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Successful sales departments are most likely to be offering employee recognition in the form of non-cash rewards, according to a performance study of best-in-class companies from Aberdeen Group and the Incentive Research Foundation (IRF). This article is copyright 2013 The Best Customer Guide.

Non-cash incentives and rewards have become a vital component of sales performance management, with internal recognition being among the most critical non-financial employee motivators, the study found.

Specifically, 55% of respondents indicated that non-cash incentives and rewards are a "vital component" of sales performance management, and 57% say that "internal recognition for positive performance" is a critical non-financial motivator.

The study, entitled 'Non-Cash Incentives: Best Practices to Optimize Sales Effectiveness', explored how best-in-class organisations extend beyond simple cash compensation to use non-cash incentives and rewards as a vital part of their sales performance management efforts.

The best-in-class firms (those in the top 20%, performance-wise) had higher customer retention rates, higher year-over-year increase in the number of sales reps achieving quota and a much larger increase in deal size/contract value than industry average firms or 'laggard' firms (the bottom 30%).

Organisations with formal internal sales employee recognition programmes had 14.8% higher team quota attainment and 5.9% higher customer renewal rate. Interestingly, 100% of best-in-class organisations use incentive travel to motivate their sales force.

The study also found that best-in-class firms were:

  • 11% more likely to offer verbal praise, 90% more likely to offer public recognition and 94% more likely to offer peer-to-peer recognition for progress toward goal versus all other firms;
  • 23% more likely than all others to offer group travel, 75% more likely to offer company sponsored events and 60% more likely to offer peer-to-peer recognition as a year-end sales incentive;
  • 26% more likely than all others to list teamwork as a very important part of the sales process, and 47% more likely than laggard firms.

The study also examined the choice of whether to outsource the management of non-cash incentive programmes or to implement them in-house, and found that many of the efficiency-oriented metrics favoured the outsourcing of incentive management, with those organisations that outsource showing higher lead conversion rates (30.4% vs. 23.9%) and lower average sales cycles (4.2 months vs. 5.3 months).