Posted by: kaaprohr | December 10, 2010

Sales Incentive Vs Performance Incentive

One the surface these two terms might seem quite similar but their application is quite different in reality. The sales rewards are quite simply a small part of performance incentives plan that contains much more vast area.

Sales Rewards can be taken as simply the rewards associated to sales for certain product or service. The sales rewards might simply be part of the salary of certain sales staff or can be an inducement for the customer but its effectiveness is often not as much as the performance incentive.

Performance Incentive is aimed at creation and promotion of certain behavior, this might be increase sales, production, reduction of errors or simply the increased turnover among the staff. This is much wider area as compare to the sales rewards and has much more relevant application in long run.

The performance incentives can easily be made as part of regular practice of organization too quite easily. Their effectiveness is proven as compare to the sales its targets are much more stable in reality. The sales targets keep changing and are often subject to the various other elements in the market as well.

Interestingly there is some difference in the terms bonus and the sales incentives also. The bonus being part of salary can be subject to different legal precedents the same is not true for the incentives. The sales rewards are often taken as cash or similar on other hands the incentives are more often non c ash.

The payment mechanism of both these is quite different too, the simple calculation of sales can be used for calculation of the sales rewards on other hands the incentives might be achieved more easily and are in control of the person achieving them as compare to sales which is subject to the behavior of some other party.

 

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