What is a spiff?
Spiff is an acronym for Sales Performance Incentive Fund (with an extra “f” just because). It’s a short-term incentive program aimed to motivate sales representatives with an immediate bonus. They are also called SPIFs or SPIVs.
Most sales spiffs involve cash rewards, but nonmonetary items such as recognition, prizes and trips work well. They can come in countless ways, but their primary purpose is to inspire greater focus and productivity.
Why should managers use spiffs in sales?
Spiffs in sales can help businesses meet or exceed sales targets. They can also:
- Boost market penetration of new products
- Increase lead generation
- Spur the movement of older inventory
- Inspire employee enthusiasm and performance
- Stir up healthy competition
- Introduce latest sales strategies
- Encourage fun and camaraderie among sales teams
What are examples of spiffs in sales?
Cash is the most popular spiff option. However, a 2016 study found that 84% of U.S. businesses use noncash rewards such as gift cards, merchandise and travel opportunities.
Some examples include:
- Extra 1.5% commission on a month’s sales of a new product or service
- $200 cash bonus for each team member if they surpass a quarterly target
- Gift card for dinner at a high-end restaurant for selling a certain number of subscriptions
- Premium merchandise with company logo, such as a jacket, laptop or watch
- Ticket to a concert
- Mini vacation
- Subscription to a book club, shopping website or gym membership
How should managers set up a spiff program?
Although spiffs are short-term incentives, they require careful planning for optimal results.
Define your goals
Establish exactly what you want your sales team to accomplish so you can explain it clearly. This gives your team a concrete, tangible expectation to achieve. Your goals may be to:
- Bring in a set amount of leads individually or collectively as a team
- Close a certain number of deals
- Sell a specific number of products
Spell out how goals should be met
You and your team should know what steps they need to take toward reaching or beating the goal you set. You can specify a sales method for them to use such as cold calling, emails or scheduling more appointments and demos. Set guidelines for who is eligible for your spiff program.
Select the spiff
You’ll likely inspire more sales efforts with a clear picture or discussion of what your team can earn. Vague notions often lead to vague action. Your team should know exactly what they are reaching for. Be certain that your budget can accommodate all potential winners.
Set a timeframe
Your team needs to know how long your incentive will last. What will “short-term” mean for a particular spiff program? Be sure that your reps understand they have one week, month, quarter or another period to hit their target.
Gauge effectiveness
Identify metrics that track your sales goals to use for reference. This will help you see if the spiff you chose would work again. ROI is the most significant metric as it lets you compare the spiff’s cost with the leads or sales the campaign produced.
