Feature Article - May/June 2018

New Directions in Sales Incentives

Technology, Gaming Elements Influence Programs

By Deborah L. Vence

Dealing with Challenges

Sometimes challenges can arise with sales incentive programs, with Van Dyke noting that "rising costs, greater regulations, tighter involvement of sourcing and procurement" are a few.

In the past several months, Sawi said there have been a number of programs that confirm very late in the game.

"Additionally, many sales incentive travel programs are growing significantly in size," he said. "When it comes to travel rewards in this seller's market, this can make it challenging to secure the space they need at a truly inspiring destination."

Another challenge is that many clients are facing a rapidly changing regulatory environment. "Recent legislation and/or public perception have a profound impact on certain industries, most particularly financial services," he said.

"Finally, an organization's ability to track sales data and provide results to program participants in a timely manner can be an obstacle. Many companies keep this information in different parts of the business, or in silos, and it presents an IT challenge to bring it all together in a meaningful way," he said.

Purdy noted that there are many challenges, but wanted to look at some of the often-overlooked challenges that can have a very big cost:

  • Taxes: "There are very strict taxation rules within the U.S. and internationally that ensure all rewards earned by the sales and channel customers are tracked at fair market value and then added to individual tax returns," he said. "The IRS will assume that if your company is issuing rewards to salespeople or third-party dealers that you are ultimately responsible for properly tracking and reporting the taxable benefits as well. Failure to do so will be expensive."
  • Data: "Building data warehouses to help cleanse, align and evaluate sales trends while shifting your sales strategy and aligning your incentives with these strategies is a challenge, but it's also a goal worth achieving because now you can calibrate your campaigns with accurate and timely data," he said.
  • Competitive Insights: "While I don't often care about the competition, knowing what they are doing as well as their strengths can help you align your sales campaign where it will have the most positive impact for your company versus the competition."
  • International: "If your program is international in scope, there are differences in Europe, especially Germany and Czech Republic, where the use of sales incentives has very special rules. Incentives are often directed at the company and not an individual sales rep. The company can, at its own discretion, reward the sales rep or team as well as track and report the value for tax purposes of these rewards."