If you're looking for quick results from your sales team, consider using Sales Performance Incentive Funds (SPIFFs). These short-term incentive programs can be set up in many ways to motivate sales teams who want to earn more.

Setting up a SPIFF plan requires some foresight to ensure it promotes the correct behavior and doesn’t discourage sales teams. Learn more about what it takes to create and manage a SPIFF program and the pitfalls to avoid. 

What is a Sales SPIFF?

A sales SPIFF is a limited-time incentive or bonus offer given to sales reps when they meet specific goals. It stands for Sales Performance Incentive Fund Formula and can also be called a “spif” or “spiv.”

The duration of a SPIFF varies. They can be used for very short-term goals, such as hitting end-of-month sales quotas, or for long-term goals, like selling all remaining inventory of a discontinued product. 

Why Use SPIFF Programs?

A SPIFF works by rewarding action. While you can use SPIFFs for any possible sales goal imaginable, they're usually implemented to encourage immediate behavior changes among sales reps. 

SPIFFs work well for the following use cases.

Boost Short-Term Sales Performance

For reps making a significant portion of their income through sales commissions and bonuses, sales SPIFFs may influence them more than other actions, such as job promotions. 

Sales representatives can often increase output to meet short-term sales performance goals, even if it’s not sustainable in the long term. SPIFF programs work well for sales managers looking for a quick short-term boost in numbers.  

Drive Specific Goals or Products

Another benefit of SPIFFs: You can tie them to almost any measurable metric, from the number of calls made to the number of units sold. If there’s no existing compensation plan for a metric, SPIFFs can motivate sales teams to focus on the new metric. 

For example, a SPIFF may reward calling dormant accounts or increasing add-on sales — activities often overlooked in a traditional compensation plan. With a financial incentive, sales reps can quickly shift their focus to new goals.

Increase Team Motivation and Engagement

The life of a sales rep isn’t always easy. SPIFFs can breathe new life into the workday while fostering healthy competition. When they can earn more for doing more, it’s natural for sales teams to become more engaged. 

If you see lackluster results or participation, a SPIFF may be the right choice to motivate sales teams. 

Other Best Use Cases for SPIFFs 

SPIFF incentives can motivate action in almost any situation, but they're most often used to:

• Support new product launches.
• Prioritize specific campaigns like holiday sales drives or end-of-year blitzes.
• Sell old stock or discontinued products.
• Increase sales in an underperforming sales territory or region.
• Promote new products or the most profitable products.
• Gain competitive market share.
• Engage new sellers in training activities that help them better understand the product.
• Reward top performers when they’ve maxed out traditional compensation plans.

Learn more in our 2024 State of Incentive Compensation Management Report.

Different Types of Sales SPIFFs

There’s no one-size-fits-all, pre-set SPIFF. It’s common to mix different types of SPIFFs to reward a specific, desired behavior. Sales leaders can choose among the following strategies to meet their needs:

1. Product-based SPIFFs: Incentivize sales reps to increase sales of particular products or services, such as a per-item bonus for each new premium software package sold or increased sales commission on a specific product line. 

2. Activity-based SPIFFs: Reward reps who engage in behaviors that drive performance, such as increasing cold call counts, updating CRMs, or conducting product demos.

3. Quota-based SPIFFs: While reps may already earn commission when they meet sales quotas, SPIFFs reward those who go above and beyond (by reaching quota faster, reaching all their quotas, etc.).

4. Individual SPIFFs: Compensate each sales rep based on their own merit, whether through personalized goals unique to the seller or with competition-based rewards. 

5. Team-based SPIFFs: Reward the entire sales team instead of individual reps, creating a team-building atmosphere and encouraging collaboration and shared accomplishment. 

Sales managers may combine two or more SPIFF models to create the right motivator for their teams. For example, they may offer an activity-based SPIFF for individuals and a quota-based SPIFF for teams that reward specific product sales. 

7 Steps to Create a Successful SPIFF Program

By carefully planning and executing your SPIFF program, you can encourage reps and motivate your team to hit sales targets. 

1. Define the Purpose

Identify the behavior you want to change, whether positive (e.g., increase cold calls) or negative (e.g., discourage promoting low-margin products).

Phrase desired behaviors to motivate your sales teams (rather than focusing on bad behaviors, share the opportunity to improve).

Set clear and measurable sales goals with a realistic timeframe so the reps know it is a limited-time promotion. A SPIFF's short-term nature creates a sense of urgency and fits more easily into an annual budget plan. 

Some examples of clear goals include:

• Boost sales of discontinued products by 20% in August.
• Increase Q3 cold calls by 2x. 
• Have reps spend three more hours monthly in the sales rep training portal in 2025. 

Determine what tools you’ll use to measure performance and when to measure it: in real time or at the end of the defined period.

2. Decide the Focus 

Determine your target audience, whether individual reps, entire sales teams, or both.

If using team rewards, address fairness and how to balance contributions. If you’re worried that a team SPIFF won’t increase team effort overall, look into individual bonuses to even things out. 

You may only need a SPIFF for new markets, a specific territory, or a product team. If you don’t extend earning opportunities across the organization, be prepared with an explanation and ways for the rest of the company to earn more.

