What is a SPIF in sales?
If you’ve just started in sales or sales operations, you’ve probably heard the word “spiff” or “spif” thrown around and wondered what it means.
This blog post will go in-depth into what it means to have a sales SPIF and why sales leaders use them.
What does SPIF stand for in sales?
So, what does SPIF mean? A SPIF is a backronym for Sales Performance Improvement Fund. A Sales Performance Improvement Fund is a short-term incentive or bonus for a sale used by companies to improve sales performance.
These could take the form of cash bonuses, prizes, a gift card, or a boost to their regular commission payments.
The term “SPIF” derives from the acronym “Sales Performance Improvement Fund.” You may have seen it with an additional “F,” and some people have even come up with funny ways to make that “F” fit.
- Sales Performance Incentive Funding Formula
- Special Performance Incentives for Field Force
- Specific Price Incentive For Final
- Special Pay Incentives For Fast Sales
- Sales Persons Incentive For Fun
These are all “backronyms,” where the words are made to fit the letters. The only remotely rational explanation for the word ‘spiff’ that we could find dates back to the mid-19th century in the Pall Mall Gazette.
Where does the word SPIF come from?
According to an article on Wikipedia, the acronym originates back to a term used to describe “The percentage allowed by drapers to their young men when they effect the sale of old fashioned or undesirable stock.”
The next reference to ‘spiffs’ is in a London newspaper forty years later, where it is again used to indicate clearing stock.
Why do sales leaders use SPIFs?
Sales leaders create a sales SPIFs strategy as a way to motivate sales reps. These incentives can come in various forms, such as an immediate reward for completing a sales objective or just something general for the team to provide motivation and fun during a sales lull.
1. Spiffs incentivize engagement
Employee disengagement is a genuine concern for many businesses. Keeping employees invested and efficient can be difficult, but SPIFs are one way to address this issue.
2. Increase market visibility and brand recognition
A SPIF program is a great way to keep a specific product or product line at the forefront of salespeople’s minds and outshine competitors.
The term “SPIF” dates back to Dell’s program to cut out competitors. Back in the 1990s, Apple and IBM used SPIFs to cut each other out from potential PC customers.
3. To push sales or contract renewals forward
SPIFs are helpful to motivate reps to push deals down the pipeline and make progress when a quarterly or annual deadline is nearing, and even during the off-season when sales take a yearly slump.
4. To support a new product or service launch
Creating a successful launch for a new product or service is critical. SPIFs can encourage sales reps to offer customers new products or services they may not have done otherwise.
5. To boost poor sales figures
SPIFs are most often implemented to help push meet or exceed flagging sales goals; a last-ditch attempt to reach the numbers, often regardless of cost.
However, properly planned SPIFs are a great way to push your sales team’s performance by incorporating short-term incentives into their long-term compensation plan.
Why Most SPIFs Fail
Every company uses SPIFs to increase sales, but many cannot demonstrate the ROI the SPIFs create.
The problem with most sales SPIFs is that they’re reactionary. They’re either a knee-jerk reaction to low sales or a short-lived attempt to boost new product or service sales.
Most ICM solutions struggle to handle short-term, last-minute promos and SPIFs, which means they’re administered on spreadsheets outside the core system. That reduces visibility and SPIF performance because the results are rarely connected to the overall plan.
When SPIFs are integrated into the long-term sales incentive program, they deliver several times more ROI in a predictable, measurable way. Read this next to learn how to make sales SPIFs that work every time.