Want to know the truth about sales motivation that most leaders miss?
SPIFFs aren't just another bonus - they're the difference between hitting your targets and blowing past them.
I understood the importance of getting SPIIFs right during a quarter (years ago) when our team was struggling with a new product launch.
Sales were flat, energy was low, and we needed a spark. We implemented a targeted SPIFF program, and within weeks, the product went from our worst performer to our best.
That's the power of a well-designed SPIFF.
Sales bonuses have always been part of the game, but SPIFFs hold a special place in the toolkit of effective sales leaders. They're not just about throwing extra money at your team - they're about strategically guiding your sales force toward the specific outcomes your business needs right now.
In this guide, we'll break down everything kind of SPIFF that you will ever need. We will dive into what they are, why they matter, and how to implement them without the common pitfalls I've seen derail even the best incentive programs.
The harsh reality? Most companies get SPIFFs wrong.
They treat them as a "nice to have" rather than the strategic lever they truly are. They set them up without clear measurement, without attribution models, without real thought about ROI.
Its time to move past the facade and treat these programs with the strategic importance they deserve.
Ready to transform how your team sells? Let's dive in.
SPIFFs stand for 'Sales Performance Incentive Fund', however, it is also known as 'Special Purpose Incentive Fund. They are sales bonuses implemented to drive specific outcomes in sales, unlike commissions which are given out on making sales. Hence, SPIFFs are paid on top of the usual sales commissions for a deal.
For example, a company may implement a SPIFF to be paid out to a salesperson if they can negotiate an upfront payment with a client. Other such usage examples for SPIFFs are explained further below in this blog.
The best part about SPIFFs is that they can be used in many different ways, depending on what the company needs. They have the power to drive specific short-term goals and drive sales reps' motivation.
Want to make sales reps focus more on a newly launched product?
Want to encourage multi-year deals?
Want to encourage self-generated deals?
All these outcomes can be driven by implementing SPIFFs for them.
Every SPIFF has a clear reason behind it. They are particularly ideal for giving a short-term boost to specific sales goals, making them a valuable tool for addressing immediate business needs. They can be paired with other sales incentives to double down on specific goals while still ensuring that salespersons have enough incentive to focus on sales.
Companies use them for specific reasons:
Many sales leaders confuse SPIFFs with commissions or use them interchangeably. Understanding their differences is crucial for effective implementation:
When designed correctly, SPIFFs offer significant advantages beyond simply boosting sales numbers:
1. Targeted Motivation Without Long-term Commitment
SPIFFs provide a surge of motivation for specific objectives without altering your permanent compensation structure. This flexibility lets you respond to changing business needs without locking into long-term financial commitments.
2. Rapid Behavior Change
Need your team to pivot quickly? SPIFFs can change sales behavior immediately, unlike training programs or culture shifts that take months to implement.
3. Data-Rich Experimentation
Each SPIFF program serves as a real-world experiment, generating valuable data about what motivates your specific sales team and which incentives drive the best ROI.
4. Energy Boost During Critical Periods
SPIFFs inject renewed enthusiasm during traditionally challenging times like quarter-end pushes, summer slumps, or holiday seasons when attention might otherwise wane.
5. Healthy, Focused Competition
Well-structured SPIFFs create positive competition around specific metrics, driving performance while keeping the team aligned toward common goals rather than competing at cross-purposes.
Sales SPIFFs come in various forms, each designed to address different business needs:
These cash-based incentives remain the most common and effective SPIFF type. Examples include:
While cash is king, non-monetary incentives can sometimes drive even more enthusiasm:
Strategic consideration should be given to whether your SPIFF targets:
SPIFFs function as tactical tools within your broader sales compensation strategy. They provide the flexibility to influence specific sales behaviors without restructuring your entire commission plan.
Every SPIFF should have a clear strategic purpose:
Let’s take a look at some practical examples and understand ways to utilize SPIFFs and improve the performance of your sales teams.
Imagine you're a company that has just launched a new software tool. You want your sales team to prioritize this product over others, at least for the initial launch phase when market penetration is low. This cannot be done through normal base commissions as the older products are easier to sell. This is where a Product SPIFF comes in handy.
Consider a company like Adobe launching a new graphic design tool. They already have a range of products, but this new tool needs special attention to gain traction in the market.
By introducing this SPIFF, the salesperson earns an extra $500 for selling 10 units of the new product, making it more attractive for them to push this product.
Big clients or strategic accounts often bring more revenue and prestige to a company. Closing deals with such accounts can be challenging but highly rewarding.
Think of a startup that offers cloud storage solutions. Landing a contract with a big corporation like IBM would be a significant win.
With the SPIFF, the salesperson gets an additional $3000 for closing a strategic account, making them more inclined to pursue such high-value deals.
