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What is a SPIFF? (Not the Spaceman!)

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If you grew up reading Calvin and Hobbes, you’re probably thinking of Calvin’s alter ego, Spaceman Spiff. But in the world of sales, SPIFF stands for Sales Performance Incentive Funding Formula.

A SPIFF is essentially an immediate bonus that gets paid to a salesperson during a temporary promotion period. For your sales team, that can be pretty exciting. It can significantly impact their compensation for that quarter. Additionally, it should give your company a nice revenue boost.

So, when do companies run SPIFFs? Generally, a company will announce a SPIFF in these two scenarios:

  1. At product launch to incentive the sales team to promote the new product
  2. At the end of a season to incentivize the sales team to sell excess inventory

What We Like About Sales Program Incentive Funds

A fun way to rally 

SPIFFs are great for rallying your team around a shorter-term goal, e.g. building awareness about a new product or trying to sell excess inventory. They can also be a fun way to engage with your team in a different manner. For example, a SPIFF can be a straight-up cash payment, or it can be something different like a four day trip to Costa Rica! 

A sense of urgency

SPIFFs can accelerate how quickly your sales team learns how to pitch a new product. Without a SPIFF, a salesperson may default to pushing an older product that he or she knows very well. After all, they’re better-versed in communicating its value props to potential customers, and they’re more confident they can nail the sales pitch for the older product. A SPIFF can create a sense of urgency for your sales team, motivating them to learn and practice a new pitch that highlights the benefits of your newest product.

Mistakes to Avoid

Twice a year is plenty 

You don’t want to run SPIFFs so often that your team starts to anticipate them with every single product launch or short-term initiative. Running SPIFFs too often can lead to some negative side effects like the sales team being demotivated when there is no SPIFF. The sales team may try to game the system if they think they can slack off one quarter and simply make up for it the following quarter when a new product is scheduled to launch. Try to stick to running SPIFFs twice a year.

Not all customers are the same

If you are selling products or services to governments and non-profit organizations, it may be best to avoid implementing a SPIFF. It can be considered illegal because the potential buyer does not know that the salesperson is incentivized to recommend one product or service over others. 

The key to implementing a SPIFF is having a commissions model that is flexible and can be modified to reflect the parameters of the SPIFF.

Flexibility is Key

The key to implementing a SPIFF is having a commissions model that is flexible and can be modified to reflect the parameters of the SPIFF. For companies that rely on Excel models or manual commissions calculations, the introduction of a SPIFF means spinning up an entirely new Excel model. 

CaptivateIQ makes it super easy for companies to implement SPIFFs. Our flexible compensation management platform allows you to make ad-hoc changes or quickly layer in SPIFFs for your team. You can either automate SPIFFs by adding them to compensation plan logic on the backend, or you can manually override formulas and make adjustments for one-off cases. This allows you to implement SPIFFs anytime with ease.

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