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How to easily set up a sales commission program that works!
The bottom line is the bottom line in retail! That’s why it’s important to create a sales culture that rewards employee performance.
The bottom line is the bottom line in retail.
A successful retail store or restaurant is dependent on selling so it’s imperative that you create a sales culture. I’m a firm believer sales people should be rewarded for selling. Hire people who are motivated to reap the financial rewards of meeting and exceeding goals. I have found quite a bit of resistance about this from owners who think a commission-based program will encourage staff to become too aggressive and competitive. They fear it will create an unpleasant experience for customers.
Let’s be clear. You are not training staff to be used car salesmen. You are training them to sell which, quite simply, is providing the information a customer needs to make a buying decision. Selling is inviting prospects to participate in the opportunity you bring to the table. With proper training and a solid reward system, you can cultivate a great sales team as well as a great customer experience.
So whether you decide to implement a commission program or a monthly bonus program, create a reward system that will help you meet your goals. Rewards can be in the form of gift cards, merchandise or commissions. Just be sure the reward is commensurate with your product or service and the level of sales skill required.
Setting up a commission program
I have seen all types of commission programs in the retail world. They sometimes pay on meeting daily goals and sometimes just pay – regardless of whether an end goal is met. Neither of these structures help elevate sales levels and definitely don’t inspire employees. Creating a goal and commission plan takes a bit of creativity and strategic thinking. There are three key elements for setting up a successful incentive program:
1. Create monthly goals. I don’t believe in daily goals. They are almost impossible to meet and a good rain storm could wipe out an employee’s bonus potential and discourage them.
2. Be sure the total of the employee goals is more than the actual monthly revenue number you want to achieve.
3. Offer larger incentives for exceeding goals. How does this play out? Let’s use this scenario for the month of April. The commissions used in these scenarios are just an example. The actual commission percentages you will pay should be based on your own store profitability and employee status.
Assume
Your sales staff includes: 1 full time manager and 2 part time sales people
Last year’s April revenues:
Manager’s sales $28,000
Part time staff #1 $ 5,000
Part time staff #2 $ 7,000
Total – last April $40,000
Note: Just count employee sales in this number – don’t count your own.
Your goal for this April $48,000 (20% increase)
This year’s April goals by employee:
Manager’s sales $35,000
Part time staff #1 $ 6,250
Part time staff #2 $ 8,750
Total sales goals $50,000
The total of employee goals exceeds the actual April revenue goal of $48,000.
Commission Structure
Manager
2% on all sales up to goal ($35,000)
5% on sales of $35,001 and above
$250 for team hitting store sales goal of $50,000
Sales staff
$100 bonus each for meeting sales goal
An additional $100 each if they exceed goal by 20% or more
In this scenario you are paying the manager a regular commission on what she sells, and more importantly, incentivizing her to exceed her goal AND to motivate the staff to meet and exceed their goals as well.
Let’s say the total sales for this April play out like this:
Scenario 1 Scenario 2
Manager sales $32,500 $37,500
Staff # 1 $ 3,500 $ 6,000
Staff #2 $ 8,750 $10,500
$44,750 $54,000
Scenario 1
Total revenue is less than the actual revenue goal of $48,000 but still represents an 8 percent increase over last April.
The manager would earn 2% X $32,500 = $650
Staff # 1 no bonus
Staff # 2 $100
Total commissions and bonuses paid $750
Scenario 2
Total revenue exceeds the actual revenue goal of $48,000 and the employee revenue goal of $50,000.
The manager would earn $1200
2% X 35,000 = $700
5% of $4999= $250
Bonus for achieving store goal $250
Staff # 1 no bonus
Staff # 2 $200
Total commissions and bonuses paid $1,475
In scenario 2, you have paid $1,475 in commission to achieve a 35 percent increase in sales ($14,000) over last year. That’s quite a deal! Plus, your employees feel more empowered because they had the opportunity to pad their paychecks!
