"Coffee is for closers..."
Building a SPIFF program to drive the behavior you want
The word SPIFF originally appeared in the Oxford English Dictionary of 1859, which defined SPIFF as: “the percentage allowed by drapers to their young men when they effect sale of old fashioned or undesirable stock.” In 1890, the word resurfaced in the Pall Mall Gazette, in an article describing how London shop girls were rewarded for selling certain articles1.
SPIFFs are an important part of any good sales program. Well-designed SPIFFs can help accelerate the launch of new products, open new markets more quickly, create healthy competition across sales teams, and do much more.
Designing a good SPIFF program involves of number of key elements. Here are six that I think are the most important:
SPIFFs should have clear and measurable goals: Any good SPIFF program needs to have clearly defined goals. What are you trying to do? How are you going to measure it? The goals must be measurable and achievable. It’s okay to have stretch goals (that’s really the intent!) – but the sales team must believe they are achievable in order to be effective.
Timely and relevant: a good SPIFF also needs be timely. It should focus on some behavior or outcome that you are trying to drive now. Make the SPIFF relevant to the goals you are trying to achieve and make sure that the sales team can clearly tie those two things together.
Attainable, but not a layup. You want the sales team to know that they have a shot at attaining the goals. But your SPIFFs also need to be a challenge (e.g. no lay-up!). You want them to stretch, push, learn. Maybe you want them to pull in a deal that’s slated for next quarter, or drive a margin increase on a particular product.
SPIFFs need to be clear and easy to understand. Everyone on the sales team needs to be able to read the description of the SPIFF, know what it takes to get it done, and know that they have the potential to achieve it. It should not be written to be confusing or difficult. If you roll out a SPIFF and get a bunch of questions immediately – it’s probably not a well-written SPIFF. Everyone from the newest to the most senior member of the sales team should be able to say “I get it. I got it.”
Drives the right behavior. When you are designing a SPIFF – think about the behavior you are trying to drive, and make sure that the specific behavior will get the goal results that you are looking for. If you’re trying to launch a new product in a new market but reward people on sales of the new product in an old market, you won’t achieve your objectives. Make sure you know what the behavior is you are trying to drive (open new markets, establish long-term relationships with customers, improve margins).
Make SPIFF programs fair and transparent. Everyone on the team should have an equal shot at achieving the SPIFF. Make the criteria for achievement and success as clear and transparent as you can.
I’ve found that the best SPIFFs are designed in collaboration between sales leaders, revops and finance. We need to make sure that we’re designing SPIFF programs that drive the right behavior, can be measured and tracked and also fit within a defined spend envelope. The last thing you want to have happen is an “out of control” SPIFF program that blows your budget (I’ve seen it happen and it’s ugly… ).
Make tracking and reporting a central part of any SPIFF program. Put the SPIFF leaderboard up and show who’s on the board, who’s top ranked, etc. You can also make it a team SPIFF and make it a competition across different teams if that’s the behavior you’re trying to drive. Don’t wait until the end of the period and shout “surprise!”. “You’re a winner, and you’re a winner, and you’re a winner…”. Let people know. Every salesperson I’ve ever worked with wants to win and wants to see their name on the board.
I have seen a lot of creative SPIFFs over the years. I’ll share one interesting one that worked really well to drive the behavior we wanted. It was a little unusual because it was a SPIFF that was tailored for each salesperson in the organization (this would obviously be hard to do if you have hundreds and hundreds of sellers). We looked at the deals that each seller had in their pipeline for this quarter and for the next quarter. We looked for combinations of two deals that had to close – one in this quarter that was on the cusp of best case and commit (it couldn’t already be committed), and one for next quarter that was already in the commit that we thought had at least a 50% chance of getting pulled into this quarter with the right amount of work.
So we would construct a SPIFF that said something to the effect of “you need to close [XYZ] deal from this quarter, and [ABC] from next quarter, and you will get a bonus of $X,000.”
Did it meet the criteria?
Clear and measurable goals: Yes
Timely and relevant: Yes
Attainable, but not a layup: Yes
Clear and Easy to understand: Yes
Drives the right behavior: Yes
Fair and transparent: Yes
I want to talk about that last one for a minute. We went out of our way to make sure that all of the deals selected fit the criteria laid out above, and that every rep had an equal shot of getting those two deals closed (as best we could). We worked very closely with the sales leaders and SE’s to make sure we knew everything about those deals that we could before selecting them. Over the multiple years we ran this SPIFF (typically twice a year but not in sequential quarters) – we typically had about 1/3 of the sellers hit the goal. A great outcome.
Another important element in creating a good SPIFF program – vary it throughout the year. Don’t run the same program every quarter – people will try and game it if nothing changes, or get bored of it. I’ve always tried to have different SPIFFs every quarter because there are always different outcomes/behaviors I want to drive.
If you have other rules for successful SPIFF programs – I’d love to hear them. As always – ending on a picture of Ollie. Waiting not so patiently for me to cut up the steak in the picture.
Please let me know if there are any interesting topics you would like me to cover!
Best,
Steve