6 Tips to Get Better, Faster Results from Your Next SPIF

Jan 19, 2023

SPIFs rarely close the revenue gap they're intended to — so why do we still use them?

SPIFs can be incredibly powerful tools to create the results you want for your business. But many sales organizations we speak to still plan one-time SPIFs last-minute and execute them late, forcing them to repeat the same pain every time they need a sales SPIF — and only seeing a fraction of the ROI they should.

We (and our enterprise customers) see much better, repeatable results when we create systems that can be used repeatedly to plan and execute short-term sales incentives rapidly.

The biggest challenge most organizations face with SPIFs is that they take so long to design that they are rarely as effective or impactful as they would be executed in a more timely manner.

This is preventable with a few simple practices, which we will explore in this article.

Foundational Best Practices for SPIFs

We've talked about SPIFs and sales team contests before. You've probably heard all the SPIF best practices time and time again, but let's repeat them once more to be sure we are reading from the same page:

Ring-fence 3-7% of the total incentive budget for SPIFs
Plan to run two to three SPIFs annually
Ensure they don't confuse your reps or divert attention away from the strategic objectives of the core compensation plan.

Despite these well-known and proven practices, many organizations do not approach SPIFs proactively, making them harder to execute and often significantly less impactful.

Why do SPIFs take so long to execute?

SPIFs are supposed to be a quick response to unexpected or suboptimal sales compensation plan outcomes. For many organizations, SPIFs arrive either too late to make an impact or miss the mark in terms of results because of a lack of visibility and flexibility:

The data needed to model the SPIF is not readily available or easy to pull from the various systems involved
Their Incentive Compensation Management (ICM) software cannot be adjusted easily or quickly enough to incorporate the new SPIF rules
Other organizational priorities delay or curtail explanations and coaching on how to best take advantage of it.

Those three issues result in SPIFs that don't have a measurable impact on behavior or never get off the ground early enough to make a difference.

So, how do we bring SPIFs to life in time to drive results?

1. Plan for SPIFs

Even though most organizations run at least one SPIF a year, they are still underprepared for it. Being proactive and planning for SPIFs is key to successful implementation. You may not know in advance all the SPIFs that will be necessary, but you can plan to find the time to look for opportunities.

The best way to do this is to make it part of your routine. Set regular meetings with sales leadership, top performers, and others within the organization to assess what is working and what is not and identify where there are opportunities to use SPIFs to move the needle in the right direction. One month before each quarter starts should leave ample time for planning.

Commit now by getting those meetings on the calendar with the appropriate stakeholders today.

2. Define a budget and communicate it early

As you finalize plans for the year, set aside a budget for SPIFs and communicate it with the Sales and Rev Ops teams. Knowing there is a budget and need will keep SPIFs top of mind and increase the likelihood that your team will spot opportunities for SPIFs.

Hold yourself and others within the organization accountable to make use of that budget to drive immediate behavior and growth. This will help you stay accountable and get your reps excited about the potential for earning additional incentives on top of their base compensation at some point during the year.

3. Create a library of SPIFs and frameworks

You've been here before and likely know the challenges your organization could face over the year and what short-term behavior you want to incentivize.

Instead of rewriting the book annually from memory, build a framework and library of SPIFs that worked in the past, particularly seasonal ones that reoccur. Besides successful historic SPIFs, this library should contain frameworks and best practices that can be customized as needed and other important information pertaining to SPIF management at your organization. With these prepared, you'll be better positioned to launch SPIFs rapidly when required throughout the year.

For example, retail firms know that at some point during the year, they will likely need to push excess inventory out the door in preparation for the next season. This means incentivizing reps to push those particular products without detracting from the sales of other lines or SKUs.

Some product overstock can be anticipated, but it is challenging to predict which products will miss sales targets or what additional commission will help get them out the door. They do still have a good idea of the problem.

