Incentives 101: How They Boost Sales Performance

May 11, 2023
Diya Mathur
Diya Mathur
Diya Mathur
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Sales is a competitive field, and incentives can help companies attract and retain top-performing salespeople. 

A report by Deloitte states that 56 % of the organizations felt the need to redesign their incentive compensation strategy in the last three years because their plans couldn't keep up.

But what are incentives, and how can they be used effectively in sales? 

In this blog, we'll take a closer look at incentives and how they boost sales performance.

What is an Incentive?

Incentives are basically rewards or benefits given to individuals or teams for achieving specific goals or targets. 

In sales, incentives are typically monetary rewards such as bonuses or commissions. 

They can also take the form of non-monetary benefits such as promotions, recognition, or extra time off. 

Incentives are often tied to revenue targets, customer acquisition, or other key performance indicators (KPIs). Monetary or not, incentives are designed to motivate sales reps to achieve their targets and perform at their best.

Sales coaching tips are essential in navigating the challenging and competitive field of sales, as they help salespeople manage pressure, meet targets, generate revenue, and exceed customer expectations.

Incentives can provide the motivation needed to achieve these goals. By offering incentives, businesses can create a culture of performance and drive their sales teams to perform at their best, enhancing the company's sales branding image.

Incentives can also help to retain top performers. Salespeople who consistently achieve their targets are valuable assets to any business. Offering incentives shows that the business values their contributions and is willing to reward them for their hard work. This can help to build loyalty and reduce turnover, which can be costly for businesses.

Types of Incentives:

Types of Incentives

There are many different types of incentives that businesses can offer to boost sales performance. Some of the most common types of incentives include:

  • Commission: Commissions are a percentage of the sale that is paid to the salesperson.

For example, if a salesperson sells a product for $1,000 and their commission rate is 10%, they will receive $100 in commission.

Commissions are typically paid on a regular basis, such as weekly or monthly, and can be structured in different ways, such as tiered commissions for hitting certain sales targets.

  • Bonus: Bonuses are a one-time payment awarded to salespeople for achieving specific goals or targets. Bonuses can be tied to individual performance, team performance, or overall company performance. 

    For example, a salesperson may receive a bonus for reaching their monthly sales quota, or a team may receive a bonus for exceeding their quarterly revenue target.
  • Promotion: A promotion is a non-monetary incentive that offers career advancement opportunities to salespeople. Promotions can be based on performance, seniority, or other criteria.
  • Prizes: Prizes are non-monetary rewards offered to salespeople for achieving specific goals or targets. Prizes can include things like vacations, electronics, or other high-value items. Prizes are often used as a motivational tool to encourage salespeople to work harder and achieve their goals.
  • Recognition: Recognition is a non-monetary incentive that rewards salespeople for their achievements. Recognition can take many forms, such as certificates, awards, or public recognition in company meetings or newsletters.
  • Extra Time Off: Extra time off is a non-monetary incentive that offers salespeople additional time off work for achieving specific targets. This can be a valuable incentive for salespeople who value work-life balance.

How to Implement Incentives:

What are Incentives

Implementing incentives requires careful planning and communication. Here are some steps businesses can take to implement incentives effectively:

  • Set clear goals and targets: Incentives should be tied to specific goals and targets that are measurable and achievable.
  • Communicate the incentive program: Salespeople should be informed of the incentive program and understand how they can earn rewards.
  • Provide regular feedback: Sales managers should provide regular feedback to salespeople on their performance and progress towards targets.
  • Adjust incentives as needed: Incentives should be adjusted periodically to ensure they remain relevant and effective.

How do Incentives boost sales performance:

There is no doubt that incentives can be a powerful tool for increasing sales performance. When properly designed and implemented, incentives can motivate salespeople to work harder, smarter, and more effectively. 

Incentives can boost sales performance in several ways. Firstly, incentives provide motivation and encourage salespeople to perform better. By offering rewards such as bonuses, commission, or recognition, salespeople are more likely to put in the effort to meet or exceed their targets.

Secondly, incentives can help salespeople focus on specific products or services that the company wants to promote. For example, a company may offer higher commission rates for selling a particular product or service, which motivates salespeople to prioritize selling that product.

Thirdly, incentives can create healthy competition among salespeople, which can further drive sales performance. By offering rewards for the top-performing salespeople, others will be motivated to work harder to achieve similar results.

Finally, incentives can increase job satisfaction and loyalty among salespeople. When salespeople feel valued and rewarded for their hard work, they are more likely to be committed to the company and remain in their role for longer, which can lead to better long-term sales performance.

Overall, incentives can be a powerful tool to boost sales performance, by motivating salespeople, focusing their efforts, creating healthy competition, and increasing job satisfaction and loyalty.

Final Thoughts:

Incentives play a critical role in driving sales performance. By offering incentives, businesses can motivate sales teams to achieve their targets, retain top performers, and improve their bottom line.

Whether it's commission-based incentives, bonuses, promotions, recognition, or extra time off, businesses have many options for incentivizing sales performance. 

The key is to set clear goals, communicate the incentive program effectively, provide regular feedback, and adjust incentives as needed to ensure they remain relevant and effective.

There are some ways that can help you decide which incentive structure is ideal for your organization. However, it is not easy to religiously stick to one structure and more often than not, companies choose to opt for a hybrid option. 

Whatever your incentive structure is, Kennect’s incentive compensation management solution and sales performance management software provides real-time updates on your incentive compensation management program with a No-code plan builder that helps you customise your IC plans and deliver at 100% accuracy! 


Diya Mathur

Diya is a Product Marketing Associate and content writer specializing in Incentive Compensation Automation. Diya has honed her ability to bridge the gap between intricate software functionalities and accessible, reader-friendly content. Her articles are a testament to her dedication to breaking down intricate SaaS solutions into digestible insights that cater to both tech-savvy professionals and those new to the software landscape.


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