By
Bob Phibbs
Ron Johnson, formerly with JC Penney, ended retail sales commissions for his staff in fine jewelry, shoes, window coverings, men's suits, and hair salons shortly after he took over.
He said, “I know with every bone in my body that a non-commissioned sales force will create better customer service and better teamwork over time.”
According to the Wall Street Journal article, JCP spokeswoman Kate Coultas added, “Our new business model requires that we move away from a commission-based environment so that every team member is motivated by meeting the needs of our customers."
Every time I hear that, somehow, retail employees who receive no commission deliver better customer service, I want to puke.
Cutting costs is cutting costs, but don’t use some smokescreen to kid yourself that not paying retail sales commissions makes you more competitive.
Shortly after Johnson was fired, JCP returned commissions to their retail salespeople. Cutting commissions had not helped anything and probably was a factor in their loss of 4.3 billion in sales.
This brings me back to the need for commissioned salespeople in retail…
If you are a retailer on the verge of offering commissions, here are a few benefits to push you over the hump:
- Salespeople will know if they don’t sell, they don’t eat as well.
- Salespeople are motivated to learn about your products.
- Salespeople are driven to initiate rather than wait for customer interaction.
Commissioned salespeople will sell the merchandise better because they have a stake in the game. They will be motivated to create better value for your customers. The sky’s the limit, which means their enthusiasm can be unbounded.
On the other hand, non-commissioned employees do not need to initiate sales. Regardless of how many sales they make, the stability of their paycheck removes their drive to sell; they can get away with being helpful.
Some employees will even brag about not making commissions like the employee during my recent Best Buy shopping experience.
If you own a jewelry store, photography shop, home furnishings, or other high-dollar store, you should already know that few products can sell themselves.
Rather than giving more discounts, coupons, and deals, why not offer a commission to your employees so they have a direct connection to your success?
I’m not talking about straight commission, as that often keeps the great salespeople away. And those who will work for it will balk at doing anything but trying to sell your merchandise.
I am talking about adding commission on top of their hourly wage or salary. Come up with an easy system that is meaningful, or employees will feel it is worthless or impossible to achieve. Again, you want your best to do even better for you! Learn how to create a commission program here
A tiered approach can be a good place to start. For example, if your salesperson exceeds their sales the previous month by 10%, they get a percentage of all the sales they made. They get a nicer commission if they go over last month by 20%.
Just remember, your best salespeople are like you - they want to make a lot of money.
Maybe you don't want to call it commission but rather a bonus. That's fine.
Without passionate salespeople in retail, there’s little to compel a shopper to take it home today.
We saw it with JC Penney, and I don’t want to see it with you.
Don’t kid yourself - great customer service means an employee has some skin in the game.
Get off the fence and find a way to commission your retail salespeople.
