Unlocking Sales Success: Effective Incentive Strategies for Retail Associates

A Winning Incentive Strategy For Sales Associates

“Put that coffee down coffee is for closers only!” – Alec Baldwin in Glengarry Glen Ross

One of my all-time favorite sales movies is the 1992 film Glengarry Glen Ross. Anyone who is in or has been in a sales organization can perhaps relate to this film based on David Mamet’s Pulitzer Prize-winning play. The film stars Al Pacino Jack Lemmon Alex Baldwin Ed Harris Alan Arkin and Kevin Spacey. The star-studded cast alone is worth the Redbox rental fee. A word of caution is in order however the language is a bit rough and I wouldn’t call this a “feel-good” movie. If you go forward consider yourself warned. One of the most dramatic scenes is a new sales contest where first prize is a new Cadillac Eldorado second prize is a set of steak knives and third prize is you’re fired! “Have I got your attention now I think I do?”

A-Always B-Be C-Closing

Since wage and salary expense makes up the second largest expense category for an independent shoe retailer I thought it might be interesting to find out just exactly what retailers are doing to compensate and motivate sales associates. As part of my research I took an informal poll of several retailers and discovered the following:

• Hourly rate: $8.00-my keyword5.00
• Discount: 30%-50% on purchases with some stores giving free shoes as often as each season to annually.
• Insurance: 50%-90% paid by employer for health insurance for full-time employees for the stores that offer it.
• Bonus: This area was so varied; I thought it best to list a few examples.

• No goals no bonuses
• 1% commission paid if total store achieved a pre-set monthly sales goal.
• 6% bonus paid on the difference if last year’s sales were exceeded by 20%.
• Various formulas involving multiple sales average sale number of items per ticket foot scans and additional sales of accessories including socks and insoles.

One retailer told me he paid my keyword0 an hour vs. a 10% commission.

He further explained “if they are not making commission they are not working here for long.”

Jack Welch’s Approach

Jack Welch the well-known former CEO of GE was famous for terminating the bottom-producing 10% every year. Everyone knew the rules going in and it seemed to work for GE. I’m not suggesting that independent retailers adopt hard and fast rules that would result in head-rolling for 10% of the sales force but with payroll costs running nearly 23% the largest portion of which is selling costs making up 10.6% (BPR 2011) this is an area that needs monitoring.

Use the KISS Method

I believe in incentives. I believe that most people serving in a sales capacity are motivated by money. If they are not they may still be good employees but they are not serving in the right capacity. I believe in setting achievable goals that reward both the company and the employee. I believe compensation structures need to be as simple as possible hence the KISS method an acronym for Keep It Simple Stupid!

I believe in paying bonuses to sales associates for contributions above and beyond the minimum expectations not for showing up and “punching the clock.” I believe that people have different skill sets personalities and motivation that might affect how much they make. I subscribe to what I might best describe as a Darwinist approach in that I believe the more you sell the more value you add to the organization and the more you should make. It’s simple and it’s fair!

“A man only hits what he aims for”…sign on the wall of Premiere Properties in the movie GGGR.

A Win-Win Formula

I would like to offer an approach that not only provides incentive to salespeople but is also designed to reduce selling costs at the same time resulting in a win-win formula.

In this example a selling cost of 10% is used to determine a base; in this case it is $6000. No commission is paid until the base is reached. Once achieved a 5% commission is paid on all sales volume over the base. The sales associate earns more based on what he or she sells and the selling costs go down accordingly.
So go ahead have that coffee now because everybody is a winner with this strategy!

Ritchie Sayner

Ritchie Sayner

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