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by Alex Palmer | January 26, 2015
Sales incentive programs must encourage workers to both enhance their own performance and help meet organization-wide goals. This is one of the recommendations outlined for sales incentives in a new white paper from Dittman Incentive Marketing.

 The report, "Designing and Implementing an Effective Sales Incentive Program," draws on recent research and case studies to lay out several best practices for sales incentives. Pointing to the Incentive Federation's finding that 74 percent of businesses use non-cash rewards, the author of the white paper emphasizes that such considerations as what is the most effective time frame, parameters of the program, and reward level must be considered.

 "For a sales incentive to deliver an effective ROI, careful thought must be given to the contest parameters and the rewards," said Dave Dittman, Executive Vice President of Dittman Incentive Marketing, in a statement. "This white paper provides a clear roadmap to designing a program that will meet the goals of the C-suite and the Sales organization."

 The paper focuses on three main phases of designing and executing a sales incentive program: setting the budget, laying out program rules, and creating an effective communication strategy.

 "Setting the Budget" is one of the major topics tackled in the story. The paper's author lays out the rule of thumb that a program should cost 15 to 25 percent of incremental gross profit -- or about 5 percent of incremental sales. For example, a company that earned $100 million at 20 percent gross profit might aim to raise incremental profit by $10 million the next year. Twenty percent of that profit would be $2 million, so 15 to 20 percent of that incremental gross profit (and the amount budgeted for a sales incentive program), should be between $300,00 and $500,000.

 "Don't forget that, even without the incentive program, some growth will be achieved using traditional marketing channels such as advertising and sales tools," he added.

 Read the full report here.