Sales targets are set for a reason. They guide salespeople and give them something to aim for. But what if a salesperson goes above and beyond? A Milestone Bonus rewards such overachievers.
A car dealership sets a quarterly target of selling 50 cars for each salesperson. One particular salesperson manages to sell 70.
By introducing a Milestone Bonus, the salesperson is encouraged to not just meet but exceed their targets, earning an extra $6000 for their exceptional performance.
Cash flow is crucial for businesses, especially startups. Getting customers to pay upfront can significantly improve a company's financial health. An Upfront Payment SPIFF motivates salespeople to negotiate such terms.
A SaaS company offers monthly and yearly subscription plans. While monthly plans provide steady income, yearly upfront payments can help the company invest in immediate growth opportunities.
By pushing yearly subscriptions, the salesperson can earn significantly more, and the company benefits from immediate cash flow.
Long-term commitments from customers ensure steady revenue and reduce the cost of sales renewals. Multi-Year Deal SPIFFs reward salespeople for securing longer-term contracts.
A cybersecurity firm offers annual licenses for its software. A three-year contract not only ensures a longer commitment but also reduces the chances of the client switching to a competitor.
Securing longer-term contracts can significantly boost a salesperson's earnings, making it a win-win for both the salesperson and the company.
For many products, especially software, just selling isn't enough. Actual usage by customers ensures renewals and reduces churn. This SPIFF encourages salespeople to not just sell but ensure customers use the product.
A company selling project management tools wants to ensure that teams are actively using their platform, which would likely lead to renewals and upsells.
By ensuring that teams are actively using the tool, the salesperson can earn an additional bonus, and the company benefits from satisfied customers.
Referrals are a goldmine in sales. A recommendation from a trusted source can significantly shorten the sales cycle. This SPIFF encourages salespeople to tap into their networks and get warm leads.
A cloud services company wants to expand its clientele. Instead of cold calling, they decide to leverage the networks of their salespeople and existing clients.
By bringing in warm leads through referrals, the salesperson can earn an additional bonus, and the company benefits from easier sales conversions.
Bigger deals mean more revenue. This SPIFF motivates salespeople to aim higher and close larger deals.
A furniture supplier wants to secure contracts with larger offices. Instead of selling to small offices, they incentivize salespeople to target corporate offices and big businesses.
By targeting and closing bigger deals, the salesperson can significantly boost their earnings, and the company enjoys larger contracts.
Initiative and proactiveness are valuable traits in sales. This SPIFF rewards salespeople who don't just rely on inbound leads but go out and create opportunities themselves.
A digital marketing agency wants to expand its client base. Instead of waiting for clients to come to them, they reward salespeople who actively seek out and close new business.
By taking the initiative and bringing in new business on their own, the salesperson can earn a substantial bonus, and the company benefits from expanded clientele.
Consistent growth is vital for any business. This SPIFF rewards salespeople who not only maintain their performance but show improvement year after year.
A health supplement company wants to see growth in its product sales every year. They decide to reward salespeople who surpass their previous year's performance.
By achieving a 10% growth compared to the previous year, the salesperson earns an additional bonus, motivating them to keep pushing boundaries.
Happy customers are the best brand ambassadors. This SPIFF encourages salespeople to gather positive testimonials and case studies, which can be powerful sales tools.
A software development platform wants to showcase its success stories. They incentivize salespeople to collect positive feedback and detailed case studies from satisfied clients.
By collecting valuable testimonials, the salesperson not only earns an additional bonus but also provides the company with powerful marketing material.
Sometimes, selling products in combination can provide more value to the customer and increase the deal size. This SPIFF rewards salespeople for such bundled sales.
A tech store wants to promote the sale of laptops along with software packages. They offer a SPIFF for every combo sale.
By promoting and selling product combos, the salesperson can boost their earnings, and customers get a better overall package.
A well-informed salesperson can sell better. This SPIFF encourages salespeople to upskill by completing training and certifications.
A cybersecurity firm rolls out a new product. They offer a SPIFF to salespeople who complete a certification course related to the new product.
By investing time in training, the salesperson not only becomes better equipped to sell but also earns an additional bonus.
While it's essential to close deals, it's equally important to maintain profitability. This SPIFF is a bit different – it reduces commissions if salespeople offer too high discounts, ensuring they prioritize the company's bottom line.
A luxury watch brand doesn't want to dilute its brand value by offering high discounts. They introduce a Reverse SPIFF to discourage excessive discounting.
By introducing a Reverse SPIFF, salespeople are more cautious about offering high discounts, ensuring the brand's value is maintained.
The beginning of a quarter or fiscal year is crucial. A strong start can set the tone for the rest of the period. This SPIFF rewards salespeople who hit the ground running.
