There is no major difference in Spiffs/SPVs/SPIVs except for the terms different companies choose to use. What does Spiff stand for and what does SPIV mean? Spiffs and spivs are basically the same; although, they are used to describe certain long-term sales or incentives. Manufacturers and/or employers use spiffs and spivs to promote sales and to incentive their sales teams. Sometimes these incentives fail to meet the need of the company, and another incentive is used in its stead. While some spiffs can be good, others can be bad. All spiffs and spivs are not and will never be the same.
If spiffs are used erroneously, the awards can become illegal. Therefore, it is imperative to always review the game plan. Make sure all the details, rules and regulations are clear, and everyone understands their part. When the program goes and ends well, everyone involved get what they want. Participants get awards, prizes, loyalty points or other incentives, sales teams get bonuses, manufacturers make a profit off new or old products, and the retailers get hundreds of potential customers. Despite the number of spiffs that do not deliver, there are twice as many programs that meet or exceeds the expectation of sales teams and manufacturers.
So, what do spiffs mean and why do companies use spiffs and spivs in their business?
Companies use spiff programs to increase their profits. Some merchandise does not have a loyal patronage, especially, non-name brand items. When new brands hit the market, they need to be properly introduced to the public. The manufacturer will offer the companies or retailers a certain percentage if they will help boost the sales of their products. Advertising alone is not enough. There has got to be an incentive involved that is beneficial to the sales team, the store, and the manufacturer.
For instance, if two-year-old dishwashers are taking up space, and customers overlook them, this can look really bad for the manufacturer. And it could look like the sales team is not trying to push these dishwashers out of the store. What manufacturers do is offer an incentive to the sales teams, if they rapidly move their merchandise. The incentives are enough to motivate the sales team to offer customers an additional percentage off, free or lower cost delivery/installation or perhaps a larger bundle of items for the same price. Whichever is greater to the consumer.
What Does Spiff Mean?
Spiff means Sales Program Incentive Funds. It is incentive program companies and businesses use to drive sales. When merchandise is not selling well, or if inventory items need to be sold or cleared, the company runs a campaign. Or, when a sales sprint is put in place on a sales team and the company or business will put in place a Spiff program to increase sales during a specific period of time. This Spiff program strategy isn’t centered around the product, rather around dominating the competition with a high number of sales. These kinds of campaigns can run for days, weeks or even months, depending on how much merchandise needs to be moved or the target revenue number. Spiff programs allow the sales team to earn cash, or other incentives.
What are Spiffs?
Spiffs can promote a number of types of incentive awards. Awards are earned when participants make a set number of purchases or sell “X” number of dollars, during a particular campaign. Cash is preferred over a loyalty points system because cash has an instant gratification value.
Spiffs are meant to be fun for participants. In the early years, spiffs were used to help launch Apple computers, and IBM used spiff programs to keep their brand stronger in the public’s eye. Salespeople during this era earned incentives to demonstrate the use of these computers. As with any program, when the incentive does not meet or satisfy the need of the employee or customer, the program fails to deliver on its promise. This can leave a negative impression on a great product or company.
Other types of programs include:
- Prepaid SPIFF cards – offering cash on a card is a great incentive.
- Open-Ended Programs – Allow everyone who participates in the program to earn awards.
- Closed-Ended Programs– With this type of program, you need to know exactly how many awards or incentives your company is willing to part with. There should be a limited number of awards or bonuses to give away, without cutting into the profits.
- Plateau Programs –Salespeople are able to achieve the maximum tier, and claim their desired goal, if they really put forth the right amount of effort. This can be considered a tier award program, where salespeople are able to claim bigger and better awards after they have completed goals at previous levels.
Sales Promotion Incentive Fund can offer merchandise like smartphones, tablets, or a smart television to capture the attention of sales teams. It is the incentive that will drive the salespeople to work extra hard to sell those hard to move items. At the same time, incentives do not need to be expensive, trendy items to work. They can be something like brand swag, or in-store banners, product brochure displays, branded apparel or even commonplace items like cameras and multi-purpose tools.
Spiff participants are great at choosing their own incentives, so why not offer them a choice of awards? Getting them into the groove of things at the beginning will help the program run smoothly.
What are Spiffs in Sales?
A spiff is bonus money. When a salesperson reaches a certain plateau in sales, he or she is awarded “push money.” At the end of the campaign, the salesperson will turn in his or her sales receipts for validation, and cash in on the awards. However, this type of spiff is not tax-free; it must be reported on a 1099-misc tax form when the annual amount exceeds the IRS limit for the calendar year.
Regardless of which type of incentive program you choose, you must be prepared to put in the time or partner with a third-party incentive program company, like Incentive Insights, who will strategize, implement and manage the Spiff program. Some spiffs and spivs cost more than others, and they may require more time than you have, or are willing to give. Before you decide to offer a spiff or spiv program, be sure to seek a third-party expert, like Incentive Insights, so you know you are choosing the right one from the start. If you are not sure about the type of spiff your company needs, you can consult Incentive Insights to get a few ideas and start working with a third-party incentive program partner who can manage the program from start to finish.
Contact Incentive Insights today to see what a Spiff program can do for your company and sales teams!