The problem with SPIFs

Source: https://bravado.co/war-room/posts/hot-take-spiffs-are-a-terrible-idea

Here’s a question for y’all – what do you think of SPIFs?

• Love them?
• Hate them?
• Somewhere in between?

Here’s my take: SPIFs can be great, but only if they’re done intentionally.

Unfortunately though, lots of SPIFs are done in a way that feels more like putting a bandaid on a broken arm rather than having something to drive sustainable results.

Take for example a common scenario – a sales team is pacing way behind target for the quarter, so leadership launches a SPIF to pay sales reps extra for overperformance.

The result?

• The top performers who have a track record of overperforming get marginally better results
• The low performers who don’t believe they’ll even perform land at the same number they usually do
• The middle of the pack performers may or may not overperform
• SPIFs inadvertently incentivize the wrong behaviors, i.e. sandbagging, fluffed up activities, etc

In short, the SPIF isn’t driving any meaningful change. It is simply activity without improved achievement.

But…I believe there’s a better way to run SPIFs that gets more reps engaged, drives ideal behaviors, and helps lift performance in meaningful ways.

How to approach SPIFs differently

A couple of weeks ago, I was in a conversation with a group of ~70 sales managers and directors to discuss thoughts and opinions on SPIF effectiveness. 

One insight in particular stood out to me the most about how SPIFs can be used – and that is, using SPIFs to test things out before codifying into strategy…or into people’s compensation plans. For example, use SPIFs to test out:

• New sales process, i.e. implementing mutual action plans for the first time
• New tactics, i.e. video outreach
• New markets, i.e. new verticals outside of your ideal customer profile
• Compensation plan variables, i.e. paying out on opportunities generated vs. meeting held if you’re leading sales development teams

Basically, use SPIFs to test out anything you think will work in the long term, but don’t have a body of evidence to support!

What’s also super important when running SPIFs is to consider what behavior(s) you want to drive.

📝 Note: performance and overperformance IS NOT a behavior. It is an outcome. The question is, what are the behaviors that drive overperformance? 

Once you’ve isolated the 2-3 behaviors overperformers do differently than the rest of the team, use SPIFs to get everyone else on that behavior board!

Broaden the scope of ‘prizes’

Another interesting insight I picked up was how sales managers approach prizes. Hint: it’s not always about cash prizes.

So what can prizes be?

• Money, obviously
• Time off, especially if your company doesn’t offer unlimited PTO
• Work trips, if you have multiple offices around the world, a prize idea could be sending the winner to work at a different office and covering their flight, hotels and meals
• Gift cards
• Company swag
• Conference attendance, I’ve seen this work really well for inside sales teams

Get the funds

Aside from designing a SPIF, the hardest thing about rolling out a SPIF is getting the necessary budget and approval. 

That’s why next week in The One on One, I’m writing about how to get the budget and approvals you need to launch the SPIFs of your dreams! Oh yes darlings, we’re digging into the topic of building business cases and coalitions!

Definitely stay tuned for that! 

Recap

Closing it out this week, a few key things I hope you’ll walk away with:

1. SPIFs can be great, if approached intentionally 
2. Incentives don’t always have to be money (although, money is great!)
3. Performance isn’t a behavior, it is an outcome – consider that for your next SPIF design

Visual of the Week

This is a picture of my grandparents – Bob and Marjilee Blackwell – in the year 1958. Without writing an entire novel on the life and love story of my grandparents, I’ll say this – these two people are two of the most inspirational people I know. They’ve been role models for me on what it means to love, care for and look out for your family. They’ve also been role models for me in going after what you really want in life. They are and will always be a shining light in my life!