How to set up a successful sales SPIF

what is a spif

There are various ways to motivate specific sales rep behaviors and drive performance. Although properly prepared sales compensation plans address most overarching business goals, there are times when short-term rewards like SPIFs are necessary.

What is a SPIF? 

A SPIF, also known as a SPIFF or SPIV, is a short-term element of the overall incentive compensation management plan. What does SPIF stand for? SPIF stands for sales performance incentive fund or special performance incentive fund. It is designed to motivate specific behaviors of quota-carrying teams, such as salespeople, customer service agents, lead qualifiers, and sales engineers.

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What is a SPIF in sales?

SPIFs can be used across departments within an organization to improve performance or to encourage and reward specific behaviors. In sales specifically, leaders run SPIFs to inspire revenue-generating behaviors.

When and how are SPIFs used?

Sales teams often add SPIF programs to meet short-term goals like:

  • Closing a pipeline gap
  • Improving specific behaviors or metrics
  • Motivating reps to sell new customers or product types

To drive participation and reward attainment, employers offer various types of incentives or rewards to team members based on the rules set forth at the beginning of each SPIF program.

SPIF challenges

Well-executed SPIFs can be very effective. However, long-term or repetitive use can reduce their impact and diminish returns. Keep the following challenges in mind to increase the odds your SPIF program is a success.

SPIFs are often planned hastily

First and foremost, it’s common for teams to add SPIFs in response to unanticipated marketplace or organizational changes. As a result of this reactionary nature, SPIFs usually lack organization, planning, and strategy. Rushing into a poorly executed sales incentive program can cause more harm than good by driving the wrong outcomes, distracting reps, or creating goals that conflict with those of your overall sales incentive compensation plan.

That’s why it’s best to proactively plan SPIFs while building out your compensation plan design. Create a  step-by-step process for adding unexpected SPIFs to minimize the risks of reactively introducing poorly executed programs.

Poorly executed SPIFs are common

Additionally, leaders usually calculate SPIF programs outside of their main commissions management services. In doing so, this increases the associated financial risk and makes it more difficult to track or analyze. So, it’s best to leverage a commission tracker that allows you to quickly add customized SPIF plans to facilitate compliance and control monitoring.

Sales reps can’t keep their eye on the prize

Plus, most sales organizations encourage reps to track their SPIFs independently, using a manual commission tracking spreadsheet or the likes. This is both time-consuming and error-prone. And, reps can’t easily monitor their progress toward their overall attainment goals. This reduces the motivational impact of the program as they approach the end of the designated period. 

It’s difficult to prevent cheating

Along with difficult tracking processes, SPIFs may lead to reps holding deals until they can benefit from the SPIF. When reps know a SPIF program is about to begin, they may delay closing deals to count them toward the desired program goal. To avoid this, wait to announce the upcoming SPIF until it’s time for the SPIF to begin. 

ROI measurement isn’t easy

Measuring the success of a SPIF program after its completion entails a complex process further complicated by manual tracking. Sales compensation platforms facilitate post-SPIF analysis, so you can determine which SPIFs are worth repeating.

Too many SPIFs are counterproductive

Last but not least, offering SPIFs too often reduces the motivational impact they have, leading to diminishing returns. If you feel the need to offer SPIFs frequently, you should revisit and revise your overall sales compensation plan. Ensure it’s driving the right behaviors and types of sales.

How to execute successful SPIFs

Take the time to properly plan SPIF programs to increase your odds of success and ROI. Below we share how to plan for your first SPIF.

  1. Start with clean accurate historical sales data. This makes it easy to identify times and product lines best suited for SPIFs.
  2.  Plan SPIFs when you design your sales commission plans. These programs can be easily integrated into the overarching comp plan, so they are implemented when they’re most needed to balance seasonal variability and key milestones throughout the year.
  3. Use SPIFs to support established sales initiatives. These include planned promotional offers for new products or a new market segment to pursue.
  4. Determine the overall compensation budget and what percentage to allocate for SPIFs. Then carefully track SPIF spending throughout the year to stay on budget.
  5. Always measure SPIF performance against objectives. This prevents repeating expensive mistakes and increases future successes.
  6. Use past SPIF performance insights to help guide future SPIF planning and adjustments.

The key to completing this process successfully is clean accurate data. An integrated sales compensation platform, like QuotaPath, makes this possible.

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SPIF best practices

We’ve gathered some tips on how to get SPIFs right to further boost your success.

Set well-defined goals for each SPIF. Knowing what you want to accomplish at the outset makes it easier to communicate to your team and to gauge success at the completion of the program.

