As Robert Dawson, longtime incentive market thought-leader and founder of The Business Group writes, “Incentive motivation is not about trips, toaster ovens, TV sets, and gift cards. Rather, incentive motivation is about investing. You are investing in something that can provide your company with the lowest risk and bring your company the highest return of any business investment you can make.”
Ideally, a well run sales organization builds an incentive program to deliver a measureable Return-On-Investment (ROI). The performance plan may include some or all of the following elements: Market research, manufacturing and logistics capabilities, ROI budget analysis, performance goals (team and individual), alignment and inclusion of sales channel stakeholders, product mix, and applicable metrics.
Estimate Potential Sales Increases – Through formal and/or informal market research, sales managers must determine what potential sales increases are possible for the duration of the incentive program and in the months that follow. This information will necessarily have an impact on manufacturing, accounting, logistics, incentive program budget, etc. Sales increases are a factor of many variables, including overall economic environment, product mix and new product roll-outs, competitive situation, strength of distribution channel partnerships, etc. Marketing intelligence can be gleaned relatively quickly and easily from forecast surveys of salespeople, dealers and distributor principals. Professional marketing intelligence firms can provide a more in-depth analysis of sales growth potential and product focus.
Determine Manufacturing, Services Personnel and Logistics Needs – Once you have estimated your sales for the incentive period, it is critical to work with internal resource providers to ensure that the products or services you sell will be available in a timely fashion. Manufacturing, warehousing, and logistics stakeholders all need to be in the loop. If you have materials made in China for example, forecasting errors will have a big impact on your ability to deliver, due to the obvious timing issue of getting products to the US. Failure to have the goods during the incentive program will not only cost you sales, but it may also damage your organization’s credibility going forward and put future sales growth at risk.
We'll cover more planning steps in the next blog so stay tuned.
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