Sales contests
You can choose to deliver rewards via a monthly contest, structured in a number of ways:
• Reward only the highest achieving employee
• Reward each individual who achieves their goal
• Reward each individual who achieves their goal ONLY if the overall monthly revenue goal is made
It’s important to create a spirit of team competition to make this work. Track each employee’s progress on a chart and be the head cheerleader in acknowledging progress on a regular basis. Be sure your contests or incentives are in line with your goals. For example, if you run a hair salon and have made a deal with a particular manufacturer for special pricing on shampoo, the contests should center around the sales of that shampoo. Alternatively, if you have an underperforming item, create an incentive around it.
Commission and rewards aren’t simply a way to pay staff if they happen to meet goals. They are tools to insure that your staff’s performance helps you achieve your goals. As you begin a reward program, give it a few months to let everyone get used to the system, get the proper training and work out the kinks. Let them know you are serious and they will we judged on their sales performance monthly. Once you pull the trigger, meet with each staff member at the end of every month to review performance and assign goals for the next month. Conduct a debrief session. Don’t focus on what went wrong. Ask them what they think they did correctly and what they might have done differently or better. These are great learning opportunities.
Pay special attention to those employees who do not meet their goals and provide additional training to help them. If an employee is consistently underachieving (let’s say 3 months running) and your efforts and training have not paid off, it’s time to find someone new.
Until next time remember,
You can do this!
Angel
10 last minute ideas to drive holiday sales!
There are ways to increase sales on the spot. Here are 10 easy ideas to use today!
Need some easy ideas to bring more traffic and sales to your store? Here you go!
1. Prime your Facebook page
If you're going to start posting offers or flash sales, get page engagement up first so your future posts will get better traction. You can:
Post simple questions
Are you in the holiday spirit? Comment below
Or offer a giveaway
Comment below for a 10% off coupon
Once engagement is up, start your flash sales or other important postings.
2. Get attention with a flash sale
Now that you’ve primed your Facebook page, hold a flash sale with offers available only to your social media followers and email subscribers.
A couple of tips:
The items you sell should be limited in quantity and available only for a limited time. This creates a sense of urgency.
You can have a flash sale for one day, or one day a week, or 7 days in row -- whatever you choose.
Promote the sale heavily ahead of time with multiple posts and emails. Remember, people are busy this time of year.
When an item is sold out, promote that as well. It reinforces the fact that quantities are limited!
You don't have to have e-commerce capabilities to have a flash sale. People can call in to reserve their purchase with a credit card and pick up in store.
Make sure the deals you offer are attention getting!
3. Prep for weather-related issues
There's a good chance there will be some sort of weather-related problem between now and Christmas. Rain, snow and sleet can negatively impact your revenues.
Take a few minutes now to plan out a weather contingency promotion to create sales even when the weather doesn't cooperate. Here are a few ideas:
Prepare a Snow Day social media flash sale
Create the ads and emails with the deals ahead of time. Direct customers to a landing page to purchase or have them simply message you complete the purchase. Emphasize these are limited time offers customers can take advantage of while staying cozy and warm at home.
Offer video shopping
If you can make it into your store, send an email blast and post on social media that you are available to video shop and will have all purchases ready and wrapped when the weather improves.
Restaurants - promote delivery
Text, email and post to remind customers about delivery opportunities.
Don't just sit back and let the weather play havoc with your sales goals!
4. Grab and Go
With each day that passes, customers get more stressed and pressured to finish their holiday shopping.
Be sure to create a "grab and go" display of popular gifts, ready and wrapped. Offer gift baskets that are fun and unique! Add toy options that relate back to your business (i.e. toy tool kits at hardware stores). Restaurants can offer a "to go" dessert with each entree purchased.
Grab and go's are appropriate for every type of business and provide a solution for which customers will be grateful and can add substantially to revenue.
5. Sell gift cards. Every. Single. Minute.
Nearly 50 percent of gift card holders spend more than the value of the card and 75 percent of those spend 60 percent more than the value of the card! Cards don't just increase holiday sales, they bring customers back after the holiday!
Create a bonus offer on gift card sales. For example, buy $100 and get a $20 bonus card.
Offer a bonus gift card with purchase.
Train your employees to ask every single person if they’d like to purchase a gift card.
Find a way to cleverly wrap your cards so customers feel good about the purchase.
Promote, promote, promote, promote!
6. Email your VIP customers
Segment the top 20 percent of your customers and start emailing them unique messages.It doesn't necessarily need to be about discounts. Try promoting a special service or opportunity just for VIP's, perhaps a private shopping event, personal shopping or simply, "We're here to make your shopping easier!"
