A reader recently asked about customer service and how it can be impacted by employee compensation programs. This is an important topic as I’m sure many of us think that we’ll get better customer service by incentivizing employees beyond an hourly wage.
I was shopping at Coach yesterday and had a sales associate who was helping me find a new wallet. I made a decision on the wallet so the associate went to the back to get it. She came out and told me that they didn’t have any left in the color I wanted but that they could order it, then ship it to my home free of charge.
I thought, “Now that’s customer service!” I followed her to the cash wrap where she immediately started telling the employee there what she needed. The employee, who was right in the middle of a transaction with another customer, had to listen to the sales associate and was obviously flustered but didn’t brush her aside like she should have.
I was appalled. Coach is a respected retailer that normally has great customer service and yet, this situation wasn’t appropriate for anyone, especially for the customer at the cash wrap who was buying a $500 handbag.
When my turn came to check out, the employee at the cash wrap thanked me for my patience and I thanked her in return and let her know that I knew what she had just dealt with.
So, was the sales associate on some type of commission and wanted to be sure that the employee behind the cash wrap gave her credit for the sale? I’m not sure. But what I do know is that commission programs can exacerbate these types of situations.
THE REAL WORLD RETAILING TAKEAWAY
I worked in a ski store when I was in college and we received a 2.5% commission on all sales. It was a small group of employees and during busy times, it was like fishing. We each put out five lines with bait, often times checking in on customers that had already been approached by another employee. It was all under the guise of customer service but in reality, we were always trolling to see if we could get a bite, hook the customer and then rack up hundreds of dollars in sales, thus feeding our commission.
While it sounds like a feeding frenzy, it actually worked quite well. We respected each other and only once in a while did we get into issues with one of us stealing another’s customer. We always passed out business cards to customers so it was clear which employee should get credit if the customer returned (and never ever did we steal customers that way).
But it’s a dog-eat-dog world today. With retail wages unable to sustain an individual, let alone a family, I’d be hard-pressed to offer a commission program for fear of the employee competition factor.
That said, there are specific retail categories where a commission structure may be warranted. High-end products where sales associates have to be well-polished and well-presented work best if there’s a commission structure – it allows you to hire a much higher caliber of employee. You’ll find this in jewelry stores (think Tiffany), specialty furniture stores and the like. But also beware the electronics retailer like Circuit City where you have to squeegee off the slickness when you walk out of the store (I don’t know if they’re on a commission program or not but it sure feels that way).
If you’re contemplating offering employees a commission program, beware.