It’s no secret that SPIFs are a deadly trap for you cabinet manufacturers. While paying salespeople SPIFs directly for every cabinet they sell does create a strong motivator, SPIFs tend to become a permanent part of the landscape.
Like that weird Facebook picture you can’t seem to get rid of (you know the one where you drank too much, fell down a ravine and cut up your face at the executive meeting), SPIFs can become the worst nightmare for your cabinet manufacturer sales approach. Since you rarely know what portion of your sales are truly derived from SPIFs anyhow, you’ll never want to let them go later for fear of losing revenue.
Whether you’ve fallen victim of the SPIF trap or not, doesn’t mean there couldn’t be a more compelling place for SPIFs.
All revenue is NOT created equal
Manufacturers have mega challenges with order entry right now (and sales too). But SPIFs, in their current form, only solve half the battle at best, usually creating more challenges than they solve.
When we ask what would happen if volume doubled quickly, most of you usually cringe. That’s because order entry would rapidly become a scene from The Walking Dead, with customer service reps freaking out and offing themselves overnight. While this is unlikely to happen (the quickly doubling of volume part) it does point to the incredible inefficiencies experienced in manufacturer order entry.
So when we say all revenue isn’t created equal, we’re referring to the quality of the order you are receiving. If the entire game were all about revenue, this cabinet gig would be a breeze. But that’s not the whole game: processing the order cheaply and efficiently is required before you can scale, and that’s all about getting clean orders.
All that SPIF of yours gets you today is an ugly order that is probably incomplete in some way or contains mistakes and incorrect configurations. To even have a chance at getting the order through, you have to track down the person that placed the order to get it corrected.
This drags out the customer experience, delays your orders and ultimately creates rush situations that throw manufacturing for a loop.
Think chickens running around with their heads cut off.
Of course you might say you don’t care right now, that all you need is the order so you’ll take it any way you can get it, but we think that’s short sighted.
A different kind of SPIF
I propose to all you cabinet manufacturers out there that SPIFs should be used to get you clean orders. You’re buying the business anyhow; why not buy the entire goodie basket (a.k.a. the clean order)?
It wouldn’t be that hard to score orders – keep it simple. Rate them 1 through 5. A five is flawless, while a one looks like the guy wrote it on toilet paper in what appears to be English at 2am after he climbed out of the ravine he fell into.
A Creative Co-op Play?
Regardless of what we say about SPIFs being right or wrong, if you’re using them you’re most likely stuck with them. Let’s go with that for a moment and accept that you’ve proven salespeople will jump at money to sell your brand.
If that were true then why wouldn’t they jump at more money to take the extra time to clean up the order? People who are strongly motivated by money are, well, strongly motivated by more money.
Last time I checked 60% or more of your manufacturer co-op dollars are written off anyhow and the rest are used for baseball caps and bubblegum. Why not pay the troops to help clean up your orders?
Think about that – after you’re sober of course.