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Sales Incentive Plans for Special Business Objectives: The Sales Compensation Series for the Small Business Owner

In a sentence

A practical guide for small business owners on designing sales incentive plans that direct, motivate, and reward sellers to achieve three special growth objectives: fast starts, new product sales, and new account wins.

Written for time-pressed small business owners wrestling with profitable growth, this concise e-book from sales compensation experts Colletti and Fiss builds on foundational commission and bonus design to tackle specialized incentive challenges. It shows how to structure a fast start incentive to capitalize on early-year sales momentum, how to compensate new product sales without under-rewarding difficult selling effort, how to reward new account acquisition while protecting current customer revenue, and when to deploy short-term SPIFFs instead of restructuring the whole plan. Grounded in the authors' consulting research and client results, it offers actionable rules of thumb—funding sources, incentive sizing, qualifying periods, and technique choices (bonus vs. commission vs. accelerator)—so owners can confidently tweak pay plans to support their growth strategy.

Tags

applied-statisticsstrategy

The model

A causal framework in which design levers (special incentive structures, opportunity sizing, funding source, qualifying rules) shape seller motivation and selling effort toward specific growth objectives, producing behavioral outcomes (fast starts, new product sales, new account wins) that drive profitable revenue growth, moderated by plan-fit and objective frequency.

Special Incentive Designdesign lever

The structural choice and configuration of a special-objective incentive element (fast start bonus/accelerator, new product incentive, new account incentive, or SPIFF) layered onto the core sales compensation plan to direct effort toward a specific growth objective.

Incentive Opportunity Sizedesign lever

The magnitude of the special incentive opportunity relative to the target incentive, such as an added 10-20% for fast starts or a two-thirds/one-third split for new product and new account pools, sized to be meaningful without overshadowing the base plan.

Incentive Funding Sourcecontextual condition

Where the money for the special incentive comes from, such as a carve-out of overachievement pay for fast starts or a share of incremental profit (e.g., 90/10) for SPIFFs, ensuring incentives are self-funding relative to results generated.

Qualifying Rules and Definitionsdesign lever

The precise definitions and thresholds governing eligibility, including how long a product or account is 'new', minimum sales per account, reactivation inactivity periods, and activation periods, which determine when sales results count for special incentive credit.

Plan Fit and Objective Frequencycontextual condition

The degree to which the chosen incentive technique matches the existing plan structure (commission vs. bonus) and the frequency of the objective (one-time vs. recurring launches), influencing seller comprehension and administrative feasibility.

Seller Motivation and Selling Effortpsychological state

The degree to which sales reps are psychologically motivated by the incentive and direct increased, well-targeted selling effort toward the special objective rather than concluding it is not financially worthwhile to pursue.

Targeted Selling Behaviorbehavioral pattern

The observable sales behaviors the incentive is intended to elicit, such as booking business early in a quarter, pulling forward seasonal or cyclical sales, actively selling new products, and prospecting to open new accounts.

Special-Objective Sales Resultsoutcome metric

The direct sales outcomes tied to the special incentive: fast start volume achieved in early quarters, new product revenue, and new/reactivated account signings and their associated sales.

Profitable Revenue Growthoutcome metric

The ultimate business outcome of consistent, profitable top-line growth achieved by replacing churned revenue, winning new customers, and expanding sales, which the special incentives are designed to support.

How they connect

special incentive design → influences seller motivation effort
incentive opportunity size → influences seller motivation effort
seller motivation effort → predicts targeted selling behavior
targeted selling behavior → predicts special objective sales results
special objective sales results → predicts profitable revenue growth
funding source → moderates profitable revenue growth
qualifying rules → moderates targeted selling behavior
plan fit and frequency → moderates seller motivation effort
special incentive design → mediates special objective sales results

The process

The book provides a playbook for small business owners to strategically use sales incentives to drive specific growth objectives. The core idea is that a standard sales compensation plan may not be sufficient to motivate targeted behaviors like accelerating sales at the beginning of the year, pushing new products, or acquiring new customers. The playbook outlines three distinct processes for designing and integrating special incentives—for a "fast start," new products, and new accounts—into the primary compensation structure. These processes guide the user through key decisions on budgeting, defining performance, selecting payout mechanisms, and setting the duration of the incentive. For situations where a permanent plan change is undesirable, the book offers a fourth process for implementing a SPIFF (Special Performance Incentive for the Field Force) as a flexible, short-term tool to achieve similar goals. Together, these processes form a toolkit for aligning sales team efforts with pressing, top-line growth priorities by modifying or supplementing the existing sales compensation plan.

