Is spiff or Commission pay better for your business?
Both SPIFF and commission pay have their pros and cons. And choosing between the two will depend on your goals and business model. Employees on commission are often under a lot of stress as it is their only source of income.
What is a Spiff?
During the 1940s, SPIFFs were given to employees who sold a high amount of electronic goods. In the 1980s, Apple was able to beat IBM in retail computer sales by sweetening the deal for the salesmen with “SPIFFs.”
What can you expect from your company with Spiff?
Spiff allows your entire organization to benefit from (and understand) sales effort, increasing productivity and happiness. Bring it on! No matter how complex your commission plans, Spiff can handle it.
How much should I charge for a Spiff fee?
Or it could be for multiple products and the SPIFF could vary: $10 for a bat; $15 for a glove; $20 for a uniform. If you're a reseller, it can be a money maker. Just like a “slotting fee” where a manufacturer pays for shelf space, you can demand a SPIFF from the manufacturer so they pay for this "employee benefit" instead of you.
Is a SPIFF a commission or a bonus?
What does a SPIFF mean in sales?
What is the difference between a SPIFF and a bonus?
is that bonus is something extra that is good while spiff is (uncountable) attractiveness or charm in dress, appearance, or manner.
Is a SPIFF taxable?
The IRS considers them incentive pay so they do fall under the rules for 1099 MISC Commission. You have to be prepared to track and report them.Jun 28, 2016
What are SPIFF programs?
How does a SPIFF work?
How do I claim SPIFF money on my taxes?
While in your return, type “1099-misc” in the Search box and then select the “Jump to” link. This will take you directly to the section where you can enter your 1099-MISC.Jun 4, 2019
Where do I report SPIFF income?
Is SPIFF capitalized?
What is commission in business?
On the other hand, a commission is a sum of money paid to an employee upon completion of a task, usually by selling a certain amount of goods or services .
Why are spiffs important?
Since spiffs provide a reward upon completion, they have been known to increase employee participation. Also, they provide healthy competitiveness in the workplace. Helps reach short term goals. If your business needs to meet a goal in a short amount of time, spiffs are the way to go. They allow sales reps to meet their quotas quickly ...
What is performance pay?
Performance pay is a salary, wages, and/or bonuses paid to employees based on their performance. Businesses provide incentives to increase employee engagement and retention, which then provides financial rewards. Performance pay includes spiffs and commissions, which are different but a part of performance pay.
Why is commission pay important?
Motivates employees to work harder. Since commission pay relies on the completion of a task or sale, employees are more motivated to complete a sale. The more sales they make, the more generous their commission will be. Helps manage payroll expenses.
Why do business owners cut down costs?
Since the amount that employees are paid depends on their sales, business owners can cut down costs, especially for employees that aren’t performing well. In addition, it can create a more motivated and proactive workforce.
Can performance pay cost money?
Without proper planning and budgeting, any type of performance pay can cost the business a lot of money. To be safe, make sure your budget can handle all of your sales reps reaching the goal or milestone that is set.
What is a SPIFF?
SPIFF is the immediate bonus that a sales rep receives after completing a sale. It is a performance fund that you set aside for your sales reps. Such rewards are a great way to meet and exceed short-term goals.
Difference Between SPIFF and Commission
At a glance, SPIFF and commission look similar. However, there are some fundamental differences between the two. Let’s look at them one by one.
Conclusion
Before we wrap up, here’s a piece of friendly advice. Invest in software to keep a tab on your reps’ activities and performances. Many sales-led organizations use CRM software to manage everything related to sales.
What is a SPIFF?
SPIFF or SPIF or SPIV refers to a manufacturer or employer paying a small, immediate bonus for a sale or even a demo to a salesperson. These can be good for your customers if these “paid recommendations” are appropriate and truthful. A SPIFF can be cash or something the salespeople really value or think is "spiffy" like a trip, drone, ...
What is SPIFF program?
