CUTTER CONSULTING GROUP

Why Your Contest/Spiff Fails, and Ways To Set It Up For Maximum Effectiveness

August 28, 2024

I wrote about compensation plan development – why companies struggle with getting the right results they want and what to do about it.


Now let’s look at sales team contests and some ways they fail. And of course, I will give you ways to set up your contests to succeed as well.


The Common Scenario

You want to motivate the team.

You need more results from them.


Maybe they are behind on their goals for the week/month/quarter/year.
Maybe you just need more sales.
Maybe you just need sales, period.


So you set up a contest for the team.
Offer some type of cash and prizes.

Mostly like based on output – for a winner who produces the most sales, revenue, demos, etc.


Contest starts.
You get some sales.
Someone starts winning, everyone else gives up trying to win.

Contest ends.


A certain percentage of the time if you compare the total sales during that period versus the previous period – you might have ended up with fewer sales. But you just paid out cash and prizes, someone got rewarded, and the company potentially ended up worse off.


How the hell did that happen?


Understanding the Failure

When you build a game (contest) in a certain way…standard way…it's built for someone to win. Which means others will lose (not everyone gets a trophy in life). Even if you add in prizes for first, second, and third place, there will still be a lot of losers (unless you only have 3 salespeople).


Mentally, your team knows that there are one or two people who generally win each contest. So they don’t even try because they know they won’t win.


You actually end up with lower morale but paying out more money. And probably still not getting enough results. This happens over and over again. At company after company.


What Can You Do Instead?

Because you still want more results, right?


Well first, don’t set up any contest that motivates and rewards the team to do their job.


Meaning, if your salesperson should be closing 10 sales a month, don’t run a contest to reward people who close 10 sales a month.


Might sound like common sense, but I see it a lot all the time. Sales Managers get pressure from above to hit the numbers for the period. So they want to run a contest to hit the targets. If left to their own decisions, they will not think about ‘more’ sales, just sales.


So, make sure you don’t reward the team (who already has a performance-based comp plan) for doing their job and hitting their basic numbers.


Focus on "More"

Only run a contest for more. More demos, more sales, more revenue, more revenue per sale, etc.


More.


Reward the people who want to work harder and smarter, the ones who want to perform better. Might sound like a simple, common-sense suggestion. But it is really the difference maker.


One type of contest I recommend most will help you avoid the problem I mentioned above – where the same people always win and everyone else gives up (and probably does worse).


Let’s take a page from golf…with a ‘skins game’ mode.


The challenge with golf is the same with sales teams – unless the grouping is really, really evenly matched – one golfer will quickly and easily distance themselves from the group. It only takes a few holes in golf for someone to do well and someone else to totally blow it.


I have been that golfer who just gives up trying after a few holes (alright – let’s be honest…I gave up trying before the first tee box). One quadruple-bogey-stop-keeping-counting-shots hole is all it takes.


But with the Skins Game mode – each hole is worth 1 point. No matter how many shots someone takes to win the hole, the winner of the hole gets one point. On the next hole? Previous strokes don’t matter, it’s only the strokes on this new hole that count. What this means is you can totally blow a hole, come back and win the next one and earn a point.


The ultimate winner is the one who has the most points (one per hole) over the 18 holes, with some way to break a tie – since there are an even number of holes.

 

For sales contests – do the same thing. For example, if you are running a two week contest, make each day worth a point. Then keep track of points to determine the winner. Make sure to build in a way to break a tie (if you do an even number of days/points) out of a secondary KPI.


Conclusion

Now, I will say – I have done this mode and still have someone after about 4 days (out of two weeks) that they were so far ahead that it would have taken a miracle for anyone else to win. So it still happens, but it’s not as common.

 

If you want to really make this type of contest work…run it in teams.

 

Pairs work well – top performer and bottom performer pairs (or some way to not stack a team with rockstars). I have even done larger team sizes, where the ‘captains’ are the top performers from the previous period and they take turn picking their team.

 

Teams plus Skins Game plus a focus on more results than they should already be producing = contest success.

Not sure where to start?


Want to make sure you fill in all the gaps before things start to change?


Get your FREE copy of the Starting Guide To Preparing Your Sales Team for Economic Shakeups. 

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