Sales incentives are programs that motivate sales reps to exceed goals. These incentives are often called SPIFs/SPIFFs (Sales Performance Incentive Funds). While incentives can be non-cash (like lunch with the CEO, a trip, or a day off), cash rewards are the most common.

Incentives can be:

• Individual-based (reward one rep for over-performance)
• Team-based (reward a group to build collaboration and reinforce that results come from the team)

Team SPIFFs often use shared experiences such as a team dinner, cooking class with a chef, a sporting event, or a spa afternoon.

Compensation design defines the full pay structure for sales roles. It typically follows a pay-for-performance model and includes elements such as:

• Role level and responsibilities
• Total On-Target Earnings (OTE)
• Base salary (if any)
• Commission structure and rates (if any)
• Timing of payouts
• “Tail” payments (if any) when someone leaves

Why do sales incentives (SPIFs/SPIFFs) matter?

When designed well, SPIFFs are a strong motivator and recognition tool. They show reps that the company rewards “over and above” contribution.

When designed poorly, SPIFFs can damage profit margins—sometimes even causing negative margins—if the cost of the incentive is higher than the profit made on the product or service being sold.

Why does compensation design matter?

Compensation design directly affects hiring and retention. If the plan is unclear, overly complex, or not competitive, it becomes hard to recruit strong talent and even harder to keep them.

Sales reps may avoid joining if the compensation structure is:

• difficult to understand
• unpredictable
• misaligned with how they prefer to be paid

Different industries also use different models. For example:

• Some industries lean toward 100% commission (e.g., parts of financial services)
• Others lean toward mostly or fully salary-based (e.g., some semiconductor sales roles)

A well-designed plan balances motivation, fairness, profitability, and simplicity—so reps want to join, perform, and stay.