Keeping your sales teams hitting company objectives is a perennial challenge.

And one of the most effective tools at any experienced sales manager's disposal is the SPIFF.  

These short-term incentives can be a great way to achieve specific business goals— whether it's speeding up longer sales cycle, promoting a new product, or re-energizing sales generally.  

But, spiffs must be used carefully.

Unfortunately, some revenue leaders use spiffs reactively, as a crutch, to make up for lost ground.

But the more your sales team comes to expect spiffs—the more you risk damaging their efficacy. If poorly set up or communicated too early, they may not move the needle at all despite all the considerable effort to launch them.  

To help with your incentive strategy, we called on Christina Straggas, the Head of Global Sales Compensation at Equinix, and Maria Oczko-Canant, Head of Global Sales Planning, Compensation and Performance Analytics at Workiva, for their expertise on:  

• The characteristics of spiffs they've seen work especially well

• Data-driven spiff design (components, timing, etc.)  

• Best practices for spiff execution/rollout, and  

• Measuring spiff effectiveness

You can watch their full session on-demand, or read on for their insightful takeaways and more info about spiff sales below.

What is a SPIFF? (And what does 'spiff' stand for?)

“SPIFF” (also written sometimes as SPIF or spiff/spif) is a backronym for “Sales Performance Incentive Fund.”  

A Sales Performance Incentive Fund is a short-term incentive or bonus for a sale that companies use to improve sales performance. An example could be cash bonuses, prizes, gift cards, or a boost to regular commission payments.  

These are designed to ignite a quick spark of motivation in your sales force with rewards ranging from cash to luxurious experiences.  

Unlike traditional commissions, which are steady and ongoing, spiffs are about immediacy.

But it's not only about the reward—it's often about the thrill of the chase, a competitive spirit, (and critically, recognition) that comes with hitting this well-defined goal.  

Three key elements of spiff sales incentives

As our two experts shared at our virtual conference, NUDGE 2024, a spiff should be:  

1. Targeted to motivate a sales team to achieve a specific goal, aligned with broader organizational goals. Whether it’s pushing a new product line, entering a new market, or clearing out older stock, the objectives should be clear and compelling.  

2. Short term and timed well: Spiffs should be used sparingly and strategically, ensuring they remain a surprise. The unpredictability is crucial; you want to avoid complacency as it dilutes effectiveness entirely.

3. A stretch goal that's not guaranteed (it's intended to boost results beyond a normal expectation).

The origin of spiffs and their evolution

Believe it or not, the use of spiffs in sales has been around for centuries. A version of ‘spiff’ first appeared in the Oxford English Dictionary in 1859 and was defined as: “the percentage allowed by drapers to their young men when they effect sale of old fashioned or undesirable stock.”

Even back then, spiffs were used to ignite a sales force to meet hard-to-reach targets, like selling challenging inventory.  

By the 1900s, spiffs became a common tool in the sales incentive tool box. Most notably for Apple, who put spiffs on their PCs in the ‘80s and ’90s. These spiffs were directly responsible for helping to make the Apple PC a household staple, and that impact is still felt to this day.

According to ICONIQ’s 2023 Guide to Sales Compensation and survey, 71% of AE’s sales compensation plans include spiffs, and the use of spiffs has been increasing since 2021.

Today spiffs are just deployed with more sophistication. Instead of educated guesses, organizations (ideally!) now use modelling and analytics for a more data-backed approach, ensuring spiff programs yield ROI.  

Types of spiff sales incentives

Spiffs aren’t a one-size-fits-all. There are multiple ways to motivate and reward your team for hitting flash goals. Here are three main categories to consider:

1. Monetary spiff

Monetary spiffs, also known as cash spiffs, are a pure cash award.

2. Non-monetary spiff

Non-monetary spiffs leverage novel rewards. If employees are already well-compensated, non-monetary spiffs can be more enticing than extra cash. Examples include:

• Event tickets

• Travel opportunities

• Experiences

• Gift cards

• Electronics

• Paid time off

3. Surprise spiff

With this spiff, the reward is left a mystery until the goal deadline's complete. Surprise spiffs can be a great way to build anticipation and excitement.  

