How to Increase Sales with Performance-Based Incentives

By Shauna Geraghty

0 min read

Sales teams often contend with the double-edged sword of attaching a specific and exact financial value to every effort, project and action undertaken. While employees in other departments can point to finished tasks, projects and accomplishments as evidence of their productivity, sales teams often cannot avoid having every singular employee action or event measured by value and cost.

As a result, sales teams are often inextricably tied to their “numbers” and incentivized based solely on them. Yet, all too often, these numbers may not be 100% indicative of actual performance and success. When this is the case, this leaves plenty of overlooked opportunities to further maximize sales team efforts with more appropriate performance-based incentives. The following 5 steps will help ensure that your sales team is appropriately incentivized and producing maximum results:

1. Manage the structure internally

The last thing you want is to leave your sales team’s incentive plan in the hands of another department. While operations, legal, finance and human resources may all want to weigh in on the value of the bonus pool, the distribution method or the awards and prizes offered, this is often a recipe for disaster. While they likely have nothing but the team’s best interest in mind, these other departments simply don’t understand the perceived value and unique understanding that the sales team has in relation to their closed sales and retained customers.

The finance department may be responsible for the final bonus budget and human resources may need to give the final approval on the method of distribution, but the sales managers must have control over the overarching plan. From prizes awarded and timing to the connection to goals and targets, the sales managers will know what motivates the sales team and position the rewards accordingly.

2. Establish the right goals and targets

Not every sales goal is going to be exactly the same. It can seem simple to tie bonuses to sales revenue, but what about market growth, target acquisition or customer retention? Instead of simply determining that performance-based incentives will be a percentage of sales revenue, you have to first consider the product channels and company goals.

For example, did your company release a new product with a different sales cycle this year? Tying performance-based incentives to sales revenue may inadvertently hinder your goals for promoting your new product line. If the new product needs time to ramp up, either because sales team members need to become more well-versed in the sales pitch or because the sales cycle has a longer process, your sales team may be far less likely to promote this product in lieu of products they have had historical success with.

Is it better for your company to allow sales teams to focus on what they know and are comfortable with, or is it better for your new product to have a successful launch and reception in the marketplace? Your answer will likely dictate the performance incentives you develop.

3. Make it about more than money

An unfair assumption is that performance-based incentives always have to be tied directly to revenue and cash compensation. While monetary bonuses are of course a valued and essential part of the incentive plan, there are other ways to acknowledge and reward positive sales team efforts. Depending on your company’s structure and policies, winning paid time off or flex time can be a great way to incentivize staff. Additionally, paid trips or prizes such as sporting event or concert tickets are a terrific addition to a department-wide contest and add some additional excitement and buzz to the mix.

Even milestone gifts, like company-branded bags, coolers and umbrellas can go far to encourage employees. This is a great way to incentivize both new and tenured employees as receiving a company-branded item for hitting a milestone, such as 100th sale or even the 1st sale, allows them to show off to their colleagues and peers in the company. If all your sales team “rock stars” received a special mug when they closed their first big sale then it would add an additional layer of pride and natural competition for those who don’t yet have mugs to carry to the morning staff meeting.

4. Promote both individual and team-based goals

One of the biggest complaints in sales departments is often that too much emphasis is placed on the individual’s performance and there is no reward for working together as a team. This negatively affects performance as employees end up more wary of working together than excited to work together. As a result, training and development suffer and workplace productivity stagnates while employees spend more time duplicating efforts individually than working together.

To mitigate this risk, create separate team and individual goals to inspire sharing and collaboration. If you have multiple sales channels, look to mixed-channel teams to leverage each other’s customers and maximize potential results. Announce team and individual accomplishments at the same meetings so that the same level of emphasis, awareness and importance is placed on the individual achievements as well as the team.

5. Inspire with and without incentives

The last thing you want is to create a culture and work ethic based entirely on “what’s in it for me?” While your incentive plan should encourage and inspire the sales team, it cannot become the sole motivation for performance. To avoid this potential pitfall make sure to make some rewards and acknowledgements public, but without financial compensation.

Take time to call out employees’ successes and efforts, giving them the opportunity to be “special” in front of their peers. Consider starting a “Hall of Fame” and listing special achievements in a public place, such as a break room or waiting area. Issuing monthly or quarterly certificates to acknowledge top performance is also a way to promote extra efforts. You can segment for as many goals and targets as you have, just make sure to keep it reasonable so the legitimacy of the acknowledgement remains. The last thing you want is to start handing out “participation ribbons” and devaluing the entire incentive program.

If your performance-based incentive program is tied entirely to sales revenue, you should likely be considering opportunities to improve your program and inspire your sales team. The benefits of creating a well-rounded plan cannot be underestimated – it can mean the difference between a lackluster sales performance and record-breaking annual revenue.


Shauna Geraghty

As the first U.S. employee, Shauna helped to scale Talkdesk to over 1,000 employees in 7 offices globally. During her tenure, she has built Talkdesk's Marketing, Talent and HR functions from the ground up. Shauna has a doctorate in clinical psychology and has applied foundational knowledge from the field of psychology to help propel Talkdesk along its hyper-growth trajectory.