More sales thanks to premiums and bonuses

Small gifts keep friendship going, but they can also lead to more sales. Encourage employees and trading partners to do better with a well thought-out bonus system .

This is how the system works

Regardless of whether you have organized your sales through your own staff, freelance sales representatives or trading partners, for example retailers, the system is largely identical.

Limit the bonus promotion to a specific time frame .
Announce in good time what you have planned.
Define clear tiered goals , such as achieving a 10%, 15%, and 20% increase in sales. Or just catching up on the sales losses caused by the coronavirus.
Support the participants with advertising measures, eg by making brochures available.
Link a reward in the form of cash or non-cash bonuses to exceeding the goals .

choice of time frame

Ideally, choose a manageable promotional period of about 3 months . If the time frame is chosen too short, there is little chance of achieving the goals. If the period is very long, there is a risk that the effect will wear off because the participants lose sight of the goal.

The right timing is also important. If you choose times when there is already a lot of sales, this can lead to problems because you cannot deliver goods. So-called "sour pickle times" are a good choice because this way you smooth out sales over the course of the year.

Timely advance notice

Sales require a lead time, so you cannot expect success if you only announce the bonus campaign 1 week before it starts. Communicate about 3 to 6 months before the start when you plan a sales promotion with premiums or bonuses. This gives the participants time to adjust to this, for example when planning their vacation.

Approximately 8 weeks before launch , announce the goals and the rewards. Also share what accompanying support you provide. Think about your own lead time. By when do the participants have to request which material so that you can deliver it on time.

Definition of targets

Achieving percentage increases in sales is a good idea if the participants usually achieve very different sales. For example, a target of EUR 10,000 cannot be exceeded for a participant who usually achieves sales of EUR 5,000. Anyone who usually achieves a turnover of 100,000 euros can at most laugh about this goal.

Sometimes, however , concrete sales figures for a product are the best goal. For example, to promote the sale of a certain car model because a successor model is to be launched.

The definition of the target decides whether a planned system of bonuses and rewards is worthwhile for your company. If you want to increase profits , promote products with a high profit margin .
If you want to have "sellers" out of stock , offer prices for their sales.

Rewards and bonuses must match the specifications

Of course, increased sales of 10,000 euros do not mean that this amount is your profit. The premium must therefore be based on the profit generated . But it must not appear ridiculous either. If you offer 100 euros for an increase in sales of 10,000 euros, you will hardly create an incentive.

Sometimes the increase in profit is extremely small compared to the increase in sales. Here it makes sense to offer the prospect of original non-cash prizes . A novelty that is not yet available on the market or a custom-made product provides a greater incentive to achieve the goal than a small amount of money.

Another reward option is to combine a small payment with participation in a raffle . Anyone who achieves a sales increase of 10,000 euros, for example, gets 100 euros. In addition, a trip around the world will be raffled among all participants who have reached the goal.

taxing the reward

If you want to reward your own staff for achieving certain sales targets, you can offer non-cash or cash bonuses that the recipient has to pay tax on. Non-monetary bonuses have the advantage that no social security contributions are incurred. However, they must be taken into account in payroll accounting as follows.

gross salary
+ non-cash benefit (value of the premium)
= total gross
- Income tax
– church tax
– Solidarity surcharge
– Employee contribution to social security
= net fee
– benefits in kind
= payout

Premiums that cost less than 44 euros including VAT are tax-free. For the annual tax adjustment, the employee can set 1,080 euros as an allowance.

Since gifts of money or goods to trading partners are also taxable by them, there is another solution here. They grant a sales bonus, i.e. a price reduction that depends on a goal that has been reached. This solution is much easier to take into account in accounting.

Overall, coordinated sales targets in connection with bonuses and bonuses usually ensure a strong but temporary increase in sales.