A SPIFF program can add long-term visibility and name recognition to help a product stand out. It’s a way to encourage a salesperson to push one product more often than a non-SPIFF paid product. It can work miracles for you and cut out competitors.
What is SPIFF incentive?
A SPIFF incentive program can add up fast so manufacturers (or the resellers) have to be able to afford the quick “commission”. Unhappy salespeople who don’t get what they are promised and in a timely way can cause real trouble. It can spill over to legal trouble as well.
Why did Apple use SPIFF?
Early Apple and even the well established IBM used a SPIFF incentive to cut out Texas Instruments from potential PC sales. When used (as recommended) for short periods of time as incentives, it can drive sales numbers, meeting or exceeding sales goals, or for quick dollar margins.
Why do restaurants use SPIFFs?
It's also common practice in publicly traded companies to use SPIFFs to reduce inventory and lower carrying costs or to get rid of older merchandise.
Is SPIFF a common practice?
They may be common practice in your industry. The use of a SPIFF program may even be the accepted way of doing business in countries you sell to or want to sell to. It can be hard to not be forced into using one if any of these are true. Before you use them, think it through.
Can you demand a SPIFF from a manufacturer?
If you're a reseller, it can be a money maker. Just like a “slotting fee” where a manufacturer pays for shelf space, you can demand a SPIFF from the manufacturer so they pay for this "employee benefit" instead of you.
What is a SPIFF?
A SPIFF is a Sales Performance Incentive Fund, with an extra F just for fun I suppose. A SPIFF Program creates an immediate reward for indirect sales reps to push your offering over a competitor manufacturer’s offering.
When to Leverage a SPIFF
Commission programs are easier to manage because they can be systemized and managed in an ongoing fashion, so there’s less overhead resource allocation to those programs. But sometimes commission based partner enablement programs simply aren’t creating enough incentive or preference for your brand. In these cases, SPIFFs can be especially useful.
How to Conduct a Successful SPIFF Campaign
Determine which partners can participate. First, narrow down which partner companies you deem qualified to participate based on tenure, volume of sales generated, location, etc. Then go one step further and determine which specific indirect sales reps at those companies are a best fit for your program.
Why do manufacturers use Spiffs?
Manufacturers and/or employers use spiffs and spivs to promote sales and to incentive their sales teams. Sometimes these incentives fail to meet the need of the company, and another incentive is used instead. While some spiffs can be good, others can be bad. All spiffs and spivs are not and will never be the same.
Why do companies use Spiff programs?
The answer is simple. Companies use spiff programs to increase their profits. Some merchandise does not have loyal patronage, especially non-name brand items. Therefore, when new brands hit the market, they need to be properly introduced to the public.
What is a Spiff program?
It is incentive program companies and businesses use to drive sales. When merchandise is not selling well, or if inventory items need to be sold or cleared, the company runs a campaign. Or, when a sales sprint is put in place on a sales team and the company or business will put in place a spiff program to increase sales during a specific period ...
Why do people use spiffs?
Spiffs are meant to be fun for participants. In the early years, spiffs were used to help launch Apple computers, and IBM used spiff programs to keep their brand stronger in the public’s eye. Salespeople during this era earned incentives to demonstrate the use of these computers.
Can spiffs be illegal?
If spiffs are used erroneously, the awards can become illegal. Therefore, it is imperative to always review the game plan. Make sure all the details, rules and regulations are clear, and everyone understands their part. When the program goes well, the end result can be profitable for everyone.
Can you cash in on a spiff?
At the end of the campaign, the salesperson can cash in on their rewards by turning in his or her sales receipts for validation. However, this type of spiff is not tax-free; it must be reported on a 1099-misc tax form when the annual amount exceeds the IRS limit for the calendar year.
Is Spiffs the same as Spivs?
The answer: there is no difference –except for the terms different companies choose to use them. Spiffs and SPIVs are basically the same; although, they are used to describe certain long-term sales or incentives. Manufacturers and/or employers use spiffs and spivs to promote sales and to incentive their sales teams.