Designing a Fast Start Incentive

To motivate and reward sellers for achieving significant sales growth relative to their goal early in a fiscal year, countering issues like seasonal buying, cyclical purchasing, or to maximize early revenue from usage-based models.

When to use: When a business wants to drive early achievement of annual sales goals, particularly in industries with seasonal or cyclical buying patterns, or with subscription/usage-based revenue models.

Step 1Determine eligibility for the incentive.
Entry: A business decision has been made to drive early-year sales performance.
Exit: A list of eligible roles or individuals is finalized.
In: List of sales roles · Out: List of eligible participants
Step 2Set the size of the incentive opportunity.
Entry: Eligibility is defined.
Exit: The potential payout value for the fast start incentive is established.
In: Target incentive opportunity for sales jobs · Out: Fast start incentive budget/opportunity size
Step 3Select the performance measure.
Entry: Incentive size is determined.
Exit: The key performance indicator for the incentive is chosen.
In: Business growth goals · Out: Defined performance measure for the incentive
Step 4Identify the funding source for the incentive.
Entry: Incentive size and measure are defined.
Exit: A funding mechanism is approved.
In: Sales compensation plan structure, Overachievement pay budget · Out: Approved funding source
Step 5Define the calculation and payout timing.
Entry: All previous design elements are finalized.
Exit: The performance period and payout date are set.
In: Fiscal calendar · Out: Defined performance period and payout schedule
Step 6Choose the incentive payout technique.
Entry: All other design parameters are set.
Exit: The final payout formula is selected.
- Use a defined (flat) bonus for achieving a specific result, which is simple and good for one-time events.
- Use an accelerated or multiplicative incentive rate integrated with the current plan, which is better for building a long-term culture of fast starts.
In: Business objective (one-time vs. recurring) · Out: Selected incentive formula (bonus or multiplier)

Designing a New Product Sales Incentive

To motivate and reward salespeople for the difficult and time-consuming work of selling new products or services, ensuring these products gain a foothold in the market.

When to use: When a business launches new products and wants to ensure the sales team dedicates sufficient effort to selling them.

Step 1Allocate incentive compensation budget to new products.
Entry: A new product is being launched and requires sales focus.
Exit: The target incentive opportunity is split between total sales and new product sales.
In: Total target incentive opportunity · Out: Dedicated incentive budget for new product sales
Step 2Define the 'new product' incentive period.
Entry: Incentive budget is allocated.
Exit: A specific time frame for the new product incentive is established.
In: Product launch date, Estimated market adoption time · Out: Defined 'new product' period
Step 3Choose the incentive technique.
Entry: Budget and time period are defined.
Exit: The incentive type (commission or bonus) is selected.
- Use a commission if the current plan is commission-based or if new product launches are infrequent.
- Use a bonus if the current plan is bonus-based or if new products are launched regularly.
In: Current sales compensation plan structure, Product launch frequency · Out: Selected incentive technique
Step 4Structure the payout formula.
Entry: Incentive technique is chosen.
Exit: A detailed payout formula is created.
In: Selected incentive technique (commission or bonus), New product sales goals · Out: A flat or tiered commission rate structure for new product sales, or a step-rate bonus scheme based on new product goal attainment.

Designing a New Account Sales Incentive

To motivate and reward salespeople for acquiring new customers, which is critical for replacing revenue lost to customer churn and achieving overall business growth.

When to use: When a business needs to focus on new customer acquisition to offset a customer churn rate (e.g., 8-12% or higher) and meet growth targets.

