How to easily set up a sales commission program that works!

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

6 of my best tips for keeping your sanity as a business owner

As CEO of your business, you will need to manage your own education, information flow, inspiration and passion. Being an effective leader means keeping yourself at the top of your game, not just in business but in spirit as well

The key to success is sustainability. What can you do to maintain high levels of passion for your business? First, take ownership of the fact that you are responsible for maintaining your passion. If you don’t nurture yourself, it won’t be hard to let employees, clients or colleagues suck you dry.

Make “What if?” your favorite question

What if I hired a different person to do that job? What if I bundled my products differently? What if I changed my work flow? Consistent questioning of your concept and processes will lead you to new and better solutions.

Don’t work in a vacuum

Studies show adults produce 65 to 93 percent more ideas in groups. So find passion partners – (no, not that kind) or form an informal advisory board by identifying friends and colleagues who are, in your opinion, passionately curious. Preferably, they will come from different industries and backgrounds. Arrange to meet with them on a regular basis and use these meetings as forums where participants are invited to throw out the biggest, best and dumbest ideas. No judgments allowed. You’ll all share tremendous energy and inspiration.

Allow yourself time away from the day-to-day minutia

The biggest killer of big thinking is the mundane. If you can, delegate some of the daily chores. If you can’t, schedule time to get away from them. Even if you take an hour a week to think quietly and create, you will reap the rewards.

Manage your expectations

Few things are more detrimental to success than expecting more than is realistically possible at a given moment in time. I have worked with owners who were doing quite well for their particular stage in business, but because they had such lofty expectations, always felt defeated.

Self-motivation and inspiration

There’s a certain amount of isolation that goes along with being a business owner. You and you alone are responsible for the majority of the decision making and certainly the hard work of leading by example. It can lead to burn out. Business ownership is draining. You have to constantly replenish your soul with information and inspiration. Whether it’s through reading, keeping a journal, practicing yoga or trying new experiments with your business, keep a constant flow of new information and experiences going that will help trigger ideas, creative energy and new perspectives. Create your touchstone by envisioning what your life will feel like when you have reached your business goals.

Get out of your store

Successful retail ownership requires a 360 degree view of the world. Since retail requires to you spend many hours in the store, it may prevent you from benefiting from different perspectives. So get out. Network. Join a community group. Go on field trips. See what the rest of the world looks like and use that new information to help grow your business.

Treat yourself with respect

You are, after all, the CEO. Treat yourself as well as you would someone who works for you. Be kind. Be complimentary. Be appreciative of all the things you do. Being the top dog doesn’t mean working like one. Commit to doing what it takes to keep your head clear and your passions ignited. No one wants to work for a crazy person. Least of all, you.

Until next time remember,
You can do this!
Angel

One of the most powerful and effective management tools is the debrief. It is an important way to end a particular program or sales cycle by analyzing performance and brainstorming opportunities to improve.

As you end the Christmas sales season, this is the perfect time to debrief about while it’s still fresh in your mind. In the future, you may want to schedule debrief sessions monthly or as often as once a week, depending on the type of business you run.

Gather your staff together for an undisturbed hour or so and review the different aspects of your business over the holiday season, i.e. customer service, product mix, customer satisfaction, sales goals, marketing effectiveness, etc.

Ask the basic questions about each area:

What did we do right?
What could we have done better?

In the debrief process, there is no “wrong.” The key is for everyone feel safe enough to be honest about their perspectives and learn from the experience.

Here are some of the questions for discussion:

Did we meet our goal If so, what elements of our plan helped us get there? If not, what prevented us from hitting those numbers?

Was our marketing effective? Did we see an increase in customers, sales, foot traffic, average sale?

Did we properly track and monitor these efforts? Which programs worked best?  Whichever programs we decide to keep, how will we modify and or improve them next year? Are there any new programs we to add to the mix next year?

Did we have the right product? The right price? Did customers seem put off by any particular items or category of items? Suggestions for purchasing next year? What do we need more of? Less?

Did everyone meet their sales goals? For those who did, what do you think were the reasons behind that achievement? For those who didn’t, what obstacles prevented you from reaching the goal? What can we do to better train or help the staff to meet and exceed goals in 2020?

The purpose of the debrief is not punitive. It is to get honest input, to gather information from everyone’s perspective to help you make better/improved decisions next year.

The key to a successful debrief is for everyone to get as specific as possible with their feedback. They can’t just say “We didn’t reach our goal because there wasn’t enough traffic.” If they think there wasn’t enough traffic, encourage everyone to dig deeper. For example, did our marketing efforts drive traffic? If not, what could we do better? Was our conversion rate up?  If average sale was down, is that an opportunity to adjust your pricing strategy.

Be sure to write everything down in detail so you can revisit the suggestions as you plan for 2020.

Commit to the debrief process to gain feedback that will improve performance not just next holiday season but year round.

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!

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

Is BOPIS right for your store?

Buy Online Pick Up In Store, also known as Click- to- Collect, is gaining traction with consumers and it’s easy to figure out why. They can purchase their desired products online 24/7 and be assured it will be at the store when they get there. It saves time, shipping costs and the customer can return it instantly if it doesn’t fit or meet their expectations.

BOPIS provides a frictionless experience for those who demand both the convenience of online shopping and the instant gratification of in-store shopping. It eliminates friction and importantly, the disappointment of finding the product isn’t available after driving to the store.

It’s a great benefit to the customer but perhaps, an even a bigger boon to retailers because 67 percent of BOPIS customers make additional purchases in store.* BOPIS gives you a competitive advantage by offering customers options for purchase and truly leverages your physical presence.  Plus, it’s important to get on the bandwagon now because according to Retail Touchpoints, 90 percent of all retailers will be offering BPOIS by 2021.

But I don’t sell online!

You don’t have to have a full ecommerce program to enjoy the benefits of BOPIS. Consider offering only best sellers for sale on your website or create a simple Facebook or Shopify store. Create a curated mix of best sellers, special offers or exclusives as part of your BOPIS program. By utilizing today’s easy- to- use and inexpensive online platforms, you can enjoy the benefits of omni-channel retailing without the expense of a full online store.

Best practices
Here are a few tips to make your BOPIS program effective.

Service
Provide a high level of service to customers who come in to pick up their purchases. Don’t just hand off the package. Train your staff to review the purchase with the customer to insure satisfaction and use the interaction to begin discussions about upsell and future purchase opportunities.  

Incentives to increase sales
There’s a good chance the customer will make an additional purchase while picking up their order, but if you want to create an additional incentive to do so, offer a bounceback during the pick up transaction valid for additional purchases only on the day of pick up.

Promote
As with any new service, promote it like crazy. Use all your digital assets, including website and social media, emails plus in-store signage and flyers with purchase to advise customers of the new opportunity.

Test before and during the holidays

If you decide to offer BOPIS this holiday season, be sure to take your systems for a test drive before the roll out. Who will be responsible for monitoring orders? Pulling and packaging items? Staff training? Marketing? Be sure your logistics and in-store experience is fine tuned to delight the customers and leave them wanting more!

*International Council of Shopping Centers, 2019