For a distributed, remote-first or hybrid workforce, you might consider a different approach. For example, instead of in-person recognition, you could consider setting up sales alerts in a communication platform like Slack. You could also consider sales contests, like a "power hour" where all your remote team members join on and work to hit a quota together.

Advantages of using spiffs

Sales spiffs are not always the answer to motivating a team, but when used appropriately, they can have a huge impact.

1. You can reignite a spark and motivate your team in a creative way

Sales team in a bit of a slump or disengaged? Spiffs provide an exciting incentive for teams that need a little extra encouragement.  

Knowing your team’s interests can help you choose a creative spiff to get them rallied around a goal. For example, consider rewarding a top-performing team as a group by sending them to a sports game or concert.

2. You can easily adapt sales incentives to short-term business opportunities

Sales incentives, like bonuses and commissions, are great for motivating employees with long-term or larger-scale company goals.  

Spiffs shine when it comes to short-term business needs or pivots. 

In a recent LinkedIn post from SaaStr asking about the effectiveness of spiffs in sales, Healy Jones, Vice President Financial Strategy at Kruze Consulting, provided an insightful response on the impact of using spiffs strategically.  

If you have identified a new untapped market, a spiff could be a quick way to rally efforts and produce near-immediate results.

QUOTE FROM HEALY JONES

Incentives in action: A real-world successful spiff example

So what types of spiffs have our compensation experts seen run especially effectively with clear advantages?  

Maria mentioned a spiff for building pipeline health—sometimes called a "pipeline blitz" or "prospecting blitz."

Maria's compensation team formulated this spiff to reward both individual achievements and team success. Involving inside sellers, the biz dev team, and account executives, the spiff was designed with targeted goals at the pod-level (a small focused group within the sales team).

What was key here, is that the business development and account reps could earn individual rewards for their contributions, but there was also a larger, overarching team goal. If the team hit certain numbers collectively, they would earn an even bigger reward.  

What were the advantages of this real-world prospecting blitz spiff example?

• This incentive structure worked well because it not only motivated individuals but also encouraged teamwork, which led to better overall performance and a healthier pipeline. Further, it had a targeted goal from the start (something with a baseline Maria and team could accurately track): improving pipeline health.

• It also generated a lot of excitement and engagement because the company could create a more substantial prize rewarding multiple team members.

The top challenges of using spiffs

Like any part of your sales incentives plan, you should always weigh the risks before introducing a spiff. Here are key challenges to watch out for:

Ensure teams aren't becoming overly-reliant on spiffs

While spiffs are a good tool to have, they don’t replace commissions or bonuses. These long-term incentives should remain the hallmark of your incentive compensation plan instead.

Using spiffs too frequently can distract your team from their other important longer-term goals. To ensure your team doesn’t go off course, design spiffs that complement existing sales commissions and bonus goals, and don’t compete with them.  

Watch out for diminishing returns

Spiffs rely on the element of surprise. If your team comes to expect spiffs, they’ll become less motivational and impactful over time.  

To combat this, use spiffs sparingly. Don’t just introduce a spiff for any business challenge. Choose the short-term outcomes you want to drive strategically to ensure you get maximum ROI from your spiff sales incentives.

Keep spiffs fair  

If your team perceives spiffs to only benefit certain team members, it can breed resentment.

When designing your spiff, make sure it's structured in a way that allows every participant a fair chance. Ensure team members aren’t unfairly advantaged by unbalanced territories or networks.  

Also, transparently track spiff metrics, so all team members can understand how the rewards are being measured and distributed.

Spiffs in the wild: A poorly executed sales spiff incentive example

Despite best intentions, some spiffs still don't work out as intended, or can even have unintended consequences in practice.  

Maria shared a situation where an organization introduced a spiff with the goal of crushing quarterly numbers. The directive was to pay anyone who got over 100% of their quota extra compensation.

