Human-centered incentive design: Unlocking insights into sales force preferences

The incentive design process tends to be innately strategy- and data-driven, with little consideration for participants’ perceptions of the plan. But honestly, we’ve all experienced designing a plan that looked brilliant on paper, but completely missed the mark when rolled out to the broad population. What’s worse, so many plans are designed and then administered with painstaking complexity, but we have no idea if they are truly driving performance by motivating participants. Organizations continue to invest billions in paying the sales force, without truly knowing if that is what drives their behavior in the most impactful manner.

The typical incentive design process involves aligning the plan components, modeling payouts and then designing communication materials to roll the plan out. Some companies have an intermediate step that requires field “champions” to get first-hand perspectives.

In today’s evolving landscape, however, companies must think differently about incentive compensation (IC) design and the tools they use to develop it. Here are some considerations for reimagining the design process and an exploration of how collecting and analyzing data about your sales force’s preferences can create advantages.

Neglecting participants’ perceptions in the incentive design process can lead to misalignment between the intended goals of the program and the actual motivations and experiences of those involved. When designers focus solely on strategy and data, they risk creating incentives that feel arbitrary or unappealing to participants, undermining engagement and participation. This disconnect can foster skepticism, reduce motivation and ultimately result in poor outcomes, as participants may not see the value or relevance of the incentives. By integrating the perspectives and needs of participants, organizations can create more effective and meaningful incentive programs that resonate on a personal level, driving engagement and fostering positive experiences.

In the context of incentive design, organizations have been deploying traditional methods of evaluating performance data and voice of sales force surveys to understand their sales force better. However, purely quantitative processes like analyzing historical sales and performance data may not tell the full story of what is driving certain behaviors among different members of the team. Relying purely on impersonal methods that exclude the voice of the associate to inform incentive design can lead to limited engagement and may even occasionally backfire.

For example, running the numbers alone can tell you that new hires have disproportionately high attrition rates. But it does little to illuminate the root cause of this behavior: current IC plans reward sales reps with prior sales experience and relationships, disadvantaging anyone new to the industry.

Engagement surveys are valuable tools for gaining deeper insights into the sales force, providing a window into their motivations, challenges and overall satisfaction. These surveys offer a structured way to collect feedback directly from sales team members, allowing management to identify trends and issues that might otherwise go unnoticed. By assessing factors like job satisfaction, recognition, support and work-life balance, engagement surveys help pinpoint areas that may affect sales performance.

In another example, if a sizable portion of the sales force reports feeling unsupported, it may indicate a need for better training or resources. Moreover, these surveys can uncover the driving forces behind high performers, enabling the organization to replicate success across the team. Understanding the sentiments and needs of the sales force can also help in crafting more effective incentive plans and career development opportunities, which can boost morale and productivity.

Even feedback tools like health check forms and voice of sales force surveys have their limitations. Participation in annual surveys can vary across teams, and while long-form qualitative responses can increase our understanding of pain points, they are often too open-ended and linear. They don’t paint a clear picture of how associates value different attributes of an incentive plan relative to each other.

This is where statistical tools like conjoint analysis have the potential to transform data collection, ideation and plan finalization. Conjoint analysis is a sophisticated statistical technique widely used in market research to understand consumer preferences and decision-making processes. By presenting respondents with various product or service profiles that differ in attributes, researchers can determine the relative importance of each feature and how they influence preferences.

While conjoint studies are primarily a market research tool, they hold untapped potential within sales compensation to help inform incentive design. You can think of this tool as a means to answer three key questions:

• How are the different components of the incentive plan ranked and valued by participants?
• What are the most popular packages—for example, combinations of incentive plan components?
• How do participants feel about the overall IC plan that has been developed and how does it compare to the existing plan?

A well-designed conjoint study for incentive design can provide the flexibility and analytical sophistication required for a large sales force-wide assessment and will also account for organizational constraints like:

• Budget and administrative restrictions: Feedback from leadership around financial constraints should be incorporated up front in designing the study to ensure all options shown to respondents are within budget and feasibility constraints.
• Statistical significance: Drawing from a large sample of associates across business units allows compensation teams to evaluate a wide range of plan designs and combinations of options for each component. 

A conjoint survey for incentive design will consist of four key sections to assess the current perception of each plan component and identify preferred packages and perceived value:

• Understand current awareness and perception: Assess the current state of incentive plans and identify which components have contributed to the largest share of associate earnings to help narrow down the potential option set. (Sample question: “Over the last two years, what percentage of your annual earnings was driven by each of the following components?”)
• Component importance allocation: Point allocation exercise to determine the importance of individual plan components on a numerical scale. (Sample question: “On a scale of zero to 100, how important is component A in your continued engagement in this role?”)
• Program bundle rank exercise: Respondents rank their preference among different sets of unique incentive plan configurations, allowing different plans to be assessed head-to-head. (Sample question: “Which of the following two plans—differing in proportion of base pay to variable pay—would increase your motivation in this role?”)
• Program bundle ratings: Respondents rate key plan constructs to assess perceived value related to engagement and retention. (Sample question: “If 100 points represent the ‘perfect’ incentive plan, how valuable are each of the following plans?”)

This approach enables teams to optimize the combinations of benefits by role and job family to maximize perceived value.

Survey results can be synthesized to provide a holistic view of how different plan designs appeal to associates and what the cost and perceived value of each configuration will be.

A conjoint study can produce insights like:

• Determining the perceived importance of individual components within the plan
• Evaluating combinations of plan designs and identifying the optimally and minimally viable plan designs
• Understanding how individual plan constructs will be received by various sales force populations and identifying patterns in preferences
• Simulating the direct cost of the incentive plan option, as well as the indirect cost due to estimate attrition or disengagement

The ultimate outcome of the exercise is to identify the top two to three prioritized plan options that will motivate the highest proportion of the sales force. These prioritized plans can undergo pilot testing with a subset of associates before implementing a full-scale rollout.

Developing a deeper understanding of your sales force regarding their incentive plan design can be a key differentiator for companies, setting them up for success as sales forces become more diverse in motivation drivers and incentive preferences.

Creating tailored plans while balancing organizational priorities and budget will not only enhance engagement and satisfaction but will also drive performance and productivity. Leveraging innovative techniques such as conjoint studies can help companies rapidly model preferences for different plan options and increase confidence in sales force buy-in of the final plan option.