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THE HOW-TO GUIDE FOR SALES INCENTIVE PROGRAMS

Written by: Andy Marken

Article Overview: Everything you need to know about sales incentive programs. A complete checklist and series of recommendations to produce success.

THE HOW-TO GUIDE FOR SALES INCENTIVE PROGRAMS

Incentive programs have been used successfully to stimulate,
encourage and assist:
* Designers and engineers in meeting schedules
* Manufacturing & quality control in increasing product
quality/production
* Employees in improving procedures/activities
* Sales people in increasing sales
* Distributors, reps and dealers in promoting specific products
* Pulling products through to consumers

Whether you conduct your incentive program(s) internally or
with the assistance of an outside organization, the following
lists of dos and don'ts and the program checklist should provide
the guidelines you need to ensure that your next series of
incentive programs are successful.

Program Dos

Getting Started
1. Clearly define the objectives before starting a program.
2. Pre-test the market for the product before the sales
incentive program starts.
3. Keep the program simple.
4. Have a complete plan.
5. Gear it to marketing plans.
6. Tie in the program with the company's over-all theme and
objectives.
7. Tie in the promotion with advertising, p.o.p., and other
merchandising supports.
8. Promote the program well in advance.
9. Make the campaign two to three months long.
10. Devise a program that is personalized for your company and
product.
11. Leave room for flexibility in the program for additional
awards along the way.
12. Allocate sufficient funds for proper promotion of the contest
or incentive program.
13. Be specific as to the aims of the incentive program.
14. Communicate and stimulate with all means possible -- mail,
telephone, newsletters, ad specialties, etc.

Appeal to Rank and File
1. Tailor the program to fit the group participating.
2. Categorize dealers by sales potential, so they compete with
others of like size.
3. Run a program for company or supplier sales people to
coincide with dealer and distributor programs. One will sell
the other.
4. Promote the program to all dealers and/or sales reps and, if
possible, to their families.
5. Make the incentive program easily understood by those that it
is intended to motivate -- the most successful are often
extremely simple.
6. Make the program fair to both sides: the company trying to
make a profit, and the salesperson trying to make a living.
7. Offer an award that is commensurable in value to the assigned
task.

Don't Kid Them on Value
1. Offer a choice of several prizes.
2. Make sure the items are top quality; avoid misrepresentation
of value of merchandise.
3. Offer incentives only for performance over a base or average.
4. Make incentives cumulative so salesmen will save for bigger
prizes.
5. Keep in mind: money awards alone are difficult to promote
and spark enthusiasm for.
6. Take the "pulse" of the sales force to ascertain if the
incentive plans really do motivate the extra effort.

Follow-Up
1. Set up a follow-through program (mailers, etc.) to sustain
the program.
2. Recognize winners with an announcement to all participants.

Program Don'ts
1. Don't make it too long-range.
2. Don't set goals too high.
3. Don't create too much administration.
4. Don't use contests in which only top performers are winners.
This may result in committing yourself to a group of prizes
regardless of results.
5. Don't use gift prizes as a substitute for personal income.
6. Don't fail to plan ahead thoroughly and carry through
completely. If it's a cash bonus or commission, pay promptly
and extend recognition. If a trip, have every detail as
perfect as possible and carefully mix solid business with
pleasure. Extend recognition via press releases, company
publications, etc.
7. Don't change incentive plan in mid-stream -- carry through to
the end.
8. Don't allow exceptions. Rules must apply to all involved.
9. Don't make the plan complex. Everyone involved should know
clearly what is expected and how to get there.
10. Don't use only your company's own products as awards. It
limits the appeal and appears as if you're only trying to
save money.

