Employee Engagement

Sales SPIFFs: What Are They & How To Use Them Right

June 10, 2022
min read

Although the term sales SPIFF may sound familiar, it’s common to not understand what it entirely is and how it can benefit you with your business. 

This article will first contextualize and explain what a sales SPIFF is, how it works and will also address frequently asked questions about the subject. 

Read below, especially if you’re an employer or HR manager, to discover how you can make SPIFFs work for you!

What SPIFFs Are In Sales And Why You Should Use Them

First, SPIFF stands for Sales Program Incentive Fund and a sales SPIFF describes a short-term incentive strategy in which sales representatives are awarded a small incentive or bonus at the point of sale. 

SPIFFs can be tailored to meet the different needs of your sales division and have direct benefits in terms of product growth. They can help meet the short-term sales goals of a particular product, create awareness of lesser known products, introduce new product lines and even help move excess stock from older lines. 

This is driven from the motivation and drive your sales representatives gain from having an incentive program that is immediate and available when successful sales are made. 

SPIFFs can be delivered through cash or goods/services incentives and are a productive way for sales reps to earn more aside from the established commission structure. 

This process of employee engagement will not only benefit the success of your business, but it will let your sales representatives feel acknowledged for their efforts and give them the drive to achieve more and better sales in the future.   

Frequently Asked Questions About SPIFFs

Is There A Difference Between Sales SPIFFs And Commissions?

Both commissions and SPIFFs are a type of performance pay that can be used to drive higher and larger sales, but they begin to differ in the structure of their delivery. A SPIFF is a shorter-term incentive program whereas commission is usually built into the sales representative’s pay structure. 


A commission is an additional sum of money, on top of the regular salary, that’s paid to the sales representative after they meet a specific target of goods sold. 

It can be paid out as a percentage of the value of sale or a flat amount based on the volume of sales made. 


A SPIFF is a short-term sales incentive that’s designed to promote immediate results. 

However, while they give your sales a temporary boost, there’s no guarantee that you’ll see long-term increase in productivity as a result.

How Do I Know What The Right SPIFF Is For My Business?

Not all businesses are alike and therefore, not all SPIFFS will be alike.

No matter if you sell tech hardware, software or digital products, it’s important to look at the type of business that you’re in, the performance metrics of your sales team and your unique sales goals to design the right SPIFF for your needs. 

A well-implemented SPIFF is easier to manage in the short term, but depending on your strategy, it can also drive up sales in the long-run as well. 

Experimentation is key in this process as once you see the results of your SPIFF strategy while it’s in action, you’ll be able to decide if it truly works and what adjustments may be needed to meet long-term goals. 

How Long Should A SPIFF Run For?

The length of time depends on a number of factors including whether your strategy runs for days, weeks or months and is influenced by the volume of product, and what your sales target is. 

A huge advantage of SPIFFs is that they help reduce the inventory that’s been weighing the business down, and so the volume of inventory, and your foundational reasons for introducing a SPIFF, will influence the time it takes to achieve results.

Is A SPIFF The Same Thing As A SPIV?

SPIFFs and Sales Performance Incentives (SPIVs) are essentially identical concepts known by different names. No matter the title you give it, a SPIFF can make an influential impact on your sales results.

Related: Best Sales Spiff Ideas To Motivate Your Team

How Does A SPIFF Work?

To define how a SPIFF works, it can be simply understood as a sales representative being rewarded for selling X number of products or services. 

Sales targets are set with extra incentives and bonuses offered for exceeding those targets. The targets can be the movement of older inventory, the volume of sales for new product lines and other factors. These targets can also be time-based (e.g. the sales rep to make the most sales in a week).

Although these rewards do not have to take the form of cash, financial incentives tend to be highly successful. 

How Can I Ensure That My Chosen SPIFF Is Successful?

For a SPIFF to be successful, you need to:

  • Decide what your revenue target is.
  • Factor in the volume of product that needs to be moved.
  • Ascertain what kind of incentives your sales team will best respond to.
  • Ensure that all participants understand the rules. 

Remember that a SPIFF is not about the product lines themselves, but is a way to drive sales and dominate the competition. 

Keeping your goals realistic, attainable, and clearly defined will prevent misunderstandings later in the process too.

Are SPIFFS Legal?

It is illegal to receive SPIFFs from a vendor company if you are completing business with the federal government, but if that is not the case, then they are considered legal.

Consult a legal advisor if you have any concerns surrounding the legality of SPIFFS that you intend to implement.

Are SPIFFs Taxable?

In the United States, received commissions and bonuses such as SPIFFS are considered taxable income by the IRS. 

If you are uncertain about the tax implications of SPIFFS, discuss this with a tax consultant.

Are There Downsides to SPIFFs?

SPIFFs can put you at risk for being exploited by low performing or unmotivated salespeople and they may not yield the results that you expect. Experimentation is key in this process.

Since SPIFFs can be easily manipulated, even through cases of fraud, it’s important to consult a specialist to help devise a SPIFF that will fit the needs of your company.

What Forms Can a SPIFF Take?

You can offer various types of SPIFF rewards, depending on the budget you’ve set aside for it. Do the relevant research and find out what your sales team will appreciate as an incentive. 

Some examples are:

  • Open programs that allocate awards to everyone who participates in the program.
  • Programs that allocate a limited number of awards or bonuses.
  • Target-based programs that allocate awards to salespeople on a tier-based program.

Prepaid cards loaded with monetary funds are the easiest to manage and offer instant gratification to sales reps. This system can be set up and re-used for future SPIFF programs.


Regardless of the incentive program that you decide on, you need expert advice and assistance in setting up your SPIFF.  

SPIFFs are an effective way to boost sales, increase product recognition, and reduce old inventory. They have been used successfully in tech and sales environments for many years. 

An incentive strategy expert will advise you about the costs, rules, and operation of your chosen SPIFF. Invest in sound advice to reap the benefits that SPIFFs can offer.

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