3. Choose the Right Sales Incentives

The best sale performance incentives are the ones your sales reps want. A cash bonus or gift card may seem the easiest choice, but it may not motivate everyone equally. Look at non-cash cash incentives such as paid time off, travel experiences, or even premium parking spaces. If you’re unsure what your teams value most, ask!

4. Ensure Transparency 

Plan the details, including the specific timeframe, payout processes, and any exclusions. Be sure to determine:

• Who can participate?
• Is there a cap on earnings?
• When will payouts occur?
• How will payouts happen (payroll, at an awards ceremony, or in an envelope at their desk)?
• Are there any activities or sales excluded from the program?

It’s just as important to share what qualifies for the bonuses as it is to share what doesn’t. If you only reward two products from the latest product line, explicitly state which ones are excluded, even if it seems like a logical conclusion. You’ll want no questions about what qualifies for the SPIFF.

5. Communicate Effectively

Sales reps will inevitably have questions about any new SPIFF plan. To get your SPIFF off to a good start:

• Communicate about the program a few days in advance. 
• Share the plan details verbally and in written form in a centralized location, such as the employee portal.
• Provide a FAQ that addresses top concerns.

Remind reps of the incentive program throughout the term. You can discuss the details during check-in meetings or performance updates. 

6. Monitor Progress in Real Time

Implement a system to track and monitor participants' progress. This system can include regular updates, progress reports, and leaderboards to keep participants engaged and motivated. 

A tool like CaptivateIQ can use real-time sales performance data and CRM updates to give sales managers a closer look at how the SPIFF is working. It also allows sales leaders to tweak programs and address inequities or inefficiencies in the compensation plan. 

Learn more: How to Adopt a Data-Driven Sales Approach

7. Assess the Program’s Impact 

After the program concludes, evaluate its effectiveness by analyzing the results and gathering participant feedback. Use this information to make any necessary adjustments for future SPIFF programs.

Best Practices for an Effective SPIFF Program

SPIFFs work best when they follow these rules.

Keep the Program Simple and Focused

Your SPIFF should be straightforward and easy to explain in one sentence. Focus on one behavior you can easily measure and benchmark. While you can combine SPIFF models, don’t try to run more than one standalone SPIFF program at a time if possible.

Offer Meaningful and Achievable Incentives

Rewards should be valued and attainable for all reps. Include smaller sales incentives for lower performers to motivate your team. Avoid gimmicky rewards like branded company gear with no monetary value outside of work.

Use Automation for Real-Time Tracking and Accurate Payouts

Sales reps want to know where they stand daily. Tools like CaptivateIQ update performance data in real time so reps can check their status and stay motivated throughout the event.

Another benefit of automation is fewer payout errors. CaptivateIQ’s reporting is so detailed that you can feel confident making accurate, timely payments rather than waiting for the end of the SPIFF to reward reps.

Potential Pitfalls of SPIFF Programs (and How to Avoid Them)

The success of a SPIFF program depends on setting appropriate goals and effective implementation. Here's how to avoid potential problems. 

Over-Complicating the Program

A complex SPIFF program can frustrate reps and reduce participation rates.

Start with clear expectations on what’s being measured, how payments are calculated, and when rewards occur. Address any concerns about overlapping incentives, such as existing sales bonus programs. (Can reps earn from both at the same time?)

Make rules simple to understand and minimize exceptions. Monitor the incentive program and make adjustments as needed, relying on rep conversations to guide your decisions.

Creating Unhealthy Competition

Avoid systems that pit reps against each other, which can lead to bad feelings and a toxic work environment. SPIFFs may allow top performers to push beyond earnings caps, but they can also discourage lower performers who have traditionally struggled to meet sales quotas. 

It’s also important to consider gaps in earnings and how a SPIFF program can further the divide.

Ensure that rewards are within reach of all reps, even if it means creating multiple reward tiers.

Failing to Track or Payout Accurately

Sales rep frustration grows if payout numbers don't match their expectations. Use real-time tracking tools like CaptivateIQ to monitor rewards closely, ensuring everyone receives credit fairly.

This eliminates the possibility of missing any rewards and takes the burden of tracking off your plate.

Sandbagging Sales

Sandbagging, or saving up sales activities to complete later, can occur more frequently during special SPIFF events. Reps may wait to report activities to receive bigger payouts under the more generous SPIFF rules.

Sandbagging can show up in different ways, including delayed contract signings, slow email responses, or hiding high-converting leads. To avoid sandbagging, try these methods:

• Don’t announce SPIFFs too far in advance.
• Consider rolling quotas rather than monthly cut-offs.
• Use CRM data analytics to look for sales pipeline inconsistencies.
• Reward honest, consistent pipeline activity and proactivity.

Eliminating sandbagging is nearly impossible, but tools like CaptivateIQ give you the data to identify and address it with your teams.

Easier SPIFFs with CaptivateIQ

Effective SPIFF programs are a great way to improve your sales numbers but they require planning and monitoring. Rather than leaving your efforts to chance, use CaptivateIQ to implement automated, logic-based compensation plans and check on rep performance as needed. 

Then, if you need to adjust your SPIFFs, you can manually override formulas or add one-off exceptions to boost morale, maintain healthy team dynamics, and reward those who deserve it most.

Sign up today for a demo with our team!