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Finding the right ways to motivate your salespeople can be hard. You want something that will help achieve your company goals while also being beneficial to the employee. A common incentive among sales teams are SPIFFs. SPIFFs can be complicated, so this article dives into their benefits and potential downsides.

What Are SPIFFs?

SPIFF stands for sales performance incentive fund. It is a short-term strategy to incentivize salespeople. In simple terms, it is bonus money. This bonus money can come from exceeding the target quota for a certain time period, or selling products labeled as SPIFF (typically because they are harder to sell than other products).

SPIFFs vs. SPIVs

Is there a difference between SPIFFs and SPIVs? There is no difference between the two terms, as both are performance incentive programs used by companies to describe certain long-term sales or incentives.

Are SPIFFs Beneficial?

Companies are always looking for ways to motivate their sales team to push past quota and make more sales. It is also helpful to push selling specific products. SPIFFs are one of the most common methods to motivate sales teams. SPIFFs can be beneficial for both employees and employers.

How SPIFFs Benefit Employees

  • Motivation. Any salesperson will say they are motivated by money. Money is a great motivator for all employees, but especially salespeople. Incentivizing employees to make bonus money through SPIFFs by making more sales or selling particular products is a great way to motivate them to produce more sales.
  • Financial gain. Salespeople can make a lot of money through SPIFFs. SPIFF challenges are common on sales teams and typically there is no cap on the amount of SPIFF a salesperson can make during a challenge.
  • Fun. An oft forgotten benefit of SPIFFs for employees is the fun that comes from them! Salespeople like to compete with other salespeople, and SPIFF opportunities lead to a lot of fun and camaraderie as a team.

How SPIFFs Benefit Employers

  • Increased profits. SPIFFs motivate employees to make more sales, which ultimately means more money and profit for the company. This is beneficial for the employer, and means that future SPIFF is more likely, which is also beneficial for employees.
  • Selling less-common goods. One way SPIFFs can be beneficial for employers is incentivizing salespeople to sell something that typically is harder to sell. This might be an older product that has been in inventory longer than other products, or higher-end products that have a bigger payout but are hard to sell due to the price point.
  • Culture. As was mentioned as a benefit for employees, SPIFF competitions add to a fun culture. They create a culture where there is camaraderie with the rest of the team. They also help create a culture that pushes employees while celebrating the victories for each other.

How to Properly Use SPIFFs

When coming up with a SPIFF program, a company needs to consider what motivates their salespeople to make a sale. A company also needs to be aware of the financial ramifications of a SPIFF program and whether it will be beneficial for the employee and the employer.

Step 1: Know Your Sales Team

Prior to implementing a SPIFF program, you need to know what incentivizes your sales team. What pushes them to make more sales? What bonuses or rewards do they like to be rewarded with? Understanding your sale’s team’s expectations and what will push them to be their best will help you implement the right SPIFF program.

Step 2: Set Rules and Expectations

Next you should have clear guidelines on what is expected in order to achieve SPIFF. Are they available once certain numbers are hit, over a certain time period, or after a certain product has been sold? It needs to be clear to salespeople what they need to achieve in order to get SPIFF.

Step 3: Implement a Plan

The final step is to implement the SPIFF plan and watch your salespeople go to work! Continue to push them and encourage them as they try to achieve the goals that have been set. Track each salesperson’s progress in relation to SPIFFs.

Potential Shortcomings of SPIFFs

Like any plan implemented to motivate your team or improve company culture, there are always some downsides. It is important to understand these downsides as a company so you know how to prevent them.

Expenses

While SPIFFs can help companies make more money, they can also be quite expensive if not done well. Companies need to be mindful of what SPIFFs they are using to incentivize their employees and make sure the bonus given doesn’t exceed profit for the company.

Toxic Environment

Competition can be a great way to motivate employees and create a fun atmosphere. However, competition can also create a toxic environment as salespeople try to boost their numbers or are at each other’s throats to win the SPIFF competition.

Greater Time

Another shortcoming of SPIFFs is that deals can take longer. This can happen when salespeople want to win a competition so they delay deals before the SPIFF competition in order to inflate their numbers once the SPIFF competitions occur.

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Questions You’ve Asked Us About SPIFFs

Yes, if a company is not careful, SPIFFs can create a toxic work environment that reinforces bad habits, poor behavior, or even illegal activity by employees. Before using SPIFFs, a company needs to be sure to weigh the pros and cons of SPIFFs.
Yes, SPIFFs are still taxed like other bonuses. They are viewed as incentive pay, which falls under the 1099-MISC. commission section of a W-2.

Tanner has over 4 years of HR professional experience in various fields of HR. He has experience in hiring, recruiting, employment law, unemployment, onboarding, outboarding, and training to name a few. Most of his experience comes from working in the Professional Employer and Staffing Industries. He has a passion for putting people in the best position to succeed and really tries to understand the different backgrounds people come from.

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