Before the spiff started, the comp team had estimated that about 21 or 22 sellers would hit over 100% on their own, based on our pipeline health and the maturity of the deals. But, by the end of the spiff period, only 18 or 19 sellers hit over 100%, which was fewer than initially projected without the spiff.

All the same, the company ended up spending a lot of money, but didn’t get the additional sellers over 100% that they'd hoped for. In fact, the company paid about 3% extra in compensation, without seeing an increase in the number of high performers. The spiff example in this case didn’t drive the intended behavior—it ended up costing more and delivering less.

Why this spiff example went wrong:

1. Double payouts: The spiff was structured such that sellers got additional money for achievements they were already being rewarded for through their existing comp plan (accelerators for exceeding 100% quota).  

2. Unrealized expectations: The spiff was expected to increase the number of sellers who exceeded their quota, but actually resulted in fewer sellers hitting the target than initially projected without the spiff.

This example highlights the importance of aligning spiffs with clear, incremental goals and ensuring that the structure of the incentive truly motivates the desired behavior without redundant payouts.

3 key steps to introducing a spiff program at your organization

Think through these crucial steps to ensure you’ve covered your bases when launching a new spiff.  

Step 1: Set clear goals and metrics

It’s important to get clear on exactly what outcomes you’re trying to drive with your spiff before choosing the incentive, and ensure they align with broader business goals.

Once you understand what outcome you’re hoping for, define a clear, attainable goal for your team. Outline the key metrics you will be tracking to assess progress towards the goal, and ensure other details like the timeline are included, so your team knows exactly what to expect.  

Step 2: Choose appropriate rewards

Not all rewards are created equal. Strike the right balance between a reward that will motivate your team, but will also make sense with the ROI generated from the spiff.  

Consider what type of reward, monetary or non-monetary, will be most motivating to your team. Not sure where to start? A sales performance management system can use predictive analytics to help you project the effectiveness of potential rewards in your sales compensation plans.  

Step 3: Monitor and measure success

As with any component of compensation, no spiff should be set-it-and-forget-it.  

Continuous monitoring and post-campaign analysis or retros are vital. Did the spiff drive the desired behavior? Was the financial outlay justified by the results? The insights gained from this evaluation can inform future spiffs, making each one more effective than the last.

Track the performance of your spiff throughout its duration. Don’t wait until the end to assess its impact. If the spiff isn’t driving the desired behavior, be ready to adjust or discontinue it.

After the spiff concludes, compare the sales performance before, during, and after the spiff period to assess impact. Use these insights to decide whether similar spiffs should be part of your long-term comp plan.

A tip: While a spiff shouldn't be used to duplicate any part of your core comp plan, it can eventually evolve to become or replace a component of the core plan should it be deemed effective enough or a behavior you want to put on repeat in the long-term.

8 Best practices for crafting the perfect spiff

Creating an effective spiff is both an art and science. The incentives must be enticing enough to motivate but not so extravagant that they break the bank.

Cash is a common choice, but we learned during Maria and Christina's session that non-cash rewards often have a more lasting impact; imagine the allure of a weekend getaway, a high-tech gadget, or even a unique experience like a cooking class with a renowned chef? These rewards create memories and stories that go beyond a simple financial gain.

Below are some of the best concrete takeaways from the live session:

1. As a leader, be strategic about approving spiffs amid competing priorities

Because you have a limited budget to allocate to this type of incentive, you'll want to ensure you have a strategic seat at the table when ideas for spiffs are being considered. This to not only evaluate each spiff's proposed ROI and relevance, but also ensure administration or operations are considered early on.

Before agreeing to create a spiff, assess whether it will truly drive the desired behavior and deliver a meaningful ROI. If Marketing or Product's proposal doesn't align with the overall business goals or if the timing isn’t right, it's important to say "no" or "not yet" rather than proceeding with something ineffective or distracting.

Here's what Christina Straggas advises around sharing your standards or tenants with the rest of the leaders you work with:

By strategically saying "no" or "not yet," you maintain focus on high-impact initiatives, avoid unnecessary costs, and ensure that when spiffs are launched, they're set up for being able to pay out on a given metric, are trackable, and align with the broader goals of the organization.