Step 1Allocate incentive compensation budget to new accounts.
Entry: A strategic decision has been made to focus on new customer acquisition.
Exit: The target incentive opportunity is split between total sales and new account sales.
In: Total target incentive opportunity · Out: Dedicated incentive budget for new account sales
Step 2Define what constitutes a 'new account'.
Entry: Incentive budget is allocated.
Exit: A clear, written definition of a 'new account' for compensation purposes is finalized.
In: Customer history data · Out: Definition of a new account
Step 3Define the 'new account' incentive period.
Entry: The definition of a new account is finalized.
Exit: A specific time frame for the new account incentive is established.
In: Typical new customer ramp-up time · Out: Defined 'new account' incentive period
Step 4Choose the incentive technique.
Entry: Budget and definitions are finalized.
Exit: The incentive type (commission or bonus) is selected.
- Use a commission if the current plan is commission-based.
- Use a bonus if the current plan is bonus-based and you expect to set regular new account sales goals.
In: Current sales compensation plan structure, New account acquisition targets · Out: Selected incentive technique
Step 5Structure the payout formula.
Entry: Incentive technique is chosen.
Exit: A detailed payout formula is created.
In: Selected incentive technique (commission or bonus), New account sales goals · Out: A commission or bonus structure for new account sales.

Designing and Running a SPIFF

To stimulate the achievement of a short-term sales goal through a temporary incentive, without making a permanent structural change to the main sales compensation plan.

When to use: For short-term objectives like promoting a new product, clearing aging inventory, acquiring a specific set of new accounts, or emphasizing high-profit products.

Step 1Define the SPIFF's purpose and goal.
Entry: A short-term business need is identified.
Exit: A clear, specific goal for the SPIFF is documented.
In: Short-term business objective · Out: Defined SPIFF purpose and goal
Step 2Determine eligibility.
Entry: SPIFF goal is defined.
Exit: A list of eligible participants is created.
In: List of sales roles · Out: List of eligible participants
Step 3Set the timing and frequency.
Entry: Eligibility is determined.
Exit: The start date, end date, and frequency policy for the SPIFF are set.
In: Fiscal calendar · Out: SPIFF duration and schedule
Step 4Choose the award type and value.
Entry: Timing is set.
Exit: The award type and value are finalized.
In: Target incentive data for eligible roles · Out: SPIFF award value and type
Step 5Fund the SPIFF.
Entry: Award value is determined.
Exit: A funding plan based on incremental profit is approved.
In: Profit margin data, Sales forecast · Out: Approved SPIFF budget and funding source
Step 6Structure the payout scheme.
Entry: Funding is secured.
Exit: A clear payout formula is documented.
In: SPIFF goal, Award budget · Out: SPIFF payout structure
Step 7Launch, communicate, and administer the SPIFF.
Entry: All design elements are finalized.
Exit: The SPIFF is active and understood by the sales team.
In: Finalized SPIFF plan · Out: Communication to sales team
Step 8Measure and confirm results.
Entry: The SPIFF period has concluded.
Exit: A report on the SPIFF's effectiveness and ROI is completed.
In: Sales data from the SPIFF period · Out: SPIFF results analysis

A candidate measure

Sales Incentive Plans for Special Business Objectives_ The Sales Compensation Series for the Small Business Owner — derived measurement candidates

Special Incentive Design

incentive type classification; formula design category; linked performance measure

self-report suitability: medium

Incentive Opportunity Size

special incentive $ / target incentive $; SPIFF % of quarterly incentive

self-report suitability: low

Incentive Funding Source

carve-out vs. incremental-profit vs. separate-budget flag; company/seller share %

self-report suitability: low

Qualifying Rules and Definitions

months a product/account remains 'new'; minimum $ per account; inactivity months for reactivation

self-report suitability: low

Plan Fit and Objective Frequency

fit rating between special element and base plan; number of launches or SPIFFs per year

self-report suitability: medium

Seller Motivation and Selling Effort

self-reported perceived worthwhileness; activity counts directed at objective

self-report suitability: high

Targeted Selling Behavior

% bookings in early quarter; new product opportunities created; new accounts opened

self-report suitability: medium

Special-Objective Sales Results

Q1/Q2 sales vs. goal; new product sales $; count and $ of new/reactivated accounts

self-report suitability: low

Profitable Revenue Growth

YoY revenue growth % net of churn; churn rate; margin on new business

self-report suitability: none

The story

The reader A small business owner who wants consistent, profitable top-line growth and needs sales people motivated to achieve it.

External problem

Existing sales compensation plans don't effectively drive special growth objectives like fast starts, new product sales, and new account acquisition.

