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What Are SPIF's and When Should You Use Them?

To generate more revenue and ensure continued growth, your sales representatives need to perform as well as possible. You’ll typically achieve optimal performance by using sales commission plans that motivate your sales representatives and incentivize exceptional sales performance.

However, from time to time, it could be necessary to motivate them even further and boost their sales performance in the short term. This is where SPIF's come in. They help you incentivize your reps’ performance when you need them to sell more for shorter periods. This is, for example, the case when you want to launch a new product or increase the sales of another.   

In this post, we’ll look at SPIF's, when you should use them, and things you should consider when implementing them in more detail. 

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What Are SPIF's?

Let’s start by looking at what SPIF's are. A SPIF or Sales Performance Incentive Fund is a short-term incentive that you use to incentivize and motivate your sales reps. It’s often part of sales strategies that aim to produce quick sales. For example, you can use a SPIF to motivate your reps to focus on the sales of a specific product during a specified period to make its launch more successful. 

SPIF's usually take the form of prepaid cards that your reps can use to shop online, at retail stores, or to withdraw cash. Keep in mind, however, that there are no hard and fast rules on how you should offer SPIF's, and you can use a variety of other forms like days off, prizes, bonus payouts, and the like.  

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SPIF's vs Sales Commissions?

Now that we’ve seen what SPIF's are, the immediate question is: How are SPIF's different from typical sales commissions? Simply put, a sales commission is an incentive you pay to salespeople as part of their total earnings, and it's based on their ability to meet their sales quotas. 

In contrast, SPIF's are short-term incentives you pay to your reps to drive the sales of a specific product or service. Also, unlike commissions which are paid at a specified percentage, SPIF's can include any amount or reward. 

When Should You Use SPIF's?

Let’s now consider some of the instances where you could consider using SPIF's. 

If You Want Short-Term Gains

SPIF's are the ideal tool if you want to drive short-term sales. This could, for instance, be when you’re launching a new product or entering a new market, and you want your reps to focus on that market or product. Another case would be when you intend to drive revenue over the short term to meet your business goals. 

If You Have the Budget

Because SPIF's are paid in addition to your sales reps’ usual earnings, you must have the budget available to implement them effectively. If you don’t, the SPIF won’t be successful and won’t motivate your reps. So, for example, if you decide that you’ll reward each rep that makes 30 sales during the period with $500, you need to ensure that you have this amount available to compensate your reps. 

If You Want To Increase Employee Engagement

Employee engagement can have a significant impact on your sales team’s efficiency, productivity, and sales performance. Yet, despite this, many businesses struggle to keep their employees engaged. SPIF's can be the perfect tool to eliminate this challenge and keep employees engaged and invested, which, ultimately, leads to better sales team performance and helps you generate more revenue. 

If You Can Implement and Manage Them Properly

Although SPIF's can be an effective tool to drive short-term performance and keep your reps engaged, they can be challenging to plan and implement because of their time-sensitive nature. So, when you want to use SPIF's to incentivize your sales team, you should be able to plan, implement, and manage them properly. 

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The Right Way To Do SPIF's

As mentioned above, it’s crucial that you plan, implement, and manage SPIF's properly in order for them to be effective. This is because, like many other incentives, incentive plan effectiveness depends on proper planning and implementation. With that in mind, let’s look at the steps you’ll need to follow when you want to use SPIF's to incentivize your salespeople. 

Define Your Goals Properly

The first step is to define your goals. In other words, you need to determine what you intend to achieve. Here, you’ll follow a two-pronged approach. You will need to decide what results you want from the SPIF and what behaviors you want to drive in your salespeople. 

Now, these goals could be anything depending on your specific needs and requirements, but regardless of what they are, it’s crucial that you define these goals clearly before you move on in the process as they form the foundation of your planning. 

Determine the Incentives

The next step is to decide what the incentives you’ll offer will be. As mentioned earlier, this can take a variety of forms. 

So, will you offer cash incentives or gift cards? Will you offer other incentives like prizes or vacations? Ultimately, the incentives you offer will depend largely on your unique circumstances and the preferences of your sales team.