2. Involve all relevant stakeholders in a spiffs' development

When designing a spiff, involve all relevant stakeholders from the start. This includes sales leadership, marketing, and sales operations, to ensure the spiff is well-rounded and executable.

Involve your operations team early in the planning process to ensure data accuracy and smooth execution, and bring in marketing to align messaging and timing with broader campaigns or enablement efforts generally.

3. Anticipate and address challenges sellers will face

Before launching a spiff, take the time to thoroughly understand the sales process from your sellers' perspective. Identify the specific hurdles or challenges they might encounter in achieving the spiffs goals whether it's market conditions, product knowledge gaps, or internal processes.

The criteria for earning the spiff must be clear and attainable. Ambiguity can lead to confusion and frustration, undermining the very motivation the spiff is supposed to inspire. Transparency in eligibility and objectives is key to maintaining trust and enthusiasm within the team.

Christina emphasized the importance of understanding what hurdles your sellers might have to jump through to achieve a spiff.  

Ultimately, tailor the spiff accordingly: remember any spiff is designed to be achievable, with rewards proportionate to the effort required. If a product is particularly difficult to sell, consider offering a higher incentive or providing additional support, like training or marketing resources, to help sellers overcome challenges.

Maria also recommends consulting with trusted sellers to see if they believe a given spiff is achievable and will drive the intended results. If the feedback indicates the team isn't ready, she advises holding off until the conditions are right.

4. Ensure the spiff is achievable and motivating

Although our experts agree, even as an incentive intended for results above and beyond the usual, spiffs should be challenging yet achievable.  

It's key to set realistic targets within reach for your sales team, and avoid creating incentives that are too difficult or too easy to earn.

If you notice that no one is on track to achieve the spiff on your leaderboard, consider adjusting the criteria and guardrails (they could be too tight).  

You'll also want to watch that spiffs don't require so much attention that they take a seller's eye off the ball for quota attainment generally.

5. Aim for a balance of proactive and reactive spiffs

Both of our panelists recommend to mix up your approach to spiffs, using them both proactively and reactively depending on your situation.

As Maria shared, if you run a reactive spiff, the key is to still ensure some work involved for the seller (vs. lowering quotas or issuing extra payouts or draws in a down market).  

For instance, if a seller can go over-and-beyond in a sub-set of the portfolio (when you may be past the point of no return on the full portfolio), they can gain the associated reward. A reactive spiff should still make someone work for the reward or have an expectation beyond a typical result.

On proactive spiffs, Christina urged us all to consider peaks and valleys in your businesses' annual calendar and how you could most influence these. For instance, in industries with seasonality, what might you do with a spiff designed for specific months when purchasing is expected to pick up? Think about this at the start of your annual planning and how you might ensure revenue over the course of the year with your limited spiff budget.  

6. Consider non-monetary rewards for spiffs, like meaningful recognition

While monetary rewards are effective, don’t overlook the power of non-monetary incentives, such as recognition or exclusive opportunities. These can have lasting impact.

As Christina shared, you'll always have outlier performers (top and bottom), so focus on significantly shifting the behaviors of those in the middle. When you elevate this population of sellers, this swings your momentum positively.  

As Maria shared:

"One time, we ran a contest where the top-performing reps got to present their winning strategies on a large company call. This was a non-monetary reward, but it was really powerful because it gave those top sellers a platform to showcase their talents and how they achieved the spiff.

This opportunity to present in front of their peers was highly valued. It allowed other reps, especially those who might be mid-level, to learn from their success. The recognition was meaningful, and it helped spread best practices across the team, elevating overall performance.

Make sure you're offering top performers the opportunity to present their winning strategies to the team, or provide access to exclusive events or meetings.

7. Prioritize clear, consistent communication (it's key) 🔑

To ensure a spiff is well-understood and embraced, clearly articulate its objectives, eligibility criteria, and rewards. Collaborate with the sales leaders to co-create excitement and transparency around the spiff and its tracking/leaderboards/administration from the start.  

