How a SPIFF works
A SPIFF has four parts: the result you want, the amount paid, who is eligible and the end date. A typical partner SPIFF reads like "$500 to the partner rep for every new deal on the Analytics plan closed between July 1 and September 30."
SPIFFs are paid on top of the partner's normal referral fee or margin, and they stop when the period ends.
When vendors use them
- Launching a product or plan. Partners stick with what they know sells. A SPIFF gets them to try pitching something new.
- Closing a quarter. A bonus for deals registered or closed before a date pulls pipeline forward.
- Building habits. Paying for a first registered deal or a completed certification gets new partners moving.
- Shifting the mix. A bonus on annual contracts, for example, nudges partners away from monthly deals.
Risks to manage
A SPIFF that is too large or runs too long becomes an expected part of pay. Deals can also be held back to land inside the SPIFF window. Keep SPIFFs short, tie them to results you can verify in your CRM, and write the rules down before announcing them. Make clear whether a refund or cancellation reverses the payment.
Example
Atlas Logistics, a software vendor, launches a new route planning add-on. To get partners selling it, it offers a $400 SPIFF to the partner for every new customer who buys the add-on between April 1 and June 30, on top of the standard 15% referral fee.
Signal Partners closes three add-on deals in the quarter, each worth $6,000 a year. It earns its normal $900 referral fee on each, plus a $400 SPIFF on each, for $3,900 in total. On July 1 the SPIFF ends and add-on deals earn the standard fee only.