A publishing house wants to ensure that their new book releases get strong initial sales. They offer a bonus for salespeople who achieve a certain percentage of their quota in the first month.
By achieving a significant portion of their quota early on, the salesperson not only sets a positive pace but also earns an additional bonus.
Retaining existing customers is often more cost-effective than acquiring new ones. This SPIFF rewards salespeople for ensuring customers renew their contracts, emphasizing customer loyalty.
A software-as-a-service (SaaS) company knows the value of customer retention. They offer a bonus for salespeople who secure renewals, especially for long-term contracts.
By focusing on renewals, the salesperson ensures a steady stream of revenue for the company and earns a handsome bonus for their efforts.
Existing customers can be introduced to other products or services, increasing the overall deal value. This SPIFF rewards salespeople who effectively cross-sell.
A gym, apart from its regular memberships, offers specialized fitness classes and diet consultation. They introduce a SPIFF to encourage salespeople to promote these additional services to existing members.
By promoting additional services to existing members, the salesperson can significantly boost their earnings, and members get a more holistic fitness solution.
Bundling products or services can increase the overall deal size and provide more comprehensive solutions to customers. This SPIFF rewards salespeople for promoting bundled offers.
A tech store offers a laptop, mouse, keyboard, and headphones as a bundle. The idea is to provide a complete setup for customers, especially those working from home.
By promoting the bundled offer, the salesperson can earn a significant bonus, and customers get a complete package at a better price.
Time-sensitive deals or promotions can create urgency and speed up the sales process. This SPIFF rewards salespeople who close deals within a specific timeframe.
A travel agency offers early bird discounts for summer vacation packages. They introduce a SPIFF for salespeople who secure bookings within the first two weeks of the promotion.
By focusing on early bookings, the salesperson can earn an additional bonus, and the travel agency ensures a steady influx of customers well before the peak season.
Breaking into a new market or demographic can be challenging but rewarding. This SPIFF offers additional incentives for sales made in a specific new segment.
A skincare brand, popular among women, wants to introduce products for men. They offer a SPIFF to salespeople who promote and sell these new products to male customers.
By targeting and selling to the new demographic, the salesperson can significantly boost their earnings, and the brand expands its customer base.
Re-engaging dormant accounts or customers who haven't purchased in a while can be a goldmine. This SPIFF rewards salespeople who focus on reactivation.
A magazine subscription service notices that many past subscribers haven't renewed in over a year. They introduce a SPIFF for salespeople who can bring these subscribers back.
By focusing on reactivating past subscribers, the salesperson can earn a substantial bonus, and the magazine regains its readership.
Some products offer higher profit margins than others. By incentivizing salespeople to focus on these products, companies can boost their profitability.
An electronics store identifies that certain premium headphones offer a higher profit margin compared to other products. They introduce a SPIFF to promote the sale of these headphones.
By promoting and selling high-margin products, the salesperson can significantly boost their earnings, and the store enjoys higher profitability.
Extending existing contracts ensures a longer revenue stream and strengthens customer relationships. This SPIFF rewards salespeople for getting customers to commit for a longer period.
A cloud storage provider wants to ensure long-term commitments from its clients. They offer a SPIFF for salespeople who can get clients to extend their existing contracts.
By focusing on contract extensions, the salesperson ensures a steady revenue stream for the company and earns a handsome bonus for their efforts.
🔔 Must read: How can we motivate and incentivize our sales team to achieve their targets and goals?
Begin by defining exactly what you want your SPIFF program to achieve. Your objectives should be:
Ask yourself: "What specific behavior change would make the biggest impact on our business right now?"
Keep your SPIFF program straightforward and easy to understand with these elements:
Example Structure: "Earn $300 for each new product demo that converts to a sale during May and June, with an additional $1,000 bonus for sales representatives who convert 10+ demos."
Before launching, calculate your potential financial exposure:
Pro Tip: Include a 10-15% buffer in your budget to account for unexpected overperformance.
Launch your program with comprehensive communication:
Key Communication Elements:
Implement robust monitoring tools to track performance:
Important: Ensure your CRM or sales management system can accurately track the specific metrics your SPIFF is targeting.
Remain flexible throughout the program:
Nothing kills motivation faster than delayed recognition:
Even well-intentioned SPIFF programs can go wrong. Here are the most common pitfalls and how to avoid them:
The Problem: When SPIFFs become more rewarding than the core compensation plan, salespeople may neglect primary objectives.
Solution:
The Problem: While SPIFFs can successfully drive focus to specific products, they might cause neglect of other important offerings.
Solution:
The Problem: Overly aggressive individual SPIFFs can damage team dynamics and collaboration.
Solution:
The Problem: Generous SPIFFs can lead to unsustainable payouts if the team performs exceptionally well.
Solution:
The Problem: When salespeople can't easily understand how to earn SPIFFs, motivation diminishes quickly.
