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The Real Truth About Cash Spiffs To Improve Retail Sales Performance February, 2010

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Paradigm <ul><li>Belief: Improving retail sales can be achieved by offering a limited-time cash incentive to sales people (aka, a cash “spiff”). </li></ul><ul><li>This approach has been used for years by retailers as a tool to drive product-specific focus, move excess inventory, clear floor space for new models, or improve profit margins. </li></ul><ul><li>Manufacturers will often use the offer of “more money” to drive added selling-emphasis around their brand of merchandise, in order to achieve a short-term lift in sales. </li></ul>

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Reality <ul><li>While having some positive impact on sales, the cash-spiff has significant drawbacks: </li></ul><ul><ul><li>1. The majority of the audience does not generate incremental lift </li></ul></ul><ul><ul><li>2. The lift that is realized may/may not be due to the money that is offered </li></ul></ul><ul><ul><li>3. There are better, more effective ways to achieve higher, more sustainable sales improvement . </li></ul></ul>

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Factors <ul><li>There are four factors that impact how effective a short-term sales initiative is: </li></ul><ul><ul><li>1. Does the sales person possess the skills and competencies to perform at a higher level? </li></ul></ul><ul><ul><li>2. Is the sales person truly “money-motivated”? </li></ul></ul><ul><ul><li>3. Does the sales person align with the short-term and intermediate-term objectives of the retailer? </li></ul></ul><ul><ul><li>4. Is there a sufficient measurement system in place to inform and engage the attention of the sales person? </li></ul></ul>

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Reality, Part 2 <ul><li>The simple matrix on the following page demonstrates why 75-80% of retail salespeople will not respond to the offer of “more money”, unless/until the remaining three factors (ability, alignment and measurement) are </li></ul><ul><li>adequately addressed. </li></ul>

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Why Cash-Spiffs Won’t Move 75-80% of Your Retail Sales Channel (II) Lacks Skills, But Is Money-Motivated ( Cash Spiffs Won’t Work ) (I) Lacks Skills, And Is Not Money- Motivated ( Cash Spiffs Won’t Work ) (IV) Skilled, And Money-Motivated ( Cash May Help, But Only To A Point…Income Expectations Will Top Out, and Performance Will Sub-Optimize ) (III) Skilled, But Not Money-Motivated ( Cash Spiffs Won’t Work )

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Four Categories of Salespeople <ul><li>Under-performers: Lacking in both skills and money-motivation. These are the bottom 20% of any sales team. </li></ul><ul><li>Under-achievers: Are motivated by the offer of more $, but lack skills. These are the next 30% of the bell curve. </li></ul><ul><li>Independent Contributors: Possess the skills to deliver more sales, but are not motivated by the offer of more $. </li></ul><ul><li>Top Producers: Know how to lift sales and will deliver more (but only up to their pre-set earnings expectations). </li></ul>

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What To Do? <ul><li>This group is either too new to make an impact, or needs to turn over . Focus on effective coaching, training and communication to improve new hires, and on performance-review process to deal with chronic underperformers. </li></ul><ul><li>This group needs training and coaching , along with sound measurement and reinforcement to produce more. Behavioral, incremental change is key. </li></ul><ul><li>This group needs to be communicated with, challenged to set new personal goals , reinforced and aligned with company goals. </li></ul><ul><li>This group needs to be reinforced, supported, and given latitude to actualize . Leveraging tools to engage them emotionally , drive focus and set their own goals to maximize performance. </li></ul>

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Consider <ul><li>Goal-setting is key for personal development. Self-imposed goals are met. Dictated goals are less effective. </li></ul><ul><li>Willingness and Ability are critical – Both need to be addressed. </li></ul><ul><li>Communicating a vision, and gaining buy-in is important. Everyone must have an understood, individual role in success. </li></ul><ul><li>What gets measured gets done. Track key results and post or report continually. </li></ul>

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What’s Next <ul><li>Email me at [email_address] </li></ul><ul><li>or visit my blog at http://ideationz.wordpress.com to open a dialog around what your company needs to get done, </li></ul><ul><li>and how best to get after it. </li></ul><ul><li>It’s all about behavior change, and money just won’t buy that. </li></ul>

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Special thanks to Skip Anderson at http://blog.sellingtoconsumers.com for his thought-provoking insight on the subject of getting more out of your retail salespeople.