By
Bob Phibbs
There are pros and cons to using incentives to grow your retail sales.
You may remember when Wells Fargo fired 5,300 employees after admitting those employees opened more than 2 million deposit and credit card accounts without customers’ authorization. The incentives that encouraged workers to open more accounts at all costs led to this disaster.
Incentives are a tricky thing to use when trying to boost your sales.
What are some reasons to use incentives with associates?
From getting your preferred brand on the customer’s wrist to adding on an extended warranty to winning a trip, you often invite unintended consequences once you reward specific behavior.
Trying To Close A Sale
Yes, you can use incentives to steer employees to encourage customers in a certain way. It can lead to hard closing the sale techniques, but there are more problems ...
Here Are Three Problems With Employee Incentives:
1. Selling one product at the expense of all others. Often, a brand will incentivize retail store employees for each product it sells. They do that to try to gain the upper hand in their competition. That means your employees might not show your customer the best product but only 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 their only or best choice.
2. 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 increase their sales. But for the rest of your crew, the average ones who just want a job or 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 considered, the weaker salespeople will succumb and let the stronger players have their up or take their sales. Those who felt overlooked will still feel overlooked and will reduce their selling efforts or even stop 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.
3. 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. Customer perception is everything.
There is a lot of evidence incentives can motivate higher levels of performance and productivity. Here are some extra retail staff incentive ideas to consider.
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.
In particular, the Driver and Expressive personality styles will find loopholes and weaknesses to achieve the desired set of widgets sold. They feel the end naturally justifies the means.
How to do a better job when offering associates incentives
Start by truly understanding what you are trying to do.
What will success look like? What could go wrong?
How will you know your employee incentive program worked?
Use software created to boost sell-through and engagement with incentives, which is simple to implement when it's an app everyone can have on their phones, like SparkPlug. You can learn more about incentivizing your frontline on my Tell Me Something Good About Retail podcast episode with guests and SparkPlug co-founders Jake Levin and Andrew Duffy.
Here are five tips for using incentives:
1. 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 incentivize salespeople to add on after they’ve been through your retail sales training, you are more likely to get the lift in sales and customer service because you’ve taught them how to do it.
2. Set tight guard rails. You need to know precisely 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 must ensure they can’t get incented for selling a razor-thin margin chair.
3. 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 workarounds and texted them to each other. For that reason, keep the time 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.
4. Think like a bad employee to see how it can be abused or hijacked. You often just create a contest thinking of the prizes or incentives. The most crucial step is to think 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.
5. Don't incent the deals. You usually incent to get the higher-priced merchandise that needs a bit more explanation, excitement, and time. You create a deal to move merchandise. Don’t confuse the two.
In Sum
Using incentives can be like adding a spark to gasoline and driving sales. It 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.
You'll build a strong brand when you train your employees to present your products and services ethically through a process that helps shoppers treat themselves and get more from their lives. 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 how to make them equitable and available only for the 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 using incentives can damage your brand ... and the consumer's trust forever.
To go deeper with sales training for your crew, check out SalesRX, my online retail sales training program.
