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What is a Sales Incentive?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 27 November 2016
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A sales incentive is some form of motivating factor that encourages a salesperson to exceed some specific sales criteria established by his or her employer. The incentive may focus on earning bonuses in addition to the standard commission, receiving one-time awards of cash or some type of goods or services, or some other benefit or perk that recognizes the outstanding contribution of the salesperson to the success of the business. Both small and large businesses often make use of at least a few sales incentives to encourage the sales team in their efforts to secure new business for the firm.

In general, the purpose of a sales incentive is to motivate salespeople to set goals that are above and beyond what is required to be considered productive. With the understanding that the basic salary and commission structure is there to reward acceptable sales efforts, the sales incentive goes one step beyond the regular and mundane. The incentive offers additional compensation of some type to those who excel at the profession and are able to generate sales at a level beyond the usual expectations of the employer. Incentives of this type encourage competition among members of the sales team, and will often encourage them to actively develop new strategies to winning business, rather than relying on the methods they commonly employ.

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One of the most common examples of the sales incentive is the cash reward. This approach often catches the attention of the salesperson, since it represents income that is above and beyond the usual salary and commission. It is not unusual for a business to run some type of contest that offers a cash prize to the salesperson who opens the most new accounts, or exceeds a certain figure in generated sales for a given period of time, usually a month or a quarter.

Another common sales incentive focuses on offering a trip with all expenses paid. With this model, the incentive is usually structured to provide lodgings, travel, and a stipend for food and other activities during the course of a long weekend, or a period of one to two weeks. Generally, the incentive not only covers the expenses for the salesperson, but also for a spouse or significant other. As with the cash bonus, the trip may be awarded to the salesperson who posts the largest increase in sales for a period, successfully sells the most units of a newly launched product or service, or has exceeded some other criteria established by the company.

In some cases, the sales incentive involves the extension of a nonmonetary item or any ongoing privilege associated with the workplace. For example, a salesperson may be granted the use of a company vehicle for a certain amount of time, or receive free lunches in the company cafeteria for a week, month, or some other defined period. While not the most spectacular of incentives, these types of rewards are often appreciated, since they convey the understanding that the company does recognize and value the work of the employee.

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