, as opposed to it being a far-fetched dream.
- If even one of your reps isn’t making more money than your Director of Sales at least once in a quarter, then you aren’t putting enough money on the table.
Moreover, it’s a really proud moment when you see your reps getting that kind of money in return for the hard work and determination they’ve put into achieving it. You’ll know that your reps are here to stay 🙂