You recognize the value of sales incentive programs and understand how they can motivate and engage your teams or channel partners, move the needle on sales, and positively impact your bottom line. Now you’ve reached the fun part: determining how much your sales incentive program is going to cost and fighting for that money in your 2022 budget.
Before you put pencil to paper, here are three elements to consider when budgeting for a successful sales incentive program.
Type of budget
Sales incentive programs are based on either open or closed budgets. Here’s the difference:
- Closed budgets: designed not to exceed a specified amount.
- Open budgets: variable; the program spend is based on the performance delivered. This is generally designed so you pay only for incremental sales and over-objective performance. These types of programs almost always pay for themselves. For example, if your team exceeds sales goals, you’ll be spending more money out of your sales incentive program budget. But on the flip side, you’ll also be impacting your business in a very positive way and showcasing a great ROI.
Projected results and participants’ earnings potential
There are two elements to consider: projected results and potential earnings. Deciding the projected results from your sales incentive program will help you determine the overall value of your total budget spend. You can determine the potential earnings value by understanding the value of the reward that will motivate your audiences. It is a relatively simple ROI conversation from there.
Length of program
How long do you want your sales incentive program to run? There are benefits to both long and short term programs.
- Long-term programs: studies show these can drive higher levels of motivation, which leads to higher performance. Your sales incentive program should be built around the critical business objectives that are key to your organizational success.
- Short-term programs: we live in a fast-paced world and shorter programs could give you the flexibility to adapt to industry changes quickly and effectively. Your sales incentive programs could address seasonal or immediate market needs. Due to the shortened length of the program, they could also be effective at keeping program participants highly engaged to meet your goals.
There’s no better time than now to create a strategic sales incentive program that will change behaviors, create meaningful relationships with your teams or channel partners, and ultimately drive business success. It starts with a plan, and that plan starts today with your 2022 budget.
Budget already approved? Great! Here’s a step-by-step workbook to driving program success.