In that scenario, a framework for SPIFs designed to move excess inventory could be designed up front based on offers that have worked in the past and pre-built into the ICM with the flexibility to tweak as the year progresses and the details become more apparent.

Historical performance is not a reliable indicator of future performance. Still, it can help us quickly get to a place where we can better model the potential impact of the SPIF using the most current data. Look back at historical SPIFs you've run frequently and build out the more common and successful ones while giving yourself the flexibility to change and build on them throughout the year.

4. Build in flexibility

Flexibility and agility are not words people associate with sales compensation management. Most ICMs are rigid systems designed to automate a specific, static accounting process. But sales and sales teams are not static, and neither is sales compensation.

As a result, almost all SPIFs are modeled and managed outside the core ICM program, typically in excel, because it is simple and easily manipulated. As powerful and flexible as Excel can be, the disconnect from the core system and all the data it contains significantly reduces the accuracy of any models and limits visibility into performance and efficacy.

Many things will change over the year, only some of which can be anticipated. You don't and won't know every SPIF you want to design and roll out before the year starts, but you can give yourself a head start when the need for one arises by:

Building a library of easily customizable SPIF frameworks, including rollout procedures
Increasing visibility into real-time performance data by automating collection and transfer
Emphasizing flexibility in sales compensation workflows to enable rapid adjustment

We can't anticipate everything that will happen in a given year, but if we invest in building flexibility and agility into our sales compensation workflows and software, that will enable us to respond to the unpredictable with more timely and impactful comp plan adjustments and SPIFs.

5. Model, Monitor, and Measure

It is essential to calculate the expected ROI on a SPIF before launching it. You should have enough data available to determine what a SPIF could cost you and what revenue lift or impact you can expect.

Modeling is also helpful for selecting between competing SPIFs for a given quarter. Once you have decided and rolled it out, monitor performance throughout its life. You want to be able to measure the following:

Rep engagement with the SPIF and sentiment towards it
Uplift you see relative to a prior comparable period
The total cost of the SPIF to the business.

The questions we want to be able to ask are: Was the SPIF worth it? Did it produce better results than no SPIF at all? How many reps took advantage of the SPIF and increased their earnings?

That will enable you to build out a library of SPIFs, allowing you to roll them out faster, with a good sense of which ones will work in particular contexts and which won't.

6. Standardize and Systematize SPIF Rollouts

It is just as important to plan for the rollout and execution of your SPIFs as it is to build out a library of SPIF templates. Standardize the structure of your rollouts. Gather your sales leadership and top performers to assess the needs of the business and identify the most effective ways to move forward and engage the sales team.

Get qualitative and quantitative feedback from reps on how much they understand each SPIF, and ensure you have protocols to coach sales reps on how to take advantage of SPIFs and ensure the whole team can benefit from them.

Most importantly, be ready to get any SPIFs into the hands of sellers early enough that they can have an impact. Show them how well they're performing throughout the quarter or lifetime of the SPIF. The longer reps go without seeing their progress toward the SPIF goals, the less motivating the SPIF becomes. There's value in surprising everyone at the end of the quarter.

Speed is of the Essence with SPIFs

SPIFs are fantastic tools for driving performance and the behavior needed for short-term tactical pivots, but most enterprises struggle to get value from them due to a lack of agility and preparedness.

The keys to high ROI SPIFs and rapid rollouts are:

Plan your SPIFs. They happen every year — why wouldn't you?
Set your budget for SPIFs and let everyone know about it — so you are committed to looking for opportunities
Create a library of successful SPIF templates that can be easily modified with up-to-date data
Make the SPIF modeling and creation workflows as agile and flexible as possible — shouldn't you be able to do that in your ICM?
Model and monitor continuously and use performance data to optimize and filter your library of SPIF templates for next year
Standardize and systematize the roll-out of SPIFs so that you have a communication framework that you know works ready to go

For more advice and tips to optimize your sales compensation program, book a call with one of our sales performance experts here.