Provide clear direction to your reps. They need to understand what they need to do to earn the incentive and what target, such as X leads or Y deals at $Z, equals success.

Designate who is eligible for the SPIF. This prevents confusion and prevents disappointment.

Specify a clearly defined start and end date for the SPIF.

Consider all SPIF-related costs to prevent going over budget.

Avoid SPIFs that contradict your main sales compensation plan.

Keep it simple. Complicated rules only lead to frustration, disappointment, and less participation.

Don’t use SPIFs too often. They become less effective at motivating and exciting the team if they become the norm.

They should be unexpected. Otherwise, reps will sandbag deals if they know when SPIFs are scheduled.

Make them possible for everyone. So, instead of offering a reward for the top X reps, set a SPIF target all team members can reach, like anyone who hits 100% of quota.

Tie success to things reps can control. For example, complete X dials per day for so many days versus speaking to X prospects per day.

How to use SPIFs to drive key business metrics

You can use SPIFs to drive specific business metrics, such as NPS scores, gross profit margin, and more.

For example, you could reward SPIFs or kickers for products that generate higher gross margins. To motivate your team to sell and upsell your most profitable products, pay your team higher rates on new business or renewals that include the products that yield higher gross margins.

You could also give a SPIF on non-discounted deals to promote full-priced deals. Maybe it’s $100 for each one on top of the commission they earn from closing the deal.

Another SPIF might entail $250 every time the rep closes a multi-year deal to drive gross revenue retention.

SPIF examples

Companies with the best SPIF incentives tailored them to their teams. What motivates some sales reps may not appeal to others. Hence, it’s best to know your team and their preferences before selecting a reward for your SPIF program. Otherwise, you risk reduced participation and results. We find that successful SPIFs fall into seven categories:

Money – This is a popular choice, but not everyone is motivated by more dollars.

Praise & Recognition – Some people enjoy being in the limelight and see rewards in this category as potentially positioning them for promotion or advancement based on performance. These include:

  • Feature of top performer’s name on the leaderboard
  • Inclusion in the President’s Club
  • Receipt of a displayable award/trophy

Access – These types of SPIFs provide access to special information, support, and resources not available to everyone. These incentives offer professional advantages. But some reps may not value them because they don’t cost the company any or much money. These include:

  • The ability to select which sales engineer they’re paired with
  • A private calling booth solely for the individual’s use
  • First dibs on new accounts or the ability to pick a handful of target accounts
  • A one-on-one dinner with the executive team providing access to exclusive information
  • Opportunities to attend trade shows, trainings, or certifications to help advance their career

Power – This rewards individuals with the ability to participate in a change or process impacting the sales team. These include:

  • Working with the creative team to build the next sales deck
  • Inclusion in discussions about sales compensation structure
  • Influence over the terms and location of the next President’s Club

Gifts – Like money, gifts are quite commonly used as SPIF incentives. These include:

  • Basic gift cards
  • Books
  • Items to make work life better, like noise-canceling headphones or an extra-wide computer monitor
  • A subscription to a platform like Headspace or a music streaming service

Consider these examples to get your creative juices started once you figure out what is attractive to your reps.

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Unsuccessful SPIFs and solutions

Regardless of how hard you try, there’s always a chance you’ll fail the first time you use a specific incentive. If you can determine why it was a flop, make adjustments and try a variation in the future.

Some reasons a SPIF might fail include:

Incentives didn’t match the audience.

Although you can’t please everyone, the incentive needs to motivate most reps included in the program. Without this consideration, you’ll have poor participation and weak results. For a team consisting of diverse demographics, no single incentive will appeal to everyone.

That’s when it’s beneficial to offer reward points where X points are awarded for each unit achieved. Then at the end of the SPIF period, recipients can redeem their points for gifts of their choosing from a selection you offer. And, remember to reveal the gift options at the beginning of the program so reps know what they are working toward.

Promoting a team SPIF

Rewarding the entire sales team for hitting a team goal can negatively impact your team’s culture. This holds especially true if the team falls a few dollars short of a multimillion-dollar goal. Top performers end up feeling short-changed and weaker reps face backlash. Instead of team SPIFs, consider an incentive that applies to everyone who exceeds quota or another target. 

If you’ve made it all the way here, you should feel fully prepared to implement a SPIF that motivates and rewards your reps. Thank you for joining us!

Looking for an easier way to plan and manage sales compensation and SPIFs? Try QuotaPath’s free commission tracking software. Or, schedule time with a member of our team to learn how to optimize your entire compensation process. 

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