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Why the Most Effective Promotional Offer or SPIFF Design is one that is targeted and focused toward an objective - Two examples discussed (one that worked and another that did not) that reveal it all!

I have designed several promotional pricing offers, SPIFFs, and compensation kickers used in accelerator/decelerator design. When I designed these offers, I always found that the most effective offers are ones that are short term and focused on achieving a specific objective.
Firstly, a discussion on offers that did not work. We designed a port in credit (PIC) offer where customers get paid a certain amount  (vis bill credit) when porting in from a competitor as opposed to no bill credits if they are not transferring over from a competitor. While the offer itself was sound, two things went awry -  it targeted the wrong business segments and the offer was extended for several quarters, making it almost perennial.
By offering the PIC to the wrong business segment we found that we were simply paying such credits to customers who would have ported in anyways. In other words we were offering PICs to segments which already had a high port in rate. We can confirm this hypothesis by comparing the baseline level of the port-ins before and after introduction of credit. In other words our port-ins did not increase due to the offer. In fact the port ins dropped because customers understood that better PICs are on the anvil in the ensuing months and decided to wait.
The second inefficiency was the PIC was used as a means to meet the quota - note the word meet and not exceed. In other words, a promotional offer was used to just meet baseline quota by as much as a 20% attainment gap. This in a way ended up teaching the sales force that a PIC was going to be on offer in subsequent quarters should there be advance information that quotas will not be met. Not a good sales efficiency strategy.
Now for an example of an offer that worked. We designed an offer to get the sales reps to bring in business earlier in the quarter rather than later in the quarter by scrambling to the finish line at the very end of the quarter. It rewarded reps by giving them a SPIFF if they brought more than, say, 60% of their quota halfway through the performance quarter. Why is this important? Two reasons: a. scrambling at the end of the quarter meant that deals with poor margins were being pushed through to meet the quotas, deals that would not have been approved otherwise, and b. by closing out the deals early in the quarter cycle, the monthly incremental revenue run-rate (MIRR) of a rep increased (earlier the sale, more the revenue in the quarter and the year - the increase could be as high as 35% compared to bringing in revenues in later) and thus the annual revenue run rate of the entire B2B sales team increased. This was a well designed, well targeted offer that produced excellent returns for the company.

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