10 Incentive Mistakes to Avoid at All Costs

When planning an incentive contest, form a committee of sales superstars to help pick the incentives and plot the guidelines for winning. Surprisingly, they will set standards tougher on themselves than managers would. But because they are still members of the rank and file, the entire sales force will usually respect their decisions. You risk the exact opposite when managers set all the standards and rewards. This is not to suggest that guidelines should not be tied to legitimate corporate goals. It is most probable that the superstars, all goal-oriented people, will include this important consideration in their proposal.

Incentives are an important part of the psychological gratification of the salesperson and, therefore, need to be given the recognition and esteem associated with top management. Incentive programs that are cranked out mechanically and anonymously in a staff process are perceived by salespeople to lack status and prestige. At the very least, include comments from the company’s president or chief executive officer in promotional mailings to contest participants.

Too often, contest rules and prize choices are clad in iron, and it becomes impossible to improvise rewards that may be more appropriate in a specific situation with a given winner. For instance, a company once offered a top prize of a year’s use of an automobile. It was won by an antique buff who owned classic cars that were all more attractive and glamorous than the prize automobile. And because the car was a rental, it was not transferable. He had no cash value and gained no satisfaction from winning the prize.

Make sure to gear incentive rewards to reaching the company’s real goal. Many sales managers will talk about goal X but go on to design an incentive plan predicated on reaching goal Z. For example, a sales manager kicks off a contest by telling salespeople they need to develop long-term customer relationships. Then he reveals that incentive points are based on the amount of sales dollars accumulated. This usually happens because Z is easier to evaluate than X, and managers are afraid to try out an untested system. Such a plan can rob the future to produce favorable short-term results.

MISTAKE 9: FORGETTING THAT GOOD SALESPEOPLE ALWAYS WORK FOR THEIR OWN GOOD FIRST, NOT THE COMPANY'S

Sales managers are usually paid a set salary and so are motivated by the prospect of promotion and advanced status in the company. They often forget that when a salesperson is not performing up to par, it is because he feels there is not enough in it for him. When choosing incentive awards, then, be sure to find out what would make it worth that salesperson’s while. Sales force input is crucial to all aspects of incentive planning.

Since most sales managers enjoy influencing other people, they tend to pride themselves on improvements they see in their sales forces. They have a natural tendency to spend too much time on individuals who are poor performers and, therefore, more in need of improvement. This tendency, popularly called "do-gooder" management, has no place in a successful incentive program. If you are a do-gooder, fight the urge to make special concessions to poor performers.

These mistakes are common traps that most incentive planners fall into at one time or another. One learns to sidestep them with experience. But the next time you find yourself planning an incentive contest, try a new approach. Imagine your salespeople as customers. Identify their needs and what segment of the force offers the most promise. Of course, don’t forget to figure in a profit for the company.

Sara C. "Sally" Stevens has a dual background in both science and psychology and has worked extensively in both professional and scientific management settings in the past 17 years. As Vice President of the Chally Group, she assists companies with both large and small sales forces to select sales personnel to fit their selling situation and to maximize the efforts of their present sales force. Ms. Stevens supervises the research and has helped develop the instruments and measurement methods that Chally utilizes. She has also developed and presented stress management workshops and programs on sales and research findings. She is active in the Dayton Sales and Marketing Executive Association and has served as the chapter secretary for two years.