What is a spiff?

Have you ever wondered what a SPIFF in sales is exactly? In this article, you will discover the meaning of sales SPIFF, its purpose, and why it differs from sales commissions.

What is a spiff in sales?

A "spiff" is a short-term sales incentive or bonus offered to salespeople to motivate them to sell a particular product or service

Definition & Meaning

The best definition I’ve found comes from Wikipedia.

A spiff, or spiv, is slang for an immediate bonus for a sale. Spiffs are paid directly to a salesperson for selling a specific product.

‍

‍

But spiff is a vast and complex subject. Let’s dive in.

Is it SPIF or SPIFF?

Both are correct: SPIF is an acronym while SPIFF is a backronym.

SPIF (with one F) is an acronym

The term "spiff" is an acronym that usually stands for "Sales Performance Incentive Fund" or "Special Performance Incentive Fund". It is a sales incentive or bonus offered to salespeople to motivate them to sell a particular product or service.

SPIF can also stands for:

• Sales Promotion Incentive Fund
• Special Performance Incentive Fund

SPIFF (with 2 F) is a backronym

You may have noticed that the real acronym for "Sales Performance Incentive Fund" should be “spif”, not “spiff” with an additional F. A lot of creative words were given to this additional F. Those are backronyms.

SPIFF usually stands for:

• Sales Performance Incentive Funding Formula
• Special Pay Incentive for Fast Sales

What is the purpose of a sales SPIFF?

Spiffs are often used by companies to boost sales of specific products or services, particularly those that are new or slow-moving. For example, a company might offer a spiff to salespeople who sell a certain number of units of a new product within a certain time frame. The spiff could take the form of a cash bonus, a gift card, or some other reward.

They can be an effective way to motivate salespeople and improve sales performance, but they can also create incentives for salespeople to prioritize certain products over others, even if they may not be the best fit for the customer's needs. It's important for companies to design spiff programs carefully to ensure they align with the company's overall sales strategy and goals.

Is there a difference between SPIFF and Sales Commissions?

SPIF programs differ from traditional sales commissions. Of course, both are ways to incentive sales  representatives upon reaching specific goals.But SPIF serves as short-term incentives. Also, these incentives can take different forms : prepaid cards, prizes or vacations.

To make it easy to understand:

• SPIFF: short term target and instant incentive
• Sales commission: long term target and payment

Benefits of SPIF (vs sales commissions):

• Motivation: The immediate gratification from SPIFs boosts morale and motivation among sales teams.
• Flexibility: They can be tailored to specific objectives, allowing for flexibility in incentivizing various sales targets or actions, such as the number of cold calls or the biggest contract signing of the month.
• Focus: SPIFs shift representatives to concentrate on specific products, services, or actions for a short period.
• Cost Control: With SPIFs, you're usually proactively aware of costs.

Cons of SPIF (vs sales commissions):

• Lower activities: SPIFs can lead sales reps to become passive. Knowing that a program is on the way, some reps may put their activities on hold.
• Inequity: It may create inequities among sales reps if goals are perceived as biased.
• Complexity: SPIF programs are one more compensation structure to manage. (Can be easily fixed with a sales compensation tool like Palette)

How to create an effective SPIFF program & examples

Create a SPIFF program

Creating an effective SPIFF program can be as challenging as creating a new sales compensation plan.

1. Set Clear Objectives: Define SMART goals aligned with boosting sales or influencing specific behaviors. Establish measurable KPIs in line with these goals.
2. Know Your Audience: Understand the sales team's motivations, preferences, and performance metrics. Tailor the program accordingly for maximum impact, avoiding a one-size-fits-all approach.
3. Allocate Incentives & Budget: Decide on attractive incentives that motivate the sales team while maintaining a reasonable ROI.
4. Ensure Clear Communication: Provide a comprehensive overview of objectives, metrics, and incentives. Transparency and trust are essential for program success.
5. Implement Real-Time Tracking: Use a tracking system to monitor individual and team progress. Encourage healthy competition and keep participants informed.
6. Celebrate Achievements: Acknowledge and celebrate the sales team's successes. Publicly recognize top performers and share success stories to motivate others.

Sales spiff examples

Example 1: "The most active caller wins dinner in a nice restaurant".

If cold calling activities are too low, why not use SPIFF to increase them?

A good meal pleases everyone, so let’s dive into implementing this.

‍

One way to track cold calling activity is by using your CRM:

Step 1 : connect your sales reps’ calling software to the CRM.

Step 2 : map cold calling activity to a “number-cold-calls” property in your CRM.

Step 3 : create a report in your CRM filtering “number-cold-calls” per sales reps involved in the program.

Step 4: every day, export the report to show reps their ranking.

Step 5: at the end of the challenge export the report.

‍

A more effective method is utilizing Palette Software. With our 'challenge' feature, you can track cold calling activities and provide each sales rep with a real-time view of their ranking.

Example 2: “Who will close the most deals this month?”

The end of the quarter is near. Time to close deals!

And as a reward, AirPod Pros are always appreciated.

‍

One way to count the number of deals closed:

Step 1: connect your billing system to the CRM.

Step 2: map the deal account from the billing system to the CRM (so you can attribute the sales rep from the CRM to the deal actually signed in the billing system).

Step 3: create a report in your CRM filtering the deals closed by sales reps during the current program period.

Step 4: every day, export the report to show reps their ranking.

Step 5: at the end of the challenge export the report.

‍

Another approach is utilizing Palette Software. We are already connected to both billing systems and CRM, automatically reconciling data between them, and providing every sales rep with a real-time view of their ranking.

Origin & Etymology of SPIFF

An old reference to the word spiff can be found in a dictionary called “A Dictionary of Modern Slang, Cant and Vulgar Words” published in 1859. More recently, Dell use the term SPIF (Sales Performance Incentive Fund) to refer to programs designed to target business that might otherwise go to competitors.