Incentives Done Poorly Aren’t Incentives at All

Clark AtwoodBy Clark Atwood

**Editor’s Note: The following blog was originally published as a reader’s comment on “Do Channel Partner Incentives Really Work?”, a Channel Partners Channel Management blog by Mike Spellecy,
vice president of solution thought leadership for Maritz Motivation Solutions.**

… I would like to point out a couple of additional thoughts regarding issues with incentives. These comments do not apply to all companies, but one or more apply to many of them.

It continues to amaze me that many companies that offer incentives lack the discipline to:

  • communicate the incentives in a timely manner. If the incentive is good from a specific start date, why is the announcement to the independent sales people done days, weeks or even months after the start date?;
  • effectively communicate the details in a planned rollout. We feel like we are pulling teeth in order to just get information to post in our portal for our sales people to even know about the incentive.

Most incentives lack reporting. As the contract holder with the provider, I would think that they would want to communicate, at least with us, as the contract holder, the progress of the incentive. Many companies seem to not track an internal ROI or performance of an incentive. The companies would do well to share success and failure of incentives with those charged with distributing information to, and motivating, the sales force.

It is amazing how many companies have a “Presidents Club” or equivalent incentive, yet they do not create a registration process in order to provide consistent (at least monthly) progress reports to the registered sales representative. They do not collect the data or distribute reporting and stack rankings to the contract holders.

So many incentives fail because they do not take into account the length of the sales cycle for which they are intended to incent. A quarterly incentive, issued on the 15th of the month, is not enough time to incent a sales representative to shift from what they have in their funnel to new, larger sales opportunities. The sales cycles are simply longer than a 75-day cycle and the provider ends up paying an incentive for only things that were already in the sales funnel. But at least they think their incentive worked at some level.

If providers want to give incentives for mid-to-large sales opportunities, the incentives must exceed the average sales-cycle length. The providers then need a quality training launch, consistent drip campaign, deal-registration process and regular touches to the sales representative.

Sales people are not all motivated by the same incentive. Instead of just making incentive decisions in a vacuum, the provider should poll the sales representatives or offer cash, gift or trip equivalents when reaching the goal.

The first question I seem to get from a sales rep when I inform them they have won a gift or trip is What is the 1099 hit going to be?” I have had sales reps turn down trips and gifts they have earned because they did not want to pay the taxes on them. When is an incentive not an incentive? When the cost of the incentive is not valued by the sales representative.

Providers may consider, as we have, not offering an incentive trip. Instead, we have reviewed the IRS guidelines and understand the difference between a “reward trip” and a “business retreat.” Our motivation driver is centered on a not-if, but-when goal. We have established a business retreat that, if the sales representative achieves the goal before our company achieves its long term goal, they will attend. If they fall short, they can financially make up the difference and attend.

Make no mistake, this is not a smoke-and-mirror exchange of words. We fully intend to have a business retreat that includes a lot of fun, but we also understand the value of having our top performers all together and want to capture a portion of that time in order to benefit them and us through a series of business meetings and trainings. This gives everyone the best of all worlds, fun and games, in a great location, training, feedback, future plan development and more, all without the tax disadvantages.

Providers would do well to treat incentives like product development. Plan, test, measure, refine, retest, roll out, scale, and report. A provider that can do these things well probably does products and services well too, because it shows they have the internal discipline to accomplish their objectives in a professional and systematic way.

Clark Atwood is president, Concierge Core Services, a national communications and technology broker with business-to-business sales representation for dozens of communication and technology providers.

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