Incentive Goal Setting Best Practices

Incentive Goal Setting Best Practices

 

In last month’s post, I talked about getting audience segmentation right. It can make or break your program strategy. Same thing goes for goal-setting. Get it right, and your bottom line goes up. Get it wrong, and sales can go flat, along with morale.

So what do you need to know before setting goals? Ask yourself these questions:

  1. What is my business objective? Is it reasonable? Why or why not?
  2. What audience behavior needs to change for the program to be successful?
  3. How did my audience perform against goals last year? List pros and cons.
  4. Is training and support for my sales team sufficient?
  5. How will I track and communicate goals? What is the message for each segment?
  6. What would the financial impact be if I set goals too low or too high?

To set meaningful goals, think about these best practices: 

  • Gather accurate individual historical data. For example, if the participant had a different territory during the prior measured period, this may impact goal-setting, depending on factors not necessarily evident with historical sales records. In setting goals for new salespeople, you could use the previous salesperson’s historical data to get an idea of what an objective might look like.
  • Set a minimum qualifier. This mechanism ensures a minimum result or the performance of specific behaviors before a participant earns awards. It also fosters engagement—in order to be involved in an incentive, participants must do something first.
  • Align reasonable goals with corporate objectives. Whether you assign individual or team goals, determine goals that achieve equity among participants. If fairness in goal-setting is perceived, people will feel they have a better chance of earning something if they can compete in similar-type groups. This will also encourage middle and low performers to stretch.
  • Avoid “double-dipping.” Incentive goals should reflect incremental sales growth over base goals. Commissions are used to award base goal achievement, whereas incentive awards drive above-and-beyond performance.
  • Communicate. Let your target segments know exactly what you want them to do. For A players, it might be asking for a 5% increase, with a 10% increase for B players. Clear, frequent communication of goals, awards, etc. is critical throughout your program. It builds your program’s brand and engagement.
  • Keep an eye on your budget. In a closed-end structure, the number of winners is capped generally for budget control reasons. In an open-end structure, the number of winners is variable, and therefore, can be difficult to predict award payout. All things considered, goals need to be obtainable and should focus on recognizing more than just top performers.

Goals are the ultimate springboard for success in any earning structure. Investing the time to analyze, set, communicate and monitor smart, strategic goals will pay in program momentum and better ROI.

 

Go to our website:   www.ncmalliance.com

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