How can you balance sales incentives for short-term and long-term success?

When you're trying to set up sales incentives with a long-term view in mind, it gets a bit tricky. You've got to keep the team pumped for the immediate wins, but also make sure they're playing the long game. It's about striking that balance where they're rewarded for nailing those quick deals but also for building solid, lasting customer relationships. Plus, you don't want it to be all about cash bonuses. Sometimes, opportunities for personal growth or a bit of extra time off can mean a lot more. It's all about keeping an eye on the big picture.

I've found there to be long-term, strategically aligned incentives, which are usually baked into the annual comp plan. These might be commissions, accelerators, or payouts on different product sets. And then, there are short-term, tactical incentives that are rolled out to address short-term challenges. eg bonuses for quick starts to a month or quarter, pipeline generation. Sales leaders combine these two to drive the behaviors and results they expect from their sales teams. It's a challenge is get the balance right. A mistake I've seen on the tactical ones is to make them reward what was likely going to happen anyway. eg, reward sellers for closing deals by the end of the current month. How much will a bonus make a difference?

Sales incentives should not only focus on acquiring new customers but also on retaining existing ones. Incentivize sales representatives to maintain strong customer relationships and provide excellent post-sales support, which will contribute to long-term success.

In my experience, the real trick with sales incentives is like walking a tightrope between motivation and sustainability. You want your team to chase those wins, but not at the cost of long-term goals. It's like trying to win a chess game by only thinking one move ahead. Sure, you might snag a few pawns, but you'll miss the checkmate. Balancing these incentives requires a keen eye on both the immediate targets and the endgame.

It's not just about quick sales; it's about building relationships. When your team is in it for the long haul, you see better customer loyalty and more consistent revenue. Plus, it encourages your team to really understand the product and the client's needs, which can lead to even more sales down the road. It's a win-win!

One thing I've found helpful is to view sales incentives as a double-edged sword. On one edge, you've got immediate motivation – it's like a turbo boost in a race, giving your team that extra push. On the other, there's long-term loyalty and skill development. It's not just about winning the race; it's about building better racers. The right incentives can create a culture of continuous improvement and dedication.

Remember, the principles of sales incentives are akin to planting a garden. You need the right balance of sunlight (short-term rewards) and water (long-term benefits) to make it flourish. Too much of one and not enough of the other, and you'll either burn out your team or leave them parched for motivation. It's all about finding that sweet spot where growth is consistent and sustainable.

Let me tell you about a time when we implemented a tiered incentive program. For short-term wins, we had instant bonuses – the quick sugar rush. But for long-term success, we introduced things like additional vacation days and professional development opportunities – the nutritious meals. This approach not only spiked immediate results but also fostered a healthier, more skilled team in the long run.

A tip I always share is to tailor your incentives. Not everyone is motivated by the same carrot. Some might sprint for a cash bonus, while others might prefer an extra day off or recognition at the next team meeting. It's like being a chef in a gourmet restaurant; you need to know your diners' tastes to please their palates. In my opinion, it is also valid sometimes to let people choose their incentive model to find the most suitable for each individual.

Keep things flexible and work with data. If you realise sales cycles are long and deal sizes are large, having monthly targets for example makes forecasting inaccurate and tough, and reps get demotivated when they're put into PIP quickly.