What is a SPIFF in Sales? Benefits, Types, and When to Use

Imagine it’s the beginning of Q4. You’re meeting with your company leadership to go over year-end targets. Your sales team is close to meeting their quota. Your reps just need a push to stay motivated. Now is the time to reveal the ace up your sleeve — sales SPIFFs.

Sales SPIFFs, or incentives for reps, are an excellent resource to help your team achieve their full potential. Below, you’ll learn why businesses choose SPIFFs to enable sales and how to create an effective SPIFF program using incentive compensation management software.

What you’ll learn:

• What is a SPIFF in sales?
• What are the different types of sales SPIFFs?
• Benefits of SPIFFs and when to use them
• Potential problems with SPIFFs and solutions
• How to implement a SPIFF program

SPIFFs, or Sales Performance Incentive Funds, are short-term sales incentives used to motivate salespeople to achieve goals or sales targets within a set timeframe.

For example, you might tell your sales team they can earn a bonus on top of their salary and commission, for selling [X] products above sales quotas by the end of the month or for booking [X] demos in a quarter that lead to a sale.

SPIFF reward types can vary from vacations to gift cards to event tickets, but they are typically monetary bonuses. For this reason, businesses must be mindful of budget constraints when allocating funds for SPIFF purposes.

While a SPIFF rewards individual salespeople for exceeding their personal sales quotas, a SPIV (Sales Program Incentive Voucher) incentivizes teamwork. Here are some key differences between the two:

If you’re looking for long-term, structured motivation, focus on commissions. SPIFFs are one-time-offered incentive programs. Sales commissions are part of a sales rep’s compensation plan. Salespeople usually earn a base salary plus a commission, typically a percentage of sales.

Businesses have many options for choosing SPIFFs for their sales teams. Let’s look at a few:

• Cash SPIFFs: Sales reps are rewarded with a direct cash bonus for hitting their goals.
• Ideal for: Immediate motivation and sales teams driven by financial rewards
• Non-cash SPIFFs: Like gift cards, event tickets, travel experiences, electronics, or PTO
• Ideal for: Acknowledging diverse bonus preferences. For example, you might survey your team to determine what kinds of non-cash bonuses interest them and plan SPIFFs based on their input.
• Tiered SPIFFs: Offer different levels of rewards based on how well salespeople perform.
• Ideal for: Motivating individuals and teams to push beyond the minimum goal
• Mystery SPIFFs: Keep salespeople guessing until the end of the promotion period.
• Ideal for: Building anticipation and excitement by adding a playful element to motivation strategies

When your business can’t seem to get over the hump for meeting necessary sales targets on deadline, SPIFFs are a great tool to lean on. Beyond the obvious of increasing sales, SPIFFS can help you:

• Boost motivation: Our State of Sales report revealed that more competition and fewer resources have made selling much harder. Most sales professionals do not expect to hit their quotas. Offering SPIFFs can be an effective way to reignite their fire and boost morale. Combining short-term goals with quick bonuses is often just the motivation salespeople need to close deals.
• Hit short-term goals: You can create a SPIFF program that incentivizes your team to achieve short-term goals, which can often feel more manageable. For example, you might focus on a plan to boost sales for specific products or one that addresses areas where you’re underperforming. Sometimes, you see better results when reps compete against one another, so brainstorm ways to gamify your SPIFFs for a little added fun.

Sales SPIFFs are excellent for short-term strategies that need extra fuel to reach the finish line. There are pitfalls to avoid if you want to see your incentive program succeed. Let’s look at some problems that can come with implementing SPIFFs:

Generic or low-value rewards, like a pizza party or a gift basket, won’t create enough excitement to drive performance.

• Solution: Incentives should be something your salespeople value. Get an accurate read on your sales team. Find out what motivates them with surveys or by asking during performance reviews.
• Pro tip: Involving your reps in the rewards selection process creates buy-in. It shows them that you listened to their input and are investing in what is valuable to them. This can encourage a stronger connection to the SPIFF program since they helped design it.

If a SPIFF only benefits top performers, it can breed resentment among the rest of the team and create a toxic work environment that disrupts productivity instead of encouraging it.

• Solution: Make sure SPIFFs are structured fairly so everyone eligible to participate has an equal shot. Goals should be attainable and not favor certain sellers’ abilities or networks over others.
• Pro tip: To create transparency for your team, track your SPIFF metrics using productivity tools to which everyone has access.

Setting goals that are too high or too low can demotivate your team. Too high? It may not feel doable. Too low? People might decide it’s not worth their time.

• Solution: Choose a goal everyone can meet and create healthy competition (if that makes sense with your team dynamic). Then, set clear, achievable milestones and a realistic timeframe for completion.
• Pro tip: Look at historical sales data and determine the baseline performance achieved without a SPIFF program. Then factor in market conditions, seasonal trends, and sales rep capacity. From there, you can set a goal for a motivational percentage increase in sales above the baseline. And, as always, ask your sales reps for their thoughts. They know their motivations better than anyone.

Before jumping headfirst into setting up your SPIFF program, let’s explore the different types of SPIFFs you could offer.

Designing an effective SPIFF can ignite your team’s performance and help you reach sales targets. Let’s look at the key steps you should take to implement a program:

What do you want to achieve with your SPIFF? A clear goal is the basis of your incentive plan, but you must also know how to get there. Make sure to include who can participate, key milestones, and a deadline. Define exactly how many products your reps need to sell, give an explicit timeframe, and communicate the program to your team.

You can integrate your SPIFF objectives into your CRM platform, so your team has the information at their fingertips. When you combine your CRM with sales incentive compensation management software, teams can use dynamic dashboards to easily view progress against goals and potential earnings.

Incentives only work when they provide value to your team. Cash is king, but you might consider offering other high-value incentives like flight vouchers and PTO for vacations. Tailor the rewards to your team’s preferences for maximum impact. Survey your sales reps and ask for their award preferences.

SPIFFs impact your budget, so it’s important not to offer SPIFFs if you can’t afford to. Reserve them for driving short bursts of momentum needed to reach a major target or two within a year.

Make sure everyone understands the SPIFF, including its rules, goals, and timelines. For example, a sales rep should know exactly how many new leads, demos, scheduled meetings, and closed deals are expected of them to hit the target. This way, when you check in with them, it will be easy to gauge their progress.

After you complete a SPIFF, analyze its impact on your sales performance. If it was successful, you can use it as a blueprint for future iterations. If not, you can make adjustments and try again.

The workplace is competitive, and keeping quality sales talent is increasingly difficult. That’s why SPIFFs are so helpful; they offer a fun, exciting, and temporary way to encourage motivation and teamwork in meeting sales goals. Overall, make sure you focus on positive motivation, fair competition, and clear communication to ensure a successful incentive program for your team.