What’s the Cost of a Bad Incentive Plan?
It always starts the same way.
A new product. A new quarter. A big fat number on a whiteboard.
So what do you do? You launch an incentive scheme. “We’ll move more units,” the sales head says. “We’ll drive urgency,” says the marketing guy. “Let’s keep it simple: top performers get paid more.”
Except… it doesn’t quite work that way.
Because somewhere between head office strategy and field execution, something breaks. Incentives, once meant to drive growth, quietly start leaking money. But they do it silently, subtly. No alarms go off. No red flags on dashboards. Just a slow drip—week after week, month after month—until you realize the incentive plan didn’t push performance. It just padded your costs.
In India alone, brands spend over ₹2 lakh crore annually on trade and channel incentives—but less than 15% can accurately measure their return. (Source: Nielsen & ET Retail)
The Leak You Don’t See—Until It’s Too Late
Incentive programs are supposed to be performance levers. But most turn into budgeting black holes because of five core breakdowns:
- Overpayment to the Wrong People
When incentive tiers are flat, reps learn to game the system. The most motivated ones stop pushing once they “hit the tier.” Everyone else? Collects their cut without moving the needle. - Demotivating Design
A 2023 Gallup study showed that 64% of sales reps don’t fully understand their own incentive structures. If your field doesn’t get the plan, they’ll ignore it. And if they think they can’t win, they won’t even try. - Incentive Cannibalization
Your D2C offer is running 10% off. Your retail partners are running a 7% cashback. Your distributor has a clearance push. Who’s actually driving sales? Or are they just pulling from each other? - Excel-Engineered Chaos
Most Indian mid-sized brands still run incentives on Excel. The result? Delayed payouts, broken trust, and an ops team that’s always “cleaning up.” - No Attribution, No Insight
When was the last time you could say: This exact incentive scheme drove this exact revenue outcome? If you can’t attribute results, you’re not managing incentives—you’re just hoping.
“The moment we introduced SKU-level targeting and daily progress nudges, our sell-through jumped 30% within 3 weeks.”
— National Sales Head, FMCG brand using Hubble
This Is Where the Real Money Gets Lost
You won’t find these failures on a single report.
But they show up everywhere:
- Inventory stuck in the wrong regions
- High-performing zones refusing new schemes
- Channel partners disengaged or pushing competitor SKUs
- Payouts spiking, even when revenue doesn’t
Every bad plan has a cost. But it’s never just the payout. It’s trust. It’s morale. It’s ‘missed targets’ and ‘lost time'.
Smart Incentives Don’t Look Like Discounts. They Feel Like Momentum.
Here’s what modern, ROI-driven incentive programs do differently:
At Hubble, we work with brands that have saved over ₹20L per quarter simply by identifying and killing underperforming incentive schemes early.
Let’s Call It What It Is: A Broken Incentive Plan Is a Revenue Leak
The cost isn’t hypothetical. It’s daily.
You don’t need more schemes. You need better strategy.
Not another Excel file. A smarter engine.
Not more payouts. More performance.
If you're not tracking ROI on incentives, you're not running a growth program. You're running a loyalty club—with no loyalty.
