Terms

Spiff

A spiff is a short-term, immediate bonus paid to a salesperson for achieving a specific goal, like selling a particular product or booking a set number of demos. Companies use these incentives to quickly move specific inventory, launch new products, or meet short-term sales targets. While typically a cash bonus, a spiff can also take the form of gift cards, merchandise, or travel incentives.

Historical Context

The term "spiff" dates back to 19th-century England, originally describing a bonus paid to retail clerks for selling old or undesirable merchandise. This practice helped shopkeepers move slow-selling stock while motivating their sales staff. By the early 20th century, spiffs were a common practice in both wholesale and retail.

The concept continued to evolve, with a notable modern example being Apple's use of spiffs in the 1980s to drive computer sales. This strategy significantly boosted their market presence and helped solidify the spiff's place in modern sales culture. Today, they remain a popular short-term incentive across many industries.

Common Uses

Spiffs are versatile tools used to drive specific sales behaviors and achieve immediate business objectives. Companies strategically deploy them to influence sales team focus and accelerate results in key areas, often outside of the standard compensation plan.

  • Products: Pushing high-margin items or new product lines to gain market traction.
  • Inventory: Clearing out old or overstocked merchandise to make room for new items.
  • Adoption: Encouraging the sale of a newly launched product or service.
  • Loyalty: Building brand preference among channel partners or third-party resellers.

Spiff vs. Stipend

While both are forms of payment, spiffs and stipends serve fundamentally different purposes in a business context.

  • Spiff: A variable, short-term bonus tied directly to performance, such as selling a specific product. It's ideal for driving immediate sales goals, like clearing old inventory or promoting new items. However, it can sometimes encourage unhealthy competition. Enterprises and mid-market companies use spiffs for tactical sales boosts.
  • Stipend: A fixed, regular payment meant to cover specific expenses, often for interns, trainees, or as a general allowance. It provides predictable income but isn't tied to sales performance. This makes it suitable for roles where support and enablement are prioritized over direct sales incentives across companies of all sizes.

Industry Applications

Spiffs are a go-to tactic across numerous industries to energize sales teams and hit specific targets. They are particularly effective in environments with tangible products and clear sales cycles, allowing companies to adapt them for various strategic goals.

  • Retail: clearing out seasonal merchandise or slow-moving inventory.
  • Manufacturing: incentivizing distributors to prioritize and push new product lines.
  • Technology: driving sales of specific software bundles or new feature adoption.

Benefits and Drawbacks

Spiffs can be a powerful tool for motivating sales teams and achieving quick wins, but they aren't without their risks. When implemented thoughtfully, they can drive significant results. However, if poorly managed, they can lead to unintended negative consequences.

  • Benefits: Spiffs provide a direct incentive, boosting sales team motivation and focusing efforts on specific, short-term goals. This is highly effective for launching new products or clearing out excess inventory quickly.
  • Drawbacks: They can encourage negative behaviors like "sandbagging," where reps delay sales in anticipation of a spiff. This can also foster unhealthy competition and lead reps to prioritize spiffed products over the customer's best interest.

Frequently Asked Questions about Spiff

Are spiffs considered taxable income?

Yes, spiffs are considered taxable income by the IRS. They are treated as supplemental wages, and companies must report them accordingly. Salespeople should expect to pay income and payroll taxes on any spiff payments they receive, whether in cash or as a non-cash prize.

How are spiffs different from regular sales commissions?

Spiffs are short-term bonuses for specific, tactical goals, like selling a new product. Commissions are a core part of a salesperson's compensation, calculated as a percentage of total sales revenue over a longer period. Spiffs are extra, commissions are standard.

Can spiffs create a negative sales culture?

They can if not managed properly. Over-reliance on spiffs may lead to unhealthy competition, reps prioritizing spiffed products over customer needs, or "sandbagging" sales. A balanced incentive structure is key to avoiding these pitfalls and maintaining a positive team environment.

Other terms

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Platform as a Service

Platform as a Service (PaaS) is a cloud model where a provider delivers a platform for users to develop, run, and manage applications online.

Platform as a Service

Business-to-Business (B2B)

Learn about B2B, including what is it, its key elements, the benefits of B2B partnerships, the differences between B2B and B2C, and strategies for effective marketing.

Business-to-Business (B2B)

Sales Automation

Sales automation uses software to streamline and automate repetitive, manual sales tasks, freeing up reps to focus on selling.

Sales Automation

Weighted Sales Pipeline

A weighted sales pipeline forecasts revenue by assigning a closing probability to each deal, giving a more accurate picture of potential income.

Weighted Sales Pipeline

Product Recommendations

Product recommendations are a marketing strategy that uses customer data to suggest relevant products, boosting sales and customer engagement.

