Nikki Baird

BrainTrust Query: How to Create a Commission Structure for Better Retail Salespeople

July 26, 2010

FROM RETAILWIRE:
Commissioning sales works. Whether that means employees get an hourly rate and a percentage of sales, a bonus at the end of the month or a chance to win a trip -- the best bosses share the wealth. What is an ideal payment structure for commission-based retail staffs?      [more...]

I would distinguish between commission sales and bonuses. Commissions, to me, are indeed paying a percent to the employee based on what was sold. Commissions may work, but customers may not like commission sales--when you know the employee gets paid based on what they sell, every enthusiastic "Yeah, it looks great on you!" comes under suspicion.

Bonuses are a different matter entirely. And I'm a recent convert to the importance of conversion rate. Setting a sales goal for a store employee is a helpful baseline, but it doesn't give them the tools to actually achieve those goals. Focusing on conversion rate helps them understand one area that is critical to achieving a sales goal, and that is talking to and trying to help every customer who comes in your zone.

Also, some days are better sales days than others--like weekends--so a straight average across the month isn't fair to the stoic mid-week worker, the one who actually keeps the store clean and prepped for those heavy weekend sales days. So rather than commissions, and rather than relying solely on sales goals, I would want to see a combo goal--the sales goal for the store for the day, in conjunction with a conversion rate goal. And I'm also in favor of setting a minimum expectation and a stretch goal, with the bonus being bigger if you hit the stretch. You could break those numbers down into something meaningful for individuals to help them track how they're doing, but it should be a team goal.