For most of the 20th century, business leaders and sales managers thought they knew how best to motivate their employees: money. Popular business theory dictates that if you offer cash bonuses to your employees, they’ll work harder and accomplish more&emdash;especially in a competition. The thinking is that employees will be more motivated if offered an extra incentive, and the losers in a competition will be more motivated to try for the prize next time. It’s a win-win, right? Well, modern social science is telling us different.

Don’t get me wrong. Cash incentives and bonuses for outstanding work can be effective, but success over the long term depends on how you structure your incentives and the goals of such programs. If you’re looking for long-term success in your sales team, let’s look at some ways to make your promotions and incentives more effective.

Structure Incentives for Long-term Success

Before you sit down to design an incentive for your sales team, define your end goal. Many sales promotions simply consist of selling more or a specific product or increasing profits. But sales incentives that only focus on numbers have a short shelf life and can actually be demotivating to your sales team. When you offer a cash reward for the top-selling sales associate of the week, more often than not, you’ll be rewarding someone who is already one of your top associates. The reward does nothing to motivate that associates to do better because they are already performing well, and lower-performing associates may not even try for the prize, knowing that they will never beat the top 5 associates in a winner-takes-all competition.

Instead, think about what makes the top 20% of your sales force more effective than the other 80%. Then design an incentives that teaches the lower 80% how to sell like the top 20%. For example, let’s say the top 20% of your associates perform well partly because they know how to use the CMS effectively. Design an incentive that rewards anyone who improves a certain aspect of their CMS usage over a specified period of time. Not only will you be opening eligibility to everyone (not just the top 20%) but you’ll be teaching skills to your sales force that will make them more effective over the long-term.

Large incentives for one winning sales associate may improve sales in the short term, but an incentive program like that does nothing to improve the performance of your entire sales team&emdash;which is the real goal of the incentive in the first place. Instead, design your program for long-term success by focusing on the skills and behaviors that will make your whole team more effective. Then you’ll be looking at long-term gains instead of a short-term bump in sales.

Teach the Why

Too often with sales incentives, we focus on selling more products or increasing sales numbers, and that’s the reason we give to our sales associates: “If you make more money for the company, we’ll give you a piece of the pie.” But Adam Grant, of the University of Pennsylvania Wharton School, says that physical incentives are just part of the picture. Contrary to current business thinking, self-interest is not the biggest motivator for increasing performance.

In a recent study, Grant asked University donations call-center employees to read short statements about their work before their shift. Some read short statements about how former employees learned valuable business and communication skills from working in the call center. And another group read short statements from students who had received scholarships or other financial rewards from the money the call center raised.

Those who read statements about the positive effects their efforts had on others, raised more than twice as much money as the other group. They also spent more time on the phone and were more personable with potential donors.

The key is that if sales associates see the value in what they are selling, and truly believe they are improving other people’s lives, they will be more motivated to do their jobs well. Incentive programs that include an emphasis on the positive outcome of the program will always do better than incentive programs that only focus on self-interest.

Luxury Is More Valuable Than Cash

The primary thinking about rewards is that cash is king because the winner can spend it on whatever they want. But the reality is much more complicated. A survey performed by Wirthlin Worldwide, found that 61% of employees spent cash rewards on bills, household items (like groceries and toiletries), or put the money in savings.

Another 33% either didn’t receive cash rewards or couldn’t remember what they spent the money on (so it must not have been memorable). The truth is that when many associates get large cash rewards they feel guilty spending it on themselves in any rewarding way.

That is not to say cash is not a motivator, small cash rewards for short-term goals tend to work very well, and can have a positive effect. For example, a $10 reward after a half-day competition can be spent on a lunch out with co-workers or an extra trip to the vending machine&emdash;small rewards that won’t make the associate feel guilty about wasting money. However, since most associates don’t feel comfortable spending large amounts of money on luxury items for themselves, giving them luxury items can be more motivating and a better reward for a job well done. That means a $300 iPod or a $200 envelope of restaurant gift certificates may be much more rewarding than a $500 cash bonus, and they’ll work harder to earn it.