Best Practice - Only Use The Complexity You Need During Design

Best Practice - Only Use The Complexity You Need During Design


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

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