Sales incentive programs, or SPIFF programs, are proven to be effective tools to increase local brand demand and loyalty through your trade partner channel. This is especially true if your trade partners also sell competitor brands. We’ve always known that salespeople are highly motivated by direct monetary incentives. We have seen this to be especially true when they can directly and in real time see the status of their claims, can expect a high approval rate, and receive their SPIFF check quickly.
Why do companies utilize SPIFFS in their channel marketing strategies? A common reason we see SPIFFS used is when a new product or model is being launched to the market, a brand may want to move existing inventory off the trade partner floors and shelves so the salespeople can then get focused on the new product being launched. Putting an extra SPIFF on the old models can be extremely effective in accomplishing this goal. SPIFFS are also effective to motivate new customer acquisition or to motivate sales of your most profitable products.
Conceptually, a typical sales SPIFF program is fairly straightforward to define and administer. It would work something like this: The channel marketing program manager will identify the goals and objectives, requirements for salesperson eligibility, and requirements for product (or other defined parameter) eligibility. This is communicated to the channel partners and is well understood. The salesperson understands clearly, is motivated to sell the SPIFFed product(s) and does so, then registers the product model, and ta-da! They quickly receive their SPIFF check. They are rewarded, happy, and now focused more than ever on the brand and its products. Right?
Unfortunately, implementation of SPIFF programs can often become burdensome for your trade partners and result in frustrated salespeople, poor program utilization, poor brand alignment and ultimately poor local brand demand. This not only completely defeats the purpose of implementing a SPIFF program, but it can actually incent negative behavior – causing salespeople to be so frustrated that they drop attention to your brand and move their attention to your competitors’ brands. Therefore, it’s critical that a SPIFF program be effectively set up and administered. Based on our work with some of the world’s strongest brands, we have found the following best practices in SPIFF program management:
- First and foremost, the SPIFF program should be integrated into the brand’s overall marketing activities and funds. It should be seen and managed as one of many tools in the marketer’s arsenal. It is ONE element of channel marketing. As you measure your overall channel marketing ROI, it should include your SPIFF incentives, along with the other channel marketing activities. So, your sales SPIFF programs need to have good integration with all your other channel marketing programs.
- Clear upfront program rules: The program should clearly communicate what products are eligible for reimbursement and how quickly salespeople can expect to be reimbursed. They should have smart rules programmed that are aligned with what salespeople are likely to do. By doing so, you will reduce the chance that salespeople experience the frustration of unmet expectations. Salespeople that are frustrated start focusing on the next brand.
- SPIFF reporting available to the salesperson on a real-time basis, in an easy to use format. Salespeople want to know the status of their SPIFF claim. Has it been received? Processed? Approved or denied? When will I get paid? Has the check been sent? A good SPIFF software management tool will provide all this information in a super easy to use form. (Remember, if it’s not easy for the salespeople to use, they won’t use it!)
- Real-time validation (and correction) of the salesperson’s submitted information. With real-time information validation errors are identified on the spot, so it’s easy from a salesperson to make a correction. For example, right at the point of information entry, if the salesperson forgets to input a field, or provides a model number that is not covered under the SPIFF program, or an invalid address, good SPIFF software will immediately cause a pop up window to occur, flagging the missing or wrong information. A good SPIFF software program will have things like the correct model numbers defined up front, so it won’t even allow an incorrect model number to be entered. This real-time validation provides immediate feedback in the form of business rules and reduces salesperson frustration. Who wants your salespeople to think they’re getting SPIFFed on a product they sold, only to get the disappointing news after the fact, that the product wasn’t covered? Again, frustrated salespeople results in them incented to focus on your competitors’ products. A good system will go even further to follow up with email messages to the salesperson, and when needed, quick personal outreach by phone and email.
- Pro-active and interactive two-way information and communications system: A good system will provide the brand’s prioritized messages to the salespeople when they log into their program portal. For example, they might see information about new SPIFF programs that are beginning, or a reminder to correct a missing field of information on an existing claim. A two-way communication system allows for better interaction vs. manual programs, or programs that require salespeople to mail in, fax in, or email the information.
- Individualized communication preferences. How do your retail salespeople want to receive your information and submit claims? A good program will let them identify this upon registering. For example, salespeople can identify to be emailed only, or some might prefer text messages or phone calls. For submitting claims, some might choose online submission or emailing claims with attachments, while others might prefer mail or fax.
- SPIFF Fraud Prevention Mechanisms: Unfortunately, fraud does exist, and it is estimated that between 2% to as high as 13% of claims are fraudulent, depending on the product category. A good SPIFF program will have business rules, and associated third party validation data that prevent fraudulent claims from being processed. So, for example, if the serial number is used more than once, or invalid addresses or consumer data is being submitted, it will be caught by the software rules immediately.
- Fast and accurate claim review. We can’t overstate the importance of this. A good program will review a claim and provide feedback within 24-48 hours. Salespeople are highly motivated by SPIFF Incentives, but we know from experience that if they don’t get quick turnaround on their claims and don’t receive their money quickly, they will disengage in the brand and turn their attention elsewhere.
- Automated claims review: Often SPIFF programs are implemented to motivate salespeople at a particular time of year (think holidays, the kick-off to spring lawn maintenance season, etc…). If your SPIFF claims review process is manual and dependent on people, then it simply can’t process the capacity spikes in situations like this. An automated system, with well-designed business rules can. It gets back to timeliness of response…. If the salesperson is not seeing feedback on their SPIFF claims with your brand, they’ll bale out quickly and redirect their selling energies.
- Friendly, experienced, and helpful humans: Automated software will dramatically reduce the number denial rate for SPIFF claims. However, there will always be those few salespeople that simply need a helpful human at the other end of the phone. A good SPIFF management program provider will have a team of experienced and helpful program managers for just such a case. The goal is to make the salespeople successful in submitting their claims, right? So let’s help them! The more successful they are the more successful we are in achieving our brand channel marketing objectives.
- Fast SPIFF payment turnaround time: If you do the above things, your turnaround time should be fast, which means it will be effective. Payback in days is ideal and no more than a couple of weeks. Especially with products that have short sales cycles, salespeople are motivated on a short selling horizon. If your SPIFF turnaround time extends beyond this horizon, you will lose their attention.
- One singular point of entry for the distribution partner’s channel marketing: The SPIFF activity should be available in the same common portal dealer personnel use for their other channel marketing activities (co-op, rebates, ads, etc). This avoids separate site with numerous passwords to remember. When it’s all integrated, it’s easier for the dealers, more efficient for the brand marketers, and will result in program objectives being met.
- Helpful SPIFF Reporting: By this we mean easy to access and understand reporting of claims status for the salespeople. They should be able to go online and quickly see the status of all their claims and know exactly how much was approved and then to expect the next check. It’s as simple as that. A report might look something like this:
A successful sales SPIFF program needs to run very smoothly, otherwise it defeats the original purpose and can actually backfire, causing salespeople to actually stop promoting your product and incenting them to turn their attention to your competitors’ products.
People (including trade partner salespeople) tend to take the path of least resistance. We believe if you implement these best practices into your sales SPIFF programs you will reduce those points of resistance and see more engaged salespeople and ultimately, stronger local brand demand and loyalty. Click here to learn more about how we helps our clients achieve their sales SPIFF program goals.