Solution:
The Problem: Without proper tracking, you can't determine if SPIFFs are driving the intended behaviors or providing ROI.
Solution:
🔔 Must read: The Invisible Costs - Sales Commission Overpayments & Clawbacks
Now, let's discuss how to measure the success of your SPIFFs.
Understanding the impact of your SPIFF programs requires systematic measurement. Here's how to evaluate their effectiveness:
Before implementing a SPIFF, document your starting point:
Example: If your goal is boosting sales of a new product by 20%, record current sales as your benchmark (e.g., 100 units per month pre-SPIFF).
Compare performance during the SPIFF period with your baseline:
Sales Growth Example:
Determine whether the SPIFF generated more value than it cost:
ROI Calculation Example:
Track how many salespeople actively pursued the SPIFF:
Participation Rate Example:
Calculate the SPIFF expense per new customer:
CAC Example:
For renewal-focused SPIFFs, track retention improvements:
Retention Example:
Gather insights from your sales team through:
Key Questions:
Evaluate whether the SPIFF created lasting impacts:
Behavior Change Example:
Not every sales challenge requires a SPIFF. Use this framework to determine when SPIFFs make strategic sense:
SPIFFs, Commission, Incentives, Bonus, Accelerators...
Whatever you call them, they all miss the point if you're just thinking about the money.
The best SPIFF programs I've witnessed share these characteristics:
In my experience, you can't control the outcome in sales directly. But you can control behavior.
That's the real power of SPIFFs - they allow you to break revenue goals into specific, measurable behaviors, then coach your team on mastering these behaviors.
One thing to remember though - your SPIFF is, at its core, a performance management system. Without real-time feedback, how can your sales team course-correct or improve mid-flight?
So set realistic targets, provide ongoing feedback on attainment, coach relentlessly with the objective of maximizing their commission.
Then reward.
The real power in sales lies in stacking your incentives properly, and you'll find that better performance and a stronger win rate follows.
Is your SPIFF program a cost or an investment? The answer should be obvious by now.
It's time to elevate our thinking beyond the transactional view of sales compensation and build systems that don't just pay out, but drive the specific sales behaviors your business needs right now.
After all, isn't that what true sales leadership is all about?
Managing and optimizing SPIFFs can be a daunting task. However, sales commission software like Visdum are designed to make this process smoother and more efficient.
Visdum is a sales commission software tailored specifically for SaaS companies. Its primary goal is to ensure that sales commissions are timely, accurate, and transparent, eliminating the common challenges faced by sales, finance, and RevOps teams.
With seamless integrations with CRM, HRIS, and Billing Systems, Visdum ensures that your data is not only secure but also easily accessible. The platform emphasizes enterprise-grade data protection, so businesses can trust their data with Visdum.
For those looking to automate their sales compensation processes, especially in the SaaS domain, Visdum offers a comprehensive solution that can save time, reduce errors, and enhance transparency.
Get a custom demo to understand how Visdum can help you streamline your sales compensation management.
Speak to a Sales Compensation expert today.
No, a spiff is not a regular commission. A commission is typically a percentage of the sale amount that a salesperson earns on every sale they make. A spiff, on the other hand, is a special incentive or bonus paid out for achieving specific goals or targets set by the company.
Yes, a spiff is a type of bonus paid to salespeople. It is an incentive offered in addition to their regular compensation (base salary and commissions) to motivate them to focus on specific objectives or products.
Spiffs are usually paid out as a lump sum or a fixed amount upon meeting the defined criteria. The criteria could be selling a certain number of units, closing a high-value deal, or promoting a new product line. Spiffs are often paid out shortly after the goal is achieved to maximize their motivational impact.
No, spiffs are not illegal. They are a common and legal practice in the sales industry. However, companies must ensure that their spiff programs comply with relevant labor laws and regulations regarding compensation and incentives.
The term "SPIFF" stands for "Special Incentive Funds" or "Special Performance Incentive for Field Force." It is called a SPIFF because it is a special incentive offered to motivate the sales force or field team to achieve specific goals or targets set by the company.
No, spiffs are generally not taxed at a higher rate than regular income. They are considered supplemental wages or bonuses and are taxed at the same rate as an employee's regular income. However, employers may be required to withhold additional taxes on spiffs depending on the amount and the local tax regulations.
Another term commonly used for SPIFF is "spot bonus" or "spot incentive." These terms refer to the same concept of a special, one-time bonus offered to salespeople for achieving a specific goal or target.
Both spellings, "SPIF" and "SPIFF," are used interchangeably to refer to the same concept of a special incentive or bonus for salespeople. However, the more commonly used spelling is "SPIFF," which stands for "Special Performance Incentive for Field Force.
.svg){kind=icon}