What Is a Spiff and How To Use It for Sales Teams

When a business needs to diverge from its sales incentive plan, it can use a spiff to realign incentives.

8/18/2020

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Diarmuid Glynn
Diarmuid Glynn

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What Is a Spiff and How To Use It for Sales Teams

As the manager of a sales team, you need to plan your year in advance. Before the next sales year starts, you will define an appropriate quota and commission structure given your company’s revenue goals. You want the new sales year to start with everyone fully incentivized and aligned with your business goals.

However, as the sales year progresses, circumstances change, and you may need to modify the incentives of your team. For example, you want more new logos or to enter a new market. Or you may want to encourage the upselling of a newly launched product. Or perhaps some unexpected churn in your accounts prompts you to focus more heavily on renewals, and so on.

Tinkering with your basic commission structure in the middle of the year is not a good idea, but what is the alternative?

You may have heard somewhere about a sales spiff, and that it can be used to solve your problem. This article will explain what a spiff is and how you can use it.

What is a spiff?

A spiff is a short-term, ad-hoc incentive for your sales reps. Most spiff rewards are financial, and it's a reward that is paid on top of their incentive compensation plan or commission structure for closing a sale.

What does spiff stand for?

Spiff stands for “Sales Performance Incentive Fund”. It’s sales jargon– and while there are variations of its spelling such as Spif or Spiv, it is most commonly named spiff.

What’s the difference between a spiff and a sales contest?

A spiff is a tool to meet sales goals in a short period of time by adjusting incentives, and it typically pays a cash bonus. A sales contest is a more playful tool to increase employee engagement, have some fun, and encourage teamwork. It rewards employees or teams with prizes like a trip, gift cards, or playful IOUs from the manager, like singing karaoke or the boss doing cold calling for a couple of days.

What are examples of a spiff?

Some simple examples of spiffs are:

  1. A $500 cash bonus for each new logo
  2. A $500 cash bonus for each team member if the company beats its Q3 target
  3. An additional 1% commission on sales of a new product in Q4

What to consider when you use a spiff for your team?

It’s important that you clearly define the goals, the time period, and the reward upfront. Make sure to invest time in communication and explanation. Run a few what-if scenarios to make sure you know the maximum additional budget you need.

Don’t create spiffs that are hard to administrate and don’t launch too many spiffs at the same time, because you will pull your team in opposite directions. Furthermore, don’t use a spiff on a permanent basis – if you want to keep it, make it part of the compensation plan, so it’s easier for budgeting.

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