Send to KindleI recently read a comment from a very successful small business owner stating that commissioned sales is the only way to really motivate employees to provide great customer service. Reasoning that only a sales associate who works on commission can understand how important repeat business is, he claims that associates on commission will deliver better customer service. I emphasize that this individual is a very successful small business owner so this has obviously worked for him. But, is it the best way?
The basis of his argument is that an associate cannot understand the importance of good customer service unless that associate is directly compensated for performance. He goes so far as to say that commissioned based selling allows better control of associates, who by the way, must be managed.
I suggest he, and all retail leaders, consider an alternative approach. It starts with each associate having 1) a real understanding of the senior leader’s vision for the company, and 2) a firm grasp of the company’s mission and how that associate contributes to the mission. I cannot overemphasize the importance of this point. People who understand why they are important to success, and who know their leadership does too, will always outperform those who do not.
Once an associate, or any employee, knows those two critical points, they need to know the company’s goals. Be careful here. It’s way too common in the retail world to set goals on a daily or weekly basis. These aren’t really goals. They’re more likely knee jerk reactions to last week’s poor sales numbers. Real goals require some time and effort to accomplish. For instance, a sales goal that says the store must make X dollars tomorrow is not a goal. It’s just a target that is most likely arbitrarily based on last week’s numbers. A real goal would be to increase store sales over the next year by X%. Now, here’s a secret to success! Make sure the associates understand their part in meeting that goal. But is that enough?
No; and that brings me to the most interesting part of this business owners comments. He insists that associates must be managed and controlled. There is a better way though. The leader must make the employees part of the stores success. How?
Now that associates know the company’s mission, the goals, and how they impact them, leaders must get the associates involved in meeting those goals; accomplishing the mission. Associates actually have ideas and when they see leadership taking their ideas seriously, they will respond. Leadership’s appreciation for the associate’s knowledge, experience, and contribution will have a much greater impact on their productivity, and customer service, than any amount of monetary bribery.
Without this vital step, commissioned sales might be a good idea.
More and more, business leaders are beginning to understand that compensation, in and of itself, doesn’t really drive high levels of performance. That’s not to say compensation isn’t important. In fact, until compensation reaches a point where it meets an employee’s basic needs, it can be the driving factor. But, using commission sales to make up for poor compensation is not the best way to motivate employees to perform better customer service. What it can do is cause an associate to believe he or she is working for themselves and not the company. Rather than feeling they are an important part of the company, they may begin to feel like the company is there for them.
So how do you compensate associates in a way that motivates them to sell more? You don’t! First compensate them fairly for their work (something most retail companies don’t understand) then treat them like the critical parts of the team that they are. Once a person’s basic needs are met, they are much more responsive to recognition of their abilities and opportunities to grow than to raw dollars. That may seem counter intuitive, but it’s a fact, supported by multiple scientific studies over the last 60+ years.
Of course some will put forth the argument that a few stars will carry lazy associates by doing most of the work. That’s possible in any situation and with any compensation plan. Even with a straight commission system, some will perform much better than others, improving the overall sales figures.
Sales associates, like any employee, are not machines that run on money. They are people who are complex and respond to being treated like a valuable part of the team. Leaders are most successful when they think of the employees (associates) as; well, like them.
