Program Planning Continued

Last time we discussed the first steps for effective program planning. We'll continue with two more important steps.

Identify Sales Channel Needs – The best sales incentive plans have channel alignment – all people in the channel are in the loop and focused on helping each other to grow sales with the identified product mix. It is critical for sales managers to identify all of the stakeholders in the channel that can have an impact on sales and include them in some way in the incentive process. For example, if you are running incentives focused on driving sales through contractor sales representatives, you may provide an override to your employee salespeople and contractor managers. At the very least, everyone in your sales channel needs to be communicated with about the program goals and their potential benefits in pulling together.

Determine the ROI Metrics – For years, the incentive business has used “rules of thumb” to determine incentive program budgets, and in fact, these rules have been useful and effective. Examples include using 1% of gross sales or 10% of incremental sales to fund the incentive program. Today however, with financial, sales, and projection metrics available through enterprise information systems, a sales manager needs to attempt to weigh all of the costs associated with the incentive program with the anticipated incremental sales profits to estimate an ROI for the program. Determining an ROI will deliver the real value of the incentive program in good times and in bad economic years can provide solid justification for continuing to invest in sales incentives.

Next time we'll conclude the discussion of Program Planning.