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Six Tips for Sales Contests
May 31, 2023
With the start of summer approaching, many companies consider running sales contests to maintain momentum and build excitement within their field sales force. Results from IQVIA’s 2022 Incentive Compensation (IC) Benchmarking Survey suggest that more companies ran contests in 2022 than they did in 2018 or 2019, and we expect that trend to continue in 2023. We wanted to offer some insights on how to optimize your organization’s sales contests so they deliver the maximum impact.
- Have a clear purpose for the contest: “Sales are sluggish, let’s run a contest” should only be the initial perspective. Looking deeply into why sales are sluggish offers insights into the potential behaviors you want to reward through a contest. For example, if a sales shortfall is due to declining sales to new customers, or sales for one of several brands, the purpose of the contest and its design become self-evident. In some cases, overall performance will best improve with a contest targeted to the middle performance tier of your salespeople. A clear purpose also builds credibility and commitment by decisionmakers and budget holders.
- Identify your budget and funding source: Companies typically allocate ~10% of their incentive compensation (IC) budget to fund contests across a fiscal year. How much of that money has already been spent or is earmarked for other contests? Are those funds part of the core IC budget or in addition to (for example, from a brand marketing team)? The budget available for a contest is a critical part of the design process, and the budget owner will be one of your most important stakeholders.
- Ensure the contest reinforces your overall IC program goals: A contest should not distract your field salespeople from their core IC plan, which drives your organization’s overall sales success. That said, a good contest ideally offers a chance for more salespeople – not just the current top performers based on the core IC plan – an opportunity to win. Running too many contests during the year, multiple contests at the same time, or offering outsized rewards, can all contribute to a lack of focus from the field. We recommend a break between contests. As the number of contests increases, there is a risk that field reps begin to expect contest payouts as part of their typical earning opportunity, resulting in lower effectiveness of contests.
- Keep the contest duration impactful, but short: Most organizations run contests for three months. In addition to matching neatly with a quarterly performance measurement cycle, that duration offers a good balance between giving the field enough time to meaningfully change their behavior, without losing their excitement and interest. Of course, the exact duration of a contest will depend on your sales cycle and availability of data.
- Get creative with your rewards: Although cash is the most common (and popular) award for a contest, consider alternatives such as merchandise, travel, or high-end experiences. For example, we know of a very successful “Summer Sizzler” sales contest where the reward was a high-end barbecue grill, delivered to the winner’s home! One additional tip: offer a few alternatives for merchandise. Someone living in a downtown high-rise may not see a barbecue grill as a desirable reward.
- Measure the impact: Once a contest has run its course, take the time to analyze the results and assess whether the contest accomplished its goal. Did sales increase, or rep behaviors change during the contest period? Did the contest pay for itself? This step is often missed in many organizations, but it’s critical for building credibility and designing more effective contests, when future contests are proposed.
Could your organization benefit from an independent perspective on sales contests? Are you interested in learning more about how your organization’s approach to contests matches up to those of your peers? Please connect with us to discuss how IQVIA could help your organization with sales contests, or if you have any questions about the insights or examples in this blog.
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