When designing a sales incentive plan, you could use a complex approach such as: - Use a score, based on calculating profit, and then applying a rule-based profit multiplier
- Measure a % increase for the score vs. the previous period
- Define 8 levels of attainment, some with and some without cascading rewards
If this is what you want to do, you can definitely do it.
However, there is a hidden cost associated with complex plans:
- The cost of explaining your plan to participants (or answering their questions)
- The cost of investigating disputes in terms of rewards (ex: how they were calculated)
Our recommendation is to only use the complexity you need during plan design. That is - complexity which:
- Promotes specific sales goals (ex: use scoring to boost desired sales behavior)
- Reduce incentive costs (ex: using profit-based incentives vs. revenue-based incentives)
- Increases plan fairness and employee motivation
When all things are equal, you should prefer:
- Revenue to profit
- Profit to scoring
- Raw values to competitive rankings
- Competitive rankings to % increases