Product Recommendations

Persona

A persona is a semi-fictional profile of your ideal customer, based on market research and real data about your existing customers.

Persona

API

An API (Application Programming Interface) is a software intermediary that allows two applications to talk to each other and exchange information.

API

Inbound Lead Generation

Inbound lead generation is the process of attracting potential customers to your business with valuable content and tailored experiences.

Inbound Lead Generation

Git

Git is a distributed version control system that tracks changes in code, allowing developers to collaborate and manage project history effectively.

Git

Lead Qualification

Lead qualification is the process of determining which prospects are most likely to become paying customers based on predefined criteria.

Lead Qualification

Event Tracking

Event tracking is the method of collecting data on specific user actions, or 'events,' on a website or app, such as clicks or downloads.

Event Tracking

Inside Sales

Inside sales is a remote sales process where reps sell products or services via phone, email, and other digital tools instead of in person.

Inside Sales

Docker

Docker is a tool that packages applications and their dependencies into isolated environments called containers for easy deployment and scaling.

Docker

Single Sign-On (SSO)

Single Sign-On (SSO) is an authentication method allowing users to access multiple applications with one set of login credentials.

Single Sign-On (SSO)

FAB Technique

The FAB technique is a sales framework connecting product features to advantages and then to the specific benefits for the customer.

FAB Technique

Customer Relationship Management Hygiene

CRM hygiene involves regularly cleaning and updating your customer data to ensure your CRM system remains a powerful and reliable tool.

Customer Relationship Management Hygiene

Time on Site

Time on site, or session duration, is a key web metric that tracks the total time a visitor spends on your website during a single visit.

Time on Site

Private Labeling

Private labeling is when a company rebrands a product made by a third-party manufacturer and sells it as their own.

Private Labeling

Positioning Statement

A positioning statement is a concise description of your target market and how your product or service uniquely fills their needs.

Positioning Statement

Sales Prospecting Techniques

Sales prospecting techniques are methods used by sales teams to identify, contact, and qualify potential customers, also known as prospects.

Sales Prospecting Techniques

Outbound Leads

Outbound leads are potential customers a business proactively contacts through outreach like cold calls, emails, or social media.

Outbound Leads

Application Performance Management

Application Performance Management (APM) monitors and manages an application's performance, availability, and the experience of its end-users.

Application Performance Management

Forward Revenue

Forward revenue is the total value of all active, committed contracts that are expected to be recognized as revenue in the future.

Forward Revenue

Geo-Fencing

Geo-fencing creates a virtual boundary around a real-world location. It triggers actions on a device when it enters or exits this area.

Geo-Fencing

Gated Content

Gated content is premium online material, like an ebook or webinar, that users can only access after providing their contact information.

Gated Content

Customer Centricity

Customer centricity is a business approach that puts the customer at the heart of every decision, aiming to build loyalty and long-term value.

Customer Centricity

Employee Engagement

Employee engagement is the emotional commitment an employee has to their organization, motivating them to contribute to the company's success.

Employee Engagement

Firmographic Data

Firmographic data is information used to classify firms. It includes attributes like industry, employee count, location, and annual revenue.

Firmographic Data

Hybrid Sales Model

A hybrid sales model blends traditional and digital sales methods to engage customers across multiple channels and buying preferences.

Hybrid Sales Model

Marketing Analytics

Marketing analytics involves measuring and analyzing marketing data to understand campaign performance and improve return on investment (ROI).

Marketing Analytics

Warm Calling

Warm calling is contacting prospects with a prior connection, like a referral or social media interaction, to make your outreach more relevant.

Warm Calling

Value Chain

A value chain is the series of business activities required to create and deliver a product or service, from conception to the final customer.

Value Chain

On Target Earnings

On-Target Earnings (OTE) is a salesperson's total potential pay, combining base salary and commission for hitting their sales quota.

On Target Earnings

Demographic Segmentation in Marketing

Demographic segmentation divides a market into groups based on traits like age, gender, and income, allowing for more targeted marketing efforts.

Demographic Segmentation in Marketing

Lead Magnet

A lead magnet is a free incentive offered to potential customers in exchange for their contact details, like an email, to generate sales leads.

Lead Magnet

Customer Acquisition Cost

Customer Acquisition Cost (CAC) is the total cost a business spends to gain a new customer. It includes all sales and marketing expenses.

Customer Acquisition Cost

Enterprise Resource Planning

Enterprise Resource Planning (ERP) is a system of integrated software that businesses use to manage and automate their core day-to-day processes.

Enterprise Resource Planning

Employee Advocacy

Employee advocacy is the promotion of an organization by its staff members, who share positive messages and content through their personal networks.

