What are the advantages and disadvantages of sales incentive program?

Answer 1

Advantages of Sales Incentives Intra-organizational contests are commonly utilized to create healthy competition among employees. When designed fairly and properly implemented, these sales incentive programs can really produce results which are much appreciated in a waning economy such as what we are experiencing currently. According to the 80-20 rule, also known as the Pareto Principle, twenty percent of sales people make eighty percent of a given company's sales and profits. In other words, if you can motivate the next 20% of your workforce to do better the overall results can be exponential. If you plan out attainable goals to target your top, middle, average and under performers, then each group will be motivated to reach their own set goal level. For example, a sales competition could target top performers by planning objectives that would take maximum effort. In order to not exclude other workers, however, more attainable goals must be introduced for each group/level of performers. As demonstrated, sales incentive programs, when properly designed and implemented, will motivate more than just your top performing sales people to increase results and in the end will result in better profits. Disadvantages of Sales Incentives Company has greater cost because of awards. Some of the increased sales aren't increases just salesman convincing people to buy something earlier than planned. People might feel pressure (and not know of contest) so they might be more likely to regret purchase; there might be more returns.