Nice, but Not Too Nice
11. Don't offer trip prizes to places where the winners would be
uncomfortable -- below their ideas of "a nice place" or way
above, where partners would feel ill at ease and not properly
dressed.
12. Don't offer prizes of questionable quality or with an
unjustifiable price tag.
13. Don't let your own interest and enthusiasm wane as the
program progresses.
14. Don't wait until the last minute to tell your dealers.
15. Don't make a big splash at announcement time and fail to
follow-up. Standings reports and promotional follow-up
mailings are a must.
16. Don't run a contest any longer than 90 days.
17. Don't set bases so high that salesmen feel they don't have a
chance to win.
18. Don't limit incentives to sales or sales volume only.
Include incentives for other work such as displays, ads, new
accounts, etc.
19. Don't be dazzled by "get rich quick" dealer loaders. They
can come back to haunt you. A dealer with a load of year-old
merchandise isn't always too receptive to new requests for
orders.

Incentive Program Checklist
I. Objectives
A. Motivating Salespeople
1. To sell the salesperson on the advantages of
promoting his firm to dealers
2. To introduce next year's line
3. To spur recruitment
4. To give recognition for outstanding performance
5. To improve the morale of salespeople and division
managers
6. To increase dealer calls
7. To provide a chance for salespeople to achieve
recognition among friends and colleagues
8. To motivate the top third to sell even more, to
increase the number of winners in the second third,
and to convince members of the lowest third that
they, too, can be winners if they really try
9. To improve working habits
10. To improve creativity in selling
11. To provide objectives which are within the range of
each salesperson's personal capacity

B. Motivating Reps/Distributors
1. To create inter-area competition
2. To develop new account leads
3. To hike sales quota
4. To get new reps, distributors, and dealers
5. To recognize accomplishments of reps/distributors in
achievement of sales goals
6. To bring the company uppermost in the minds of
reps/distributors as they make their calls
7. To stimulate/place future orders
8. To change order pattern

C. Motivating the Trade
1. To accomplish personal contact between dealer and
rep/distributor
2. To promote consumer interest
3. To place deals with retail customers
4. To serve as door openers
5. To serve as "thank you" gifts to customers
6. To stop out-of-stocks
7. To generate new retail accounts, larger sales, and
increased sales staff competition
8. To introduce dealers to a wide selection of products
the company produces
9. To cope with buyer resistance
10. To induce larger quantity buying

D. Stimulate Merchandising
1. To speed the promoted product to the accounts
2. To promote displays
3. To place more P-O-P displays
4. To gain extra facings
5. To offset competitive programs
6. To draw people into stores selling your products
7. To boost sales during slow selling seasons
8. To educate sales personnel on how to sell,
demonstrate, and display a new line
9. To change old buying habits
10. To get important sales points across
11. To focus attention on product innovations

E. Increase Sales
1. To gain referrals for dealer operations
2. To help move off-season products
3. To smooth out seasonal variations
4. To help introduce new products
5. To move discontinued merchandise
6. To gain the lion's share of business through creative premium merchandising
7. To open new outlets
8. To sell high-profit items
9. To accomplish broad-line selling
10. To sustain the sales momentum attained the previous
year
11. To point up the advantages of volume buying

F. Company Benefits
1. To promote the new product
2. To educate salespeople
3. To emphasize certain products
4. To recruit new salespeople
5. To develop company-conscious rep/distributor/dealer
sales personnel