Employee Advocacy

Consumer Relationship Management

Consumer Relationship Management (CRM) is a strategy for managing all of a company's relationships and interactions with its customers.

Consumer Relationship Management

Trademarks

Think of a trademark as a brand's unique signature—a word, symbol, or phrase that legally protects its identity and sets it apart from the rest.

Trademarks

Microservices

Microservices is an architecture where apps are built as a collection of small, independent services that communicate with each other over APIs.

Microservices

Sales Rep Training

Sales rep training is the process of equipping your sales team with the skills, knowledge, and tools to effectively sell and hit their targets.

Sales Rep Training

Funnel Analysis

Funnel analysis is a method for understanding the steps users take to complete a goal, revealing where they drop off in the conversion process.

Funnel Analysis

Sales Pitch

A sales pitch is a persuasive presentation of a product or service, aimed at convincing a potential customer to make a purchase.

Sales Pitch

Targeted Marketing

Targeted marketing focuses on specific consumer groups whose needs align with your product, allowing for more personalized and effective messaging.

Targeted Marketing

Sales Bundle

A sales bundle groups multiple products or services into a single offering, often at a discounted price to provide greater value to customers.

Sales Bundle

Scalability

Scalability is a company's ability to handle increased workloads or market demands without a drop in performance or a spike in costs.

Scalability

Small to Medium-Sized Business

A small to medium-sized business (SMB) is a company whose employee count and annual revenue fall below certain industry-specific thresholds.

Small to Medium-Sized Business

Lead Conversion

Lead conversion is the process of turning a prospect into a customer by getting them to complete a desired action, such as making a purchase.

Lead Conversion

Sales Stack

A sales stack is the suite of tech tools—from CRMs to prospecting software—that sales reps use to close deals faster and more efficiently.

Sales Stack

Ballpark

Learn about ballpark, including estimating with ballpark figures, understanding ballpark estimates in sales, & ballpark estimates vs. precise quotes.

Ballpark

Business to customer

Learn about business to customer, including maximizing B2C sales strategies, B2C vs. B2B: unveiling differences, & core principles of B2C success.

Business to customer

Channel Partners

Channel partners are third-party firms that help market and sell a company's products or services, acting as an indirect sales force.

Channel Partners

Dynamic Segment

Dynamic segments are self-updating lists that group contacts based on real-time data, ensuring your outreach is always timely and relevant.

Dynamic Segment

Economic Order Quantity

Economic Order Quantity (EOQ) is the ideal order quantity a company should purchase to minimize its total inventory-related costs.

Economic Order Quantity

Sales Calls

A sales call is a real-time conversation between a salesperson and a prospect, aiming to persuade them to purchase a product or service.

Sales Calls

Forecasting

Forecasting uses historical data to make informed predictions about future trends, helping businesses anticipate outcomes and plan accordingly.

Forecasting

Account Executive

An Account Executive (AE) is a sales professional responsible for closing new business deals and managing existing client relationships to drive revenue.

Account Executive

Channel Marketing

Channel marketing is a strategy where a company sells its products or services through third-party partners, like resellers or affiliates.

Channel Marketing

Demand Forecasting

Demand forecasting is the process of predicting future customer demand for a product or service based on historical data and market trends.

Demand Forecasting

Pay-per-Click (PPC)

Pay-per-click (PPC) is an ad model where you pay a fee each time your ad is clicked. It's a method of buying targeted visits to your website.

Pay-per-Click (PPC)

Sales Operations Management

Sales Operations Management streamlines sales processes, tech, and data analysis to help sales teams sell more effectively and efficiently.

Sales Operations Management

Overcoming Objections

Overcoming objections is the process of addressing and resolving a prospect's concerns or hesitations to move a sale forward.

Overcoming Objections

Feature Flags

Feature flags let you remotely control features in your app without new code. This enables safe testing, gradual rollouts, and quick rollbacks.

Feature Flags

Revenue Forecasting

Revenue forecasting is the process of estimating a company's future revenue, using historical data and market trends to guide strategic planning.

Revenue Forecasting

BAB Formula

Learn about BAB formula, including implementing BAB in sales strategies, crafting an effective BAB pitch, & comparing BAB with other sales frameworks.

BAB Formula

Product-Led Growth

Product-Led Growth (PLG) is a business strategy where the product itself drives user acquisition, conversion, and expansion.

Product-Led Growth

C-Level or C-Suite

The C-suite, or C-level, refers to a company's most senior executives. Their titles usually start with 'Chief,' such as CEO, CFO, or CTO.

C-Level or C-Suite

Buyer

Learn about buyer, including identifying your ideal buyer, understanding buyer's journey, & evaluating buyer decision processes.

