SPIFF

What is a SPIFF?

A SPIFF is a short-term cash incentive for a specific sales result, such as renewing agreements early. It runs for a set window and sits on top of the regular comp plan. The word began as retail slang for a bonus paid to a salesperson for selling particular goods. Expansions such as sales performance incentive fund were fitted to the letters later, which is why spellings vary between SPIF and SPIFF.

Why it matters to a revenue leader

A SPIFF is the fastest way to shift what sellers focus on this month without rewriting the comp plan. That speed is also the risk. Run them often and sellers learn to wait for the next one, and the base plan loses its pull. Manufacturers have long paid SPIFFs directly to the salespeople of the retailers who sell their products, and researchers Zheyin Gu and Yunchuan Liu studied these programs as an incentive aimed squarely at the person making the sale. For a services leader, a SPIFF suits a narrow, time-bound goal, like locking in renewals before a price increase.

A fire protection company wants 200 inspection agreements renewed before a January price increase. It pays sellers $150 for each agreement renewed by November 30. Sellers renew 170, at a SPIFF cost of $25,500, and the VP compares that with the renewals that would have come in anyway.