In its public communication, detail how the spiff aligns with overarching business goals and what sellers need to do to win.  

Remember to:

• Provide regular updates and reminders throughout the spiff period to help keep the incentive top-of-mind and motivate participants to stay engaged.  

• Communicate the outcomes for the business to not only reinforce the value of the spiff but also encourage the related behavior long-term.

• Ensure sellers know whenever they're seeing a payment on a spiff on their pay check that it's for the outcome they drove. This helps you capitalize on the programs you're implementing as much as possible.  

And on the topic of communication...

8. Be strategic about timing and announcements

Be sure you carefully consider when and how you announce spiffs to avoid unintended consequences, such as sales reps delaying deals to qualify for the incentive.  

For product launch spiffs, align the announcement with the marketing rollout to maximize impact, but avoid announcing too far in advance to prevent gaming the system. You don't want deals to be potentially delayed due to the timing of a potential spiff.

FAQs: Spiff sales incentives

How do spiffs differ from bonuses or other sales incentives?

Spiffs and bonuses are both important components of a sales incentive pay plan. However, the two are quite different and should be deployed using different approaches.

Bonuses are a fairly standard part of variable compensation packages, especially for sales professionals. They are typically based around long-term goals, such as meeting a sales target within a quarter.  

Spiffs, on the other hand, are not a standard or expected part of a compensation package. They are deployed opportunistically and as a surprise to drive short-term results for a business. They go over and above typical compensation, helping to further motivate employees towards a short-term goal.  

Here’s a hypothetical example of a situation where you may use a spiff:

It’s the beginning of the quarter and your pipeline is a little low. As a result, your AEs calendars are looking sparse. As a sales leader, you’re worried that falling behind so early in the quarter could be difficult to recover from. So, you introduce a week-long spiff that will reward your BDRs for booking 10 meetings each with companies in a newly-identified market for the following week.  

While technically your BDRs may receive a quarterly bonus for hitting their broad meetings-booked targets, it’s a longer-term goal and won’t motivate them the same way a spiff will to produce almost immediate results in a specific market.  

In an ideal scenario, your BDRs would put their heads down and manage to generate a solid amount of meetings for the following week, ensuring you don’t fall too far behind on your targets.

What industries benefit most from spiffs?

A well-designed spiff can work well in almost any industry that has a sales-led go-to-market motion. Whether you’re selling software, physical inventory or something in between, you can use spiffs to motivate your sales force to meet challenging targets.

How often should spiffs be used?

Avoid overwhelming your sales team with too many spiffs at once. Keep the number manageable to ensure focus and prevent distractions from their core responsibilities.

As a rule of thumb, limit active spiffs to two or three at any given time and make sure they target different aspects of performance or product focus.

Are spiffs taxable?

Yes, spiffs are considered taxable income, so they need to be declared. They are taxed similarly to other bonuses on an employee’s tax return.

How much of your budget should be allocated to spiffs?

Both Maria and Christina emphasize that you should use spiffs to complement—not duplicate—your core compensation plan. Every spiff should enhance elements of a comp plan, but if a certain behavior or outcome is already covered, your spiff needs to focus on driving additional or complementary results.

There are also some ground rules to consider around how many spiffs you have for various roles at one time, considering spiffs are just one part of your overall compensation budget.  

Here’s more on budgeting for your spiff programs:

‍Go forth and (thoughtfully) incentivize

As Christina and Maria shared, spiffs can no doubt inject energy, foster a competitive spirit, and align individual efforts with company-wide goals, but, like any incentive, they must be managed carefully to avoid potential drawbacks, such as fostering a culture overly focused on short-term results.

In the end, the success of a spiff lies in its design and execution. It’s about more than just offering a bonus; it’s about creating a compelling narrative, a challenge that excites and a reward that resonates.

Done right, spiffs can be a catalyst for remarkable achievements and a testament to the power of well-timed, well-targeted incentives.