Buyer

Data Management Platform

A Data Management Platform (DMP) is a software that collects and organizes audience data from various sources for targeted marketing efforts.

Data Management Platform

Personalization in Sales

Personalization in sales means tailoring outreach to a prospect's specific needs, interests, and context to make communication more relevant.

Personalization in Sales

Compliance Testing

Compliance testing ensures a product or system adheres to specific regulations, standards, or policies set by governing bodies or organizations.

Compliance Testing

Average Customer Life

Average Customer Life is the average time someone remains a customer. It's a key metric for predicting revenue and measuring customer loyalty.

Average Customer Life

B2B2C

Learn about B2B2C, including benefits of B2B2C model, key strategies for B2B2C success, & B2B2C vs. B2C vs. B2B: understanding the differences.

B2B2C

Sales Director

A Sales Director leads a sales team, develops strategies, and is responsible for meeting a company's revenue targets.

Sales Director

Affiliate Networks

Affiliate networks are platforms that act as intermediaries between publishers (affiliates) and merchant affiliate programs.

Affiliate Networks

Account-Based Marketing Benchmarks

Account-Based Marketing (ABM) benchmarks are key metrics used to measure the performance and success of your targeted account strategies.

Account-Based Marketing Benchmarks

Multi-Channel Marketing

Multi-channel marketing uses various platforms—like email, social media, and direct mail—to engage with customers wherever they are.

Multi-Channel Marketing

Messaging Strategy

A messaging strategy defines what your brand says, how it says it, and where it says it to connect effectively with your target audience.

Messaging Strategy

Hadoop

Hadoop is an open-source framework designed for the distributed storage and processing of extremely large data sets across clusters of computers.

Hadoop

Hard Sell

A hard sell is an aggressive sales technique that uses high-pressure tactics to push a customer into making an immediate purchase decision.

Hard Sell

Marketing Performance

Marketing performance is the process of measuring a campaign's effectiveness against set goals using key metrics like ROI and conversion rates.

Marketing Performance

GTM

A go-to-market (GTM) strategy is an action plan that outlines how a company will reach target customers and achieve a competitive advantage.

GTM

B2B Marketing Analytics

Learn about B2B marketing analytics, including key components of B2B marketing analytics, & getting started with B2B marketing analytics.

B2B Marketing Analytics

PPC

Pay-per-click (PPC) is an internet advertising model where businesses pay a fee each time one of their online ads is clicked by a user.

PPC

Buying Process

The buying process is the journey a customer takes from first realizing a need to making a final purchase decision and evaluating it afterward.

Buying Process

Ideal Customer Profile

An Ideal Customer Profile (ICP) is a detailed description of the perfect, hypothetical company that would get the most value from your product.

Ideal Customer Profile

Virtual Selling

Virtual selling is the process of selling to customers remotely using technology like video calls, rather than meeting them in person.

Virtual Selling

Customer Relationship Management Systems

A Customer Relationship Management (CRM) system is a tool that centralizes customer data to help manage interactions and nurture relationships.

Customer Relationship Management Systems

Demand

Demand is the economic principle describing a consumer's desire and willingness to purchase a specific good or service at a particular price.

Demand

Sales Territory Planning

Sales territory planning is the process of dividing customers into geographic areas to be assigned to specific sales reps or teams.

Sales Territory Planning

Bulk Application Programming Interface

Learn about bulk API, including how it works, the advantages of using it, common use cases, and tips for optimizing it.

Bulk Application Programming Interface

Customer Success

Customer Success is a business strategy focused on proactively helping customers achieve their goals with your product or service.

Customer Success

Drip Campaign

A drip campaign is a series of automated messages sent to prospects or customers over time to nurture leads and drive engagement.

Drip Campaign

Buyer Behavior

Learn about buyer behavior, including understanding the buyer's journey, influencing factors in buyer behavior, & buyer behavior and marketing strategy.

Buyer Behavior

Digital Analytics

Digital analytics is the analysis of data from digital channels to understand user behavior and optimize online experiences for business goals.

Digital Analytics

Lead Enrichment Tools

Lead enrichment tools are platforms that automatically add missing data to your leads, like contact info, firmographics, and buying signals.

Lead Enrichment Tools

Sales Operations Key Performance Indicators

Sales Operations KPIs are measurable metrics that track the efficiency and effectiveness of a sales team's operational processes.

Sales Operations Key Performance Indicators

Sales Intelligence

Sales intelligence is technology that gathers and analyzes data to help salespeople find and understand prospects and existing clients.

Sales Intelligence

Jobs to Be Done Framework

The Jobs to Be Done (JTBD) framework focuses on understanding customer needs by identifying the specific 'job' they are trying to accomplish.

Jobs to Be Done Framework