There are lots of definitions given throughout history for the acronym SPIFF. Many believe it started in the 1900’s within the furniture industry as an acronym for Sales Performance Incentive For Furniture. Today, it is applied to a new set of words - Special Pay Incentives For Fast Sales. Regardless of how you play with the words, here are three quick rules to abide by when building a SPIFF.
Short Duration: Treat the timeline for your spiff just like you would treat a special offer for a customer – for a limited time only! You need to create a sense of urgency. The longer it runs, the worse it will perform. Cash is King: Yes, you can build them around a cool gadget, but it better be a really cool gadget like the iPhone. Otherwise your sales force will dream up tens of hundreds of other items they would prefer other than your gadget. Solution – give them the cash, and lots of it. Align With Financial Goals: There are two primary reasons to do a spiff – to push units or to drive quick margin dollars.
- In certain situations you may want to move inventory to reduce carrying costs or to get rid of last years items. Or, you may be falling short of your unit targets for
- The second reason is to generate more margin dollars quickly. This can be done by cutting a high margin product down to get a pop in volume while still preserving a healthy spread. If you move enough units you will more than surpass the break even in the short run.
Happy selling!
Too often Spiffs encourage or reinforce poor behaviors that might reap short term gains but create long-term problems. Companies managing to Wall Street always have issues as they seem to lose long-term vision as they manage quarter-to-quarter. It is a constant game of catch-up that can never be won. I saw it all the time at AOL.
Posted by: JZ | April 29, 2009 at 10:07 AM