Let your best customers know you care about them and are there to help.
7. Hide a toy
Parents are always looking for special experiences for their kids over the holidays! You can make that happen simply by hiding small toys or gifts throughout the store. Small promotions like this insure guests will spend more time in your store and perhaps find their own treasure to purchase. Enhance the promotion by offering to donate a toy to charity for every toy found in the store. It's a simple and inexpensive way to drive traffic, create goodwill and put a smile on customers' faces!
8. There's nothing that makes people want something more than knowing others want it too!
Keep your followers updated on what's hot at your store or restaurant. Whether it's the most popular flavor of ice cream, a sweater that's flying off the shelves or a gift item that customers are raving about -- post about it.
9. Last minute employee bonus
Get your employees motivated with last minute bonus opportunities. Whether it’s $25 for exceeding gift card sales or a more substantial percentage of over-budget sales during the last week of the season, give them a little push to keep momentum up during the last days of the holiday selling season.
10. Be responsive
With more traffic in store, you’re probably focused on on-site customers and attending to their needs. But you also need to be prepared for an onslaught of inquiries from multiple platforms. Whether it be by email, Facebook messenger, Instagram DM's or through your website, customers will start contacting you 24 hours a day with questions ranging from your hours to product availability.And here's the thing -- when these digital questions are asked, customers expect an immediate (or reasonable) response time or they'll just move on.
Be sure to assign staff members to monitor these platforms continuously and offer timely - and engaging responses. For example, if you received an inquiry as to whether or not a product is in stock, don't just reply, "Yes." Ask the customer what time they'd like to pick it up! Online channels are a gold mine of potential business not to be ignored!
Wishing you a great holiday season!
Until next time remember,
You can do this!
Angel
How to get your staff into the spirit of selling more this holiday!
Looking for ways to get your staff pumped this holiday season? I know one surefire way to light a fire under them….and that’s pay them!
Looking for ways to get your staff pumped this holiday season? I know one surefire way to light a fire under them….and that’s pay them!
Even if money is tight, there are ways to incentivize your staff to sell more without it being a drain on cashflow or margins.
Even if you don’t ordinarily have a bonus program, there’s no reason not to implement one this holiday season.
Most retailers earn 20-30 percent- or more- of their annual revenue during the holidays. This is the time of year you want to maximize every single sales opportunity! And incentives are a great way to motivate staff.
Here are some DO’S and DONT’S for setting up a successful bonus program.
DO
Understand what motivates your staff. What makes them drool? Depending on their age and tenure, it might be time off or perks like gifts or gift certificates. It doesn’t always have to be money.
DON’T
Just offer a reward on a blanket sales goal. A bonus program needs to work on both sides. That means your employees get incentivized for meeting their goals – and yours!
Let’s say for example, last year your sales were $100,000 during the holiday season and your goal is to increase that number by 20 percent this year to $120k. Your staff incentives would be based on achieving or exceeding this year’s goal. That way any additional commission or bonus you’re awarding is coming out of new revenue.
DO
Consider segmenting. Let’s say you’d like to grow sales for a new line or service. Perhaps you’d like to increase average sale. You can create a bonus program around any specific segment of business or goal you’d like!
DO
Tier the bonus structure. Add an even more delicious opportunity for your staff after they’ve hit the goal. Using the example above with a goal of $120k, add an additional incentive if you reach $130k. In sales, we call that a BHAG (Big Hairy Audacious Goal.) You’d be amazed at the enthusiasm you can generate around a big, fat opportunity.
DO
Train. Train. Train.
Just implementing a program isn’t enough. You need to host regular training to you’re your staff achieve their goals.
DON’T
Be afraid to instill a little competition among your staff. Most owners I work with are afraid that competition is divisive but it can create a ton of energy and ultimately, great results!
DO
Make sure your goals are reasonable and achievable. Goals should be a stretch but not so stratospheric that they can’t possibly be met. If your goals are excessive, it will have the opposite effect of motivating your staff…it will discourage them.
Good luck in putting together your bonus program! If you have any questions, email me at success@angelcicerone.com
Until next time remember,
You can do this!
Angel