How Incenting Retail Employees Can Lead To Unintended Selling Problems
By Bob Phibbs
The big news this week was that Wells Fargo fired 5300 employees, about 2% of their workforce, after admitting those employees opened more than 2 million deposit and credit card accounts without customers’ authorization. Their incentives that encouraged workers to open more accounts at all costs led to this disaster.
Fines paid admitting guilt have amounted so far to $185 million. The damage to this storied brand’s reputation is incalculable.
Trust is broken.
Incentives are a tricky thing to use when trying to goose your sales. From getting your preferred brand on the customer’s wrist, to adding on an extended warranty, to winning a trip, once you reward specific behavior, you often lead to unintended consequences.
Here Are Three Problems With Employee Incentives:
Selling one product at the expense of all others. Many times a brand will incent retail store employees for each of that brand’s products they sell. They do that to try to gain an upper hand on their competition. That means your employees might not show your customer the best product but only show the one brand that gets the spiff. That can lead to more walks since customers are nudged to consider something the salesperson knows isn’t the only or best choice for them.
Rewarding the strong as the weak give in. Your best salespeople are driven to succeed by an innate desire to get ahead. For them, incentives are a great reward and can really increase their sales. But for the rest of your crew, the average ones who just want a job or who avoid customers altogether, it just means they feel bad. Sometimes they’ll feel jealous, but most times they’ll lose any sales motivation and stay resigned to being last. Unless your incentive system is clearly thought out, the weaker salespeople will succumb and let the stronger players have their up or take their sale. Those who felt overlooked before will still feel overlooked and will reduce their efforts at even trying. Ongoing incentive programs that aren’t tweaked can lead to higher turnover as employees feel it is a pressure cooker of stress to make incentives.
Ruining your customer service. Because they feel so sales-y and fake, your employees will have no problem suggesting the incented item to your shopper by saying, "I get a bonus if I ask." With social media and review sites, it won’t take long for people to notice and talk about how you only want to sell them something. Why? Because your generally disempowered employees will look desperate as they try to achieve success.
What to do
This isn’t to say no incentive programs work. There is a lot of evidence incentives can motivate higher levels of performance and productivity.
The problem is when the owner or sales manager only wants to get results and doesn’t care what it takes, you set up with a wild west mentality. The Driver and Expressive personalities, in particular, will find the loopholes and weaknesses to achieve the desired set of widgets sold. They feel the end naturally justifies the means.
And if those employees aren’t already making as much as they feel they deserve, well then, so much the better...
Start by truly understand what you are trying to do. What will success look like? What could go wrong? How will you know it worked?
Here are five tips when using incentives.
Train. Why do you use incentives to begin with? To drive sales. The easiest and best way to sell all of your merchandise is with retail sales training. No matter what the cost, it pays back with every purchase. When you incent salespeople for adding-on after they’ve been through your retail sales training, you are more likely to get the lift in sales and lift in customer service because you’ve taught them how to do it.
Set tight guard rails. You need to know exactly what they can and can’t do. For example, if an incentive is on furniture but there is a line of furniture you already allow them to discount a certain percentage, you need to make certain they can’t get incented for selling a razor-thin margin chair.
Monitor. Leaving incentives open for too long becomes an entitlement and they stop working. Either that or they stop working in the manner you expected because employees have learned all the work-arounds and texted them to each other. For that reason, keep the time period short. If you want to go for a month or a quarter, you must monitor every week and feel free to discontinue at any time when you discover abuse.
Think like a bad employee to see how it can be abused or hijacked. Many times you just come up with a contest thinking of the prizes or incentives. The most important step is in thinking like that rotten apple that could ruin the whole thing. What are the loopholes? How could I get around this and still get the prize? Have an employee brainstorm with you about how other employees might abuse the program.
Don't incent the deals. You usually incent to get the higher-priced merchandise that needs a bit more explanation, a bit more excitement, a bit more time. You create a deal to move merchandise. Don’t confuse the two.
Using incentives can be like adding a spark to gasoline and therefore drive sales, or they can be like adding fuel to a simmering fire of employees who feel underappreciated and therefore look to milk you for all you’re worth. That rogue cowboy culture leaves your brand on shaky ground.
When you train your employees to present your products and services ethically through a process that helps the shopper treat themselves and get more from their life, you’ll build a strong brand. As they master their selling skills, the fun and reward will come from doing a better and better job at doing it. Bonusing or incenting them will be a small part of their success, not the only reason they do their job.
As long as you know why you are using incentives, how you’ll use them, who will get them, and make them equitable and available only for a short term, you can strategically use incentives to help sell your premium merchandise.
But the Wells Fargo lesson should always be kept top of mind.
A misstep in how you use incentives can damage your brand ... and the trust of the consumer forever.
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