Spiff awards in the 21st Century should be linked to overall business strategy, systems and employee behaviors that all focus on customer needs. Spiff definition is a bonus for a sale. Generally, we define spiff as a reward paid by the manufacturer directly to a salesperson for selling a definitive product. There are many negative and positive perceptions of spiff incentive campaigns.
When spiffs are awarded to get rid of inferior merchandise that is not selling, often the customer need is not the first priority. The salesperson’s need to increase their income may be the motivation. However, when a spiff is used to launch a new product; make room for a newer model, where the customer is made aware and is also offered an incentive; or when the customer can benefit from an add-on component, spiffs can be a win/win.
Spiffs Gone Wrong
Sales spiffs can bring up images of under the table cash payola. The U.S. Department of Justice identified the potential for graft and corruption when they specifically labeled spiffs or kickbacks illegal for government purchases in 2007.
When consumers are steered to inferior merchandise by a salesperson looking to earn a spiff, customer loyalty is damaged. It was a big problem in the electronics industry many years ago and many retailers suffered as a result.
Tracking spiffs is also an obstacle. A cash spiff may not make its way to the sales person, when a greedy manager or corporation pockets the cash. High salesperson turnover and reduced employee loyalty is often the outcome.
However, if the intention of a spiff program is to reward sales people and also provide a quality product to the customer, sales spiffs can be a successful short-term incentive for all.
Spiffs Done Right
I worked in an industry that was always spiffing sales agents to up-sell or sell add-ons, and punishing them with poor reviews when they didn’t meet quotas. As we began to focus more on customer loyalty, our spiff program was tied into customer wants and needs, rather than forcing the customer to buy something they may not want. This was done though upgrading our computer systems.
When a customer made a specific purchase, related products were identified to suggest to the customer. Each upgrade or add-on had a spiff attached, but the spiff was not immediately identified to the agent. They just knew that the suggestion was something that may enhance the customer experience. A spiff re-cap was indicated in a monthly report and their paycheck.
This is similar to purchases we make online today, where related products are suggested based on shopping history. There’s a great article about automating spiffs in the auto dealership industry, “How do you motivate your sales people” that demonstrates how the emerging spiff automation as a win/win for all.
Rules To Spiff By
Spiffs should be short-term sales promotion campaigns that are in alignment with the overall business strategy.
Sales goals should align with corporate goals as a long-term strategy. The occasional spiff program should be part of the overall promotional mix.
While rewarding a salesperson for pushing a product out the door may meet your immediate needs to unload product, keep the consumer benefits in mind so that the sale is a win/win for all.
A spiff is a trade promotion/push campaign. Consider adding a pull component to drive customers to the sales team. Using social media to announce a clearance sale or to deliver a coupon is a cost effective tactic that builds goodwill among the trade, while increasing awareness and sales.
Don’t become spiff happy. Offering too many spiff campaigns becomes a big, potentially uncontrollable expense that may cause salespeople to hold off from selling your product as they wait for the spiff de jour.
Develop an integrated trade program that focuses on rewarding overall production instead of an occasional spiff payout.
Automated process for ongoing spiffs change behaviors, increase sales and build customer loyalty as people, processes and strategies are aliened around customer needs.