Why is omnichannel sales attribution still a problem?

Discussion
Source: Macy’s; Photo - RetailWire
May 10, 2021

Macy’s cannot offer the use of its Scan and Pay app for purchases from departments where employees make commissions in union-represented stores in Massachusetts and Rhode Island, a labor relations arbitrator recently ruled. The ruling demonstrates how retailers are still facing challenges figuring out how to compensate and incentivize associates as stores are doing more to support online selling.

The arbitrator found Macy’s self-checkout feature in its mobile app bypassed the traditional point of sale register-based tracking of sales and commissions, thereby affecting and reducing commissions for store associates.

“Today’s victory for Macy’s workers sends a powerful message to CEOs across the industry that companies cannot use mobile apps to force a backdoor pay cut on workers,” said Marc Perron, president of the United Food and Commercial Workers International in a press release.

App-driven self-checkout is also being offered by other larger retailers. Curbside pickup and ship-from-store are other omnichannel practices potentially creating tensions with associates concerned they’re losing pay to online sales despite brick and mortar store’s increasing influence on online sales.

Santiago Gallino, a professor at the Wharton School who specializes in digital transformation, told CNBC that associates on commission may be less incentivized to assist shoppers heading to stores for help if they expect that many will only later go online make the purchase.

“The link between the cause and the effect is not so clean,” he said. “The moment when that link is broken, my sales rep may lose the incentive to be helpful and pay attention to a customers’ needs.”

In an out-of-stock situation, for example, to gain full credit for a sale, an associate may encourage a customer to come back to the store later rather than encouraging them to purchase the item online.

Speaking to WWD, Anil Patel, CEO of HotWax Commerce, said most retailers don’t have the technology to determine how to reward associates for online sales influenced by their actions or department.

“Setting sales quotas at the store level and measuring store success purely based on in-person purchases isn’t realistic, especially if your stores are being leveraged to fulfill online orders,” he said.

DISCUSSION QUESTIONS: How serious an issue is the proper accounting of how in-store actions affect online sales?  How should commissions and pay structures for associates be revamped to acknowledge the support stores provide for online sales?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"This problem is real and needs to be addressed as more and more stores become showrooms and distribution centers for e-commerce sales."
"...frankly nothing will happen until the retailers create sound and logical policies that reflect the shopper journey of today."
"Keep the silo to online and don’t give an inch – websites convert at 1-2 percent, stop trying to cook the books to say that they are the ones driving sales."

Join the Discussion!

29 Comments on "Why is omnichannel sales attribution still a problem?"


Sort by:   newest | oldest | most voted
Neil Saunders
BrainTrust

There is no technical barrier to tracking and attributing sales at a broad level, it’s just that some retail systems are not configured to do this. However the issue becomes more complex once it starts coming down to individual compensation. This is especially so if incentives and policies are designed to treat stores and online as competing channels when, as far as the customer is concerned, they are complementary. The solution here is not to over-complicate, but to design compensation policies so that they are aligned with the modern realities of shopping, With unions involved this may well be a headache, but unions need to understand that a failure to evolve and adapt will mean stores close and staff lose their jobs.

Gene Detroyer
BrainTrust

Neil’s most important words are: “as far as the customer is concerned.”

Rick Watson
BrainTrust

Seriously how can we still be having this discussion in 2021?

The Macy’s discussion last week just made me shake my head in concern for their future.

The key is to align incentives. How can Target get this so right but other retailers are still struggling with it? Both store employees and online P&L owners need to get credit for the sale. Then the corporate finance group can just report out the right numbers.

DeAnn Campbell
BrainTrust

Do you think this issue is tougher for Macy’s because of their long entrenched history with the unions? If so, you’re right it could be the undoing of Macy’s future.

David Naumann
BrainTrust

There is no silver bullet to solve the sales attribution problem. Some brands have moved to a blended market approach that evaluates stores and online collectively based on the regional location or proximity of stores and customers’ home address for online purchases. However this does not solve the issue where a sales associate assisted a customer that later buys anonymously online or scan and pays via their phone.

Bob Amster
BrainTrust

Anil Patel is correct. Many retailers do not have the technology to correctly and fairly attribute sales to the various channels involved. But, as Neil Saunders points out, this is not because the technology is not available. In fact, developing an equitable system of attribution is a no-brainer that a second year programmer can program, provided that the programmer is given the business rules to code. We have been advocating for years that everyone involved in a sale, as part of the team that caused the sale to happen, should be credited — but without double-booking sales, of course.

Perry Kramer
BrainTrust
This is an extension of the problem that retailers have been dealing with for over a decade now. How do you accurately account for sales, financially and in perpetual inventory, that in some way have a digital component? It started with what location gets credit for an omnichannel sale that may involve a store and an e-commerce site, including how do we calculate store associate bonuses. This then expanded to, how do we plan and allocate? Based on where the sale was financially posted or where we want the merchandise? How do we meet auditors’ requirements for posting sales at the time of ownership transfer? The reality is that almost every major retailer has several custom programs that solve all of these issues based on their business decisions. It appears that Macy’s elected to move this need to the bottom of the priority list. There will need to be some type of proration of commission developed based on who was working at the time of the sale to ensure commissions are provided for these cases.… Read more »
David Naumann
BrainTrust

Very good points Perry. There are many issues to consider and there is no perfect or fair solution.

Gary Sankary
BrainTrust

This is a great example of a legacy process that is not aligned with modern consumer behaviors or supporting technology. Retailers are striving to engage with customers across multiple channels through the entire purchase journey.

Macy’s and the union need to come together and find a creative way for employees to support unified commerce models enthusiastically and at the same time feel incented and be rewarded by providing excellent service.

Robin Mallory
Guest
1 month 10 days ago

If the metric is still “monetary sales of merchandise,” compensation policies must become broader, and inclusive of channels.

But will there be separate policy for Macy’s full line vs Macys Backstage store? (Or does brand halo mean all employees are compensated via same process?)

Bigger picture: is today’s retail compensation strategy creating the retail/business leaders of tomorrow? Is compensation incentivizing growth in position as well as growth of sales completed?

DeAnn Campbell
BrainTrust

Retailers won’t be truly successful until they can fully integrate performance metrics and sales attribution across all channels. Macy’s unions are fighting the wrong fight. Instead of forcing shoppers to stick with old school check-out, which goes against the grain of shopper behavior, they should be looking for ways to get credit for a portion of online sales. Brick and mortar has an enormous impact on a company’s e-commerce profitability. There is a significant boost in online sales where stores are available and a proven drop in online sales where stores have closed. In addition, click and collect, ship from store and other brick and mortar services significantly increase e-commerce profit margins. Retailers must find a way to incentivize employees by regional