Incentive Magazine recently published the results of its 2010 Sales IQ report, which reveals the latest trends in motivation and incentives. 

This year’s study revealed nearly half of sales managers plan to increase their rewards budget, while only 16% plan to spend less.

Some other findings:

• Nearly 30% of sales organizations have no official rewards program.
• Just over 40% of companies plan on allocating at least half of their budgets to rewards and incentives.
• 20% of companies plan to include more than 20 incentive programs including contests, cash rewards and other ancillary bonuses as part of their overall sales strategy.
• 20% of companies that increased their reward and incentive budgets did so to spark sales growth.
• Most companies that decreased their incentive budgets did so because of budget cuts or a decrease in sales during the past year.

Nearly a third of companies that participated in the survey said less than 5% of their salespeople actually end up benefiting from the incentives and rewards the company offers.

That stat reveals a common downfall of most incentive and reward programs: The bar is set to high, and too few can achieve the rewards being offered. And when that happens it can actually demotivate people.

At least some of the goals sales reps need to reach in order to collect a reward need to be obtainable to the masses or else there’s no point. Research has proven the most effective rewards programs focus on metrics and benchmarks that give everyone an opportunity to win.

If a program only rewards reps that reach extremely high closing rates, it can actually lower the morale of other sales reps.

Of course it’s still important to let reps know that extremely high performance is still the ultimate goal. That’s why many companies recommend implementing a tiered rewards strategy in which bigger rewards are earned every time a rep reaches another sales milestone.

Just make sure the initial milestones are somewhat easy to reach. That’ll make everyone feel like they have a chance to earn something and increase motivation among your entire sales staff.

Click here to read the complete “Incentive 2010 Sales IQ Report.”

Tags: incentives, Leadership, management, motivation