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Use of SPIFFS in Sales CompensationSpiffs represent a method of incentivizing certain kinds of sales rep behaviors and outcomes. Also known as a Sales Performance Incentive Fund, the Spiff is a concept dating back to as early as the mid 1800s and used by manufacturers as sort of kickback program to retailers that sell higher volumes of certain product lines. Since then, the concept evolved into very popular sales performance tool within sales teams.

Usually Spiffs are tied to performance and outcomes such as sales revenues, contracts, accounts or units sold, but they can also be tied to activities such number of calls or meetings.

In my experience cash is king and highly motivating for sales reps, but there can be instances where non-monetary prizes are used in Spiff competitions, such as vacation, trips, and retail products and services. Cash prizes are commonly in the range of 3-5% of base salary or 5-10% of variable.

Some best practices suggest that spiffs make up a small percentage of overall compensation, should be tied to driving sales of new products only and and that they should not be used to spike performance during a period, but I have had success using Spiffs with my reps as a boost during a quarter when it seems like energy levels were dropping and reps needed an excuse to get pumped up.

They key thing is to reward outcomes that are desirable to the sales organization, so be sure not to create a Spiff that might detract energy and focus on the overall sales targets.

Other factors to consider in designing a spiff program are the specific performance criteria, measurement program, duration of contest, eligibility of reps to participate, prizes and schedule for payouts.

A contest for within a contest
While sales team members are competing to be at the top of the company leaderboard, Spiff contests can be a fun side game and in my experience, as long as spiffs are not used too often, they can have a noticeable impact on overall sales.

To your success!

Photo Credit: nist6dh via Compfight cc

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Eliot Burdett

CEO at Peak Sales Recruiting
Before Peak, Eliot spent more than 20 years building and leading companies, where he took the lead in recruiting and managing high performance sales teams. He co-founded Ventrada Systems (mobile applications) and GlobalX (e-commerce software). He was also Vice President of Sales for PointShot Wireless.

Eliot received his B. Comm. from Carleton University and has been honored as a Top 40 Under 40 Award winner.

He co-authored Sales Recruiting 2.0, How to Find Top Performing Sales People, Fast and provides regular insights on sales team management and hiring on the Peak Sales Recruiting Blog.
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