What is Spiff Management?

Posted On: March 15, 2025

Manufacturers and wholesalers deliver their products and services through local retailers such as dealers, agents, contractors, and installers. These retailers carry different brands of the same product lines, and the suppliers seek to increase their share of the business. They apply strategies such as coop marketing funds, volume rebate contracts, and owner relationship building. These strategies, however, fail to reach the individual person that offers the greatest influence. That is the retail salesperson that is promoting and persuading the ultimate buyers.

A sales rep spiff program is designed to reach and engage that individual, to increase the frequency at which that person promotes and sells their brand compared to the other brands. Retail salespersons are incentivized positions. Many are straight commission. These individuals are highly motivated to earn more income. Therefore, suppliers offering spiff payments directly to these individuals can exert significant influence on that individual’s sales behavior.

However, there is a significant challenge and that is implementing a spiff program that is controlled and cost effective. It must be convenient to request a spiff while still applying mechanisms to ensure only valid spiff payments are made. And, to ensure the sales rep’s attention is not lost, the program must be prepared to move spiff requests rapidly through to verification and payment.  For these reasons, spiffs run on paper and spreadsheets routinely fail. They are too slow, too expensive, and lead to frequent disputes.

Spiff Management is a set of passively managed integrated processes that organize, automate, and fulfill spiff programs. Spiff Management requires a software-based platform to perform these automated processes conveniently and cost effectively. The fundamental elements of Spiff Management include:

1. Participant Registration & Acceptance: Participants must be able to register via an online portal where they can coincidentally create their user account, identify their employer (the supplier’s customer), agree to terms and conditions, and submit their W9. Spiff program managers must be able to permit new registrants via a brief review and single click, issuing a confirmation email out to the rep they are free to get started.
2. Spiff Request Data Audit: The spiff request must be audited via software as opposed to a person. This can be accomplished by adjudicating the spiff request to a supplier shipment record via unique identifiers such as model and serial number, or SKU and invoice number. Additionally, the software must confirm that shipment was made to the rep’s employer and within the required timeframe.
3. Spiff Request Intake: Registration and data auditing allows the program to ask for the minimum fields necessary to auto-validate the spiff request, and to either quickly approve it or deny it. A mobile app is the most convenient intake method as these reps are typically in the field or on the showroom floor. A mobile app offers the additional benefit of capturing a photo of the retail sales invoice which improves the likelihood the shipment won’t be returned back. A web quick-card entry is an acceptable alternative for intaking spiff requests.  
4. Creating Payment Records: Program managers should be capable of batching up validated spiff requests at a time of their choosing such as weekly, bi-monthly, or monthly. The batching process should consolidate multiple approved spiffs from the same rep into a single payment record. The payment records should be fed by API service to the payment provider. Payment methods include B2C Zelle Disbursements, company check, and reloadable cards. While this method should be sorted out your bank’s treasury official, Zelle Disbursements is the fastest option because it’s electronic.
5. 1099 Reporting: If the aggregate spiff payments made to an individual exceed the IRS limit, then the supplier must issue a 1099-misc tax form. The Spiff Management system should offer a 1099 report and require the reps to provide their SSN and W9 at the time of registration.
6. Loyalty Tier(Optional): A spiff program can deliver deeper engagement through a loyalty tier where the Spiff Management system tracks and rewards loyalty points based on rewarded spiff payments. These loyalty points should be tracked and presented through the spiff intake tool (i.e. mobile app or web quick card) and could be redeemed for merchandise, tools, gift cards, trips, event tickets, or even cash bonus.