G. Sales Staff
1. To gather data about salesmen's selling techniques
2. To upgrade selling techniques

Dealer Incentives To Meet Your Objectives
1. Offer a "package prize" of premium and merchandise.
2. Offer a premium that can be readily used for the dealer's own
trafficbuilding promotions.
3. Select items with high user demand that are geared to
seasonal interest.
4. Pack your premium right in the merchandise carton. It will
ease your wholesalers' selling job.
5. Drop-ship premiums to dealers.
6. Offer certificates to encourage payment of invoices.
7. Try the total-purchase basis to keep your smaller accounts
happy -- set up a quota-like system of point earnings.
8. Select your dealer self-liquidators with an eye to their
possible use by the retailer in motivating his or her own
staff.
9. Bring the dealers' reading material -- the business press --
into your dealer sweepstakes with ads and articles.
10. Arrange duplicate prizes of dealer sweepstakes for the
salesman -- yours or your distributor's.
11. A questionnaire filled in by the dealer is a good way to get
your sales points across.
12. Hold a p.o.p. design contest. Let your dealers tell you how
they would prepare your pieces.
13. Take an industry problem and see how your dealers solve it
via an essay contest.
14. Let your dealers shine where they can. Hold a store design
contest.
15. Learn something. Hold a contest to see how many items your
dealers can relate to your product.
16. Ask your dealers to name your trade character(s), your new
product, your new model.
17. Challenge your dealers to select the word that best describes
your product.
18. How about a photo contest for the most unique use of your
product?
19. Ask your dealers to guess:
* The number of people involved in bringing your product to
the customer.
* The amount of taxes your product produces for federal,
state and municipal governments.
* The number of people your advertising campaign will reach.
* The date the 1,000,000th (your figure) item comes off the
assembly line.
* The total production for the month of _______________.
20. Get your other products into the act. Tie them into your
display contest for your major product.
21. Make sure that dealers compete only with stores in their own
class.
22. Offer a bonus in your display contest for those winners who
include other products of yours.
23. Offer a premium to everyone entering your contest.
24. Add that second sale. Offer your dealers an opportunity to
sell an item at half-list with every purchase of another item
of yours. Dealer gets full mark-up on both.
25. Offer dealers a bonus with each self-liquidator that their
customers request.
26. Get your advertising media into the act. They have a working
relationship with your dealers -- their customers.
27. Hold your sweepstakes drawing at your booth during your next
convention.
28. Offer salable accessories as purchase bonuses.
29. Increase your dealer mailings with theme-oriented inserts.
30. Tie-in your dealer incentive promotion with your customer
premium campaign.
31. Select a choice of premiums which will help dealers to
promote their own business.

1. Use incentive compensation to:
* Open up new accounts
* Get new brokers and jobbers
* Stop "out-of-stocks"
* Cope with buyer resistance
* Induce large quantity buying
* Sharply increase sales of full line
* Sustain the momentum attained the previous year
* Get business they wouldn't get otherwise
* Get salespeople to build displays
* Offset competitive programs
* Boost sales during slow selling season
* Aid in introducing new products
* Afford recognition and reward for outstanding performance
* Provide added stimulus to salespeople
* Generate excitement and enthusiasm in product sales
* Get salespeople into the habit of selling everything in
the line
* Encourage salespeople to be consistent producers both in
volume of business and in the number of sales
* Establish a spirit of fraternity throughout the company
* Draw people into stores selling its items
* Help distributor to sell
* Stimulate wholesalers to place future orders
* Get dealers to change their order pattern
2. Vary the time of year for each contest so your people don't
hold off their orders until contest time.
3. Keep the contest short. You can maintain peak excitement for
just so long.
4. Get your company president into the act. Have him do the
communicating rather than the normal bosses, the district
sales or division manager.
5. Don't be afraid of a brash, noisy note in your contest
promotion. It will sustain the contest from the kick-off
through the prize awards.
6. Put fairly low-cost prizes within the reach of all your sales
representatives.
7. Sales incentives are invaluable in introducing a proven
product to new customers.
8. Set realistic qualifying quotas within the reach of all
salespeople and you'll motivate even the poorest producers.
9. Set a money figure on each sale so your sales incentive
premium becomes self-liquidating.
10. Select premiums that create interest and are valuable enough
to justify large orders by distributors.
11. A recognized brand name makes the premium promotion
promotable to the distributor.
12. Make each specific sale an automatic entry into the
sweepstakes.
13. Arrange duplicate prizes for the salespeople calling on the
winning distributor.
14. Apply the same sales contest rules and principles to a
contest among nonsales employees on:
* Money saving suggestions
* Accident prevention
* Attendance
* Longevity
# # #

Related Articles
  How to use customer incentives to dramatically increase customer loyalty
  How to build customer loyalty
  Dealer Incentive Programs
  How to use incentive marketing effectively
  Using direct sales incentives to reward and retain

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