In many channel incentive programs, the same sales representatives—usually the top 20%—get rewarded with every promotion, reducing the morale and productivity of the lower 80%. In a recent WorkStride report, 64% of organizations agreed strongly or completely that this was the case, meaning that not all participants in their programs were getting recognition for their efforts or improvements. This could be due to the fact that organizations with in-house channel incentive programs not managed by a third-party provider simply lack the tools or specialization required to be able to segment their promotions’ audiences appropriately.
Of the survey respondents, over half run promotions that are the same for everyone, regardless of region, performance level, or product type. 42% of organizations only run promotions that target all participants at the same time; 45% of them only have promotions that are tailored to specific audiences. Just 14% of organizations have a mix of the two types.
In fact, many organizations surveyed are unsatisfied with how these programs are currently run. Out of the organizations that do not completely customize each program for different audiences, 4 out of 5 of them strongly or completely believe that their incentive programs would be more successful if they were able to deeply customize promotions to different audiences.
In a study featured in Marketing Science, researchers found that the ideal promotion mix is structured around each individual sales representative’s performance; that is, the top 20% of sales representatives are more motivated with incentives that reward them for selling beyond their annual quotas, while the lower performers require more frequent incentives, such as reaching a specific quota each quarter.
Organizations also have the opportunity to incentivize the lower-performing 80% of their indirect sales representatives by rewarding based on overall improvement month-over-month or quarter-after-quarter, or by providing team-based challenges, such as pitting specific stores in a region against each other for a “grand prize” type of reward for all representatives at the winning store.
The data and commentary in this article come from our report, The State of Channel Incentives in the Manufacturing Industry. Get your copy today!