Internal problem

The owner feels uncertain and loses sleep over how to tweak pay plans without overspending or cannibalizing existing sales.

Philosophical problem

Sellers shouldn't be left to conclude that pursuing hard new business isn't financially worthwhile; pay should reward the results growth requires.

The plan

Decide which growth objective (fast start, new product, new account) matters most.
Answer the key design questions: eligibility, opportunity size, measure, funding, and timing.
Choose an incentive technique that fits your current plan and the frequency of the objective.
Define qualifying rules such as 'new' duration, minimum sales, and activation periods.
Consider a SPIFF instead of a structural change for temporary or single-result goals.
Measure whether the incentive actually increased the expected sales results.

Success

Sellers get off to a fast start and are twice as likely to hit the annual growth plan.
New products gain a market foothold and new accounts replace churned revenue.
The compensation plan reinforces strategy without overspending or double-paying.
The owner confidently adjusts pay plans as the business grows.

At stake

New products are under-sold and growth goals are missed.
Churned revenue is not replaced and the business stagnates.
Sellers game or ignore poorly designed incentives.
The owner overspends or cannibalizes existing sales through double-compensation.

Chapter by chapter

ch01Using a Fast Start Incentive
Fast start incentives can significantly boost early sales performance, doubling the likelihood of achieving annual growth goals, particularly for businesses facing seasonality or cyclicality in buying behaviors.
- Fast start incentives can effectively double the likelihood of achieving annual sales growth goals.
- Businesses facing seasonality should incentivize early sales to maximize overall performance.
- Understanding cyclicality can help sales teams counteract buyer behaviors favoring end-of-year purchases.
- Setting up a fast start incentive requires careful consideration of eligibility, size, and performance measures.
ch02Compensating New Product Sales
Navigating the complexities of incentivizing sales personnel for new product offerings is crucial for businesses aiming for growth, yet it requires a strategically tailored approach to compensation.
- The sale of new products is critical for achieving long-term business growth.
- Clear, structured compensation plans are essential to motivate sales teams.
- Setting differentiated goals for sales compensation helps combat the under-selling of new products.
ch03Compensating New Account Sales
This chapter explores how businesses can effectively create incentive structures for attracting new customers, addressing the challenges of high churn rates and the necessity for consistent growth.
ch05Concluding Thoughts
This chapter distills key insights on overcoming challenges in top-line growth by effectively utilizing sales compensation strategies tailored to both current customer retention and new account acquisition.
- Top-line growth remains a persistent challenge for small businesses, necessitating a careful evaluation of current sales models and strategies.
- Fast start incentives are critical for maximizing early sales performance, providing momentum in the initial stages of growth.
- SPIFFs represent an alternative to comprehensive compensation plan changes, offering targeted incentive options that can drive immediate behavior shifts.
- The alignment of sales incentives with business growth objectives must be strategically managed to prevent misalignment and ensure overall company health.

Questions this book answers

How can small businesses use sales incentives to drive fast starts, new product sales, and new account acquisition?
How much incentive opportunity should be allocated to special business objectives and where should the funding come from?
When should a business use a bonus, a commission, an accelerator, or a SPIFF?
How long should a new product or new account be considered 'new' for special incentive treatment?
How do you reward new business without cannibalizing or double-paying for existing sales?

Glossary

Special Incentive Design: The structural choice and configuration of a special-objective incentive element layered onto the core sales plan to direct effort toward a specific growth objective.
Incentive Opportunity Size: The magnitude of the special incentive opportunity relative to target incentive, sized to be meaningful without overshadowing the base plan.
Incentive Funding Source: Where the money for the special incentive comes from, ensuring incentives are self-funding relative to results generated.
Qualifying Rules and Definitions: The precise definitions and thresholds governing when sales results count for special incentive credit.
Plan Fit and Objective Frequency: The degree to which the chosen technique matches the existing plan structure and the frequency of the objective.
Seller Motivation and Selling Effort: The degree to which reps are motivated by the incentive and direct increased, well-targeted effort toward the special objective.
Targeted Selling Behavior: The observable sales behaviors the incentive is intended to elicit.
Special-Objective Sales Results: The direct sales outcomes tied to the special incentive.