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How to Go About Creating a Functioning Sales Incentive Program


Salespeople are mostly motivated by personal incentives and at the forefront of their mind is the sales commission.  If that’s agreeable then the addition of other incentives, can get the best out of a salesperson.

A sales incentive program will focus your sales team so they are motivated and highly productive. The benefits of incentive rewards, are best explained in this article on incentive programs.

Types of Sales Incentive Programs

If you’re trying to enhance the productivity of your sales team, you first need to know what incentive program will work. Here is a list of sales incentive models:

Territory Model

This model is made for team-based cultures. When there is are multiple sales reps working in the same area, this can be an effective method. After every compensation period, the total sales for a certain period is calculated and split among the reps that worked during that time duration.

This is a good method that works if the territories are defined, and the sales team supports each other by sharing common goals.

Profit Margin

With this incentive program, your sales reps largely remunerated on company performance. This plan is common amongst startups that don’t have working capital for large base salaries. This program works well particularly when it’s teamed with a company share scheme.

Straight Salary

As its name suggests, straight salary is a system where your sales team receives a salary but no additional money for commissions.

This is best used in operations where the sales team is small and where everyone works together on projects. However, these plans don’t provide too much motivation for sales people. At if you do take this incentive program, make sure that you apply extra bonuses to keep your employees interested.

Commission Only

In this form, there is no direct salary for the employee. The sales rep will only receive money when they make the sale. However, this method tends to attract fewer candidates than the other methods. But, the ones that do it are confident they can make sales and meet the sales team’s goals.

Draw Against Commission

Just like commission only, this incentive program is based on commission. It starts on the first day of the pay period; the employee is given a specific amount that will start to be deducted from their commission at the last part of the pay period. After paying off the advance, the sales member takes the rest of the commission.

The only disadvantage is that dung lean months, your employees won’t be able to pay off your advance, meaning that they’ll start owning you money. If more of these months continue to occur, your company can get in a high amount of debt.

Salary Plus Commission

This is where you offer the sales team a salary and a commission if they perform correctly during the sales period. In order for this to be effective, you’ll need to track the individual sales to ensure that the splits and payroll is accurate and fair.

Tips to Improve Your Sales Incentive Program

Consider the following couple of tips to improve your current sales incentive program.

Know How to Motivate Your Employees

Knowing the main factors that motivate your employees is a crucial component in ensuring that the incentive program is a success. Make sure that the reward program rewards positive behavior with incentives that employees desire the most. For some individual employees, you might have to offer multiple incentives.

Keep it Simple

Don’t create a complex formula with multiple formulas and factors. Your employees will become confused and less interested in the incentive program. Because of this, you need to focus on the incentives that drive positive employee behavior. Most incentive programs fail due to the complexity of how rewards are won or the reporting.

Select the Right Compensation Metrics

Depending on what metrics you choose, it will determine the effectiveness of your program. So pick which metrics that will impact your company the most.


As you can see, creating a sales incentive program that’s right for your business and sales team takes some effort initially but when it’s operational the rewards for your team and your business will be realised quick smart.

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