Once you’ve decided what incentives you’ll offer, you also need to decide the value of the incentive. This depends on the budget you have available, which we’ll discuss later. 

Determine Who Will Participate

You also need to decide which reps will be eligible to take part in the SPIF. When you do, you’ll eliminate any confusion. You’ll also be able to involve those reps that are most suited to the SPIF, which prevents other reps from taking part. 

When doing this, you’ll prevent the situation where some reps won’t perform well and earn the reward. This, in turn, keeps morale intact. Keep in mind, however, that when you use SPIF's on this basis, you should implement them for all the groups of sales reps and not favour one group above the other.

Determine a Timeframe

The next step is to determine the duration of the SPIF. Remember, we mentioned earlier that SPIF's are temporary incentives, so you should determine the appropriate timeframe for the SPIF based on what you want to achieve. 

For example, if you want to focus on the launch of a new product, you might implement a SPIF for the first month after its release. Likewise, when you want to increase revenue over a quarter, you’ll implement the SPIF for the entire quarter to motivate your sales reps to make more sales. 


As mentioned earlier, when deciding on the reward you’ll offer, you also need to decide on the value of the reward, and this value should be determined based on the budget you have available. When it comes to planning your budget, you should always plan for the best-case scenario.

In other words, you should plan that all your sales reps will meet their targets and be awarded the SPIF. In this way, you’ll know if they do, you’ll have the budget available to compensate them. 

Be Transparent

Once you’ve defined all the aspects above, it’s vital that you are transparent. To be completely transparent, your reps need to know what the reward is and what they need to do to earn the reward. 

When they know this, they’ll be more motivated to perform better to win the SPIF. In contrast, if your reps don’t know what’s expected of them and what they could earn, they’ll be less likely to perform well. 

Measure Your Results

Finally, you should measure the results you achieve when implementing the SPIF. When you do, you’ll learn whether the SPIF was successful and whether you achieved what you set out to achieve. So, you’ll be able to assess your return on investment and determine if, ultimately, SPIF's are worth it for your business and if you should use them in the future. 

Disadvantages of SPIF's

As mentioned earlier, SPIF's can be effective in several situations to drive short-term results or increase employee engagement. However, despite their advantages, they do come with some disadvantages too. 


When you implement SPIF's, it could lead to your sales rep waiting for the SPIF period to start to close deals they could’ve finalized before. They could also recommend the wrong products or services to customers to earn the incentive. You’ll thus need to implement the necessary measures to ensure this doesn’t happen. You could, for example, not announce the SPIF weeks ahead of time and keep it a surprise. 


While it’s true that SPIF's can increase performance over the short term, they can become expensive if you use too many of them, or you schedule them for too long. In addition, they’ll typically have less of an impact if you use them too often. For that reason, you should aim to use SPIF's infrequently and, at most, once or twice a year. 


Although competition can be a good thing that can drive sales reps to perform better and be more efficient and productive, it can also be detrimental if it's unhealthy. Unfortunately, SPIF's can lead to unhealthy competition, especially those that only have one or a few winners.

This, in turn, leads to a toxic work environment that decreases productivity, efficiency, and performance, exactly the opposite of what you want to achieve.  


For the same reasons that SPIF's can lead to unhealthy competition, they can also decrease employee morale. This is especially the case where SPIF's favour certain reps over others due to, for example, their skills, experience, or workflows. Simply put, when these reps aren’t able to take advantage of SPIF's, their morale will decrease and their performance will suffer. 

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The Bottom Line

For those times when you want to increase the performance of your sales teams, sell more products, and generate more revenue, SPIF's can be a very effective tool to boost your sales team performance in the short term. 

So, in addition to sales commissions, SPIF's should be part of your sales management processes. Hopefully, this post helped illustrate what SPIF's are, when you should use them, and what you should consider when doing so.

When implementing sales commissions and SPIF's, you also need software to manage all your compensation processes. To get the best sales commission software for your business, get in touch with Performio. Our commission software simplifies compensation plan management by automating your sales commission calculations, increasing transparency, and providing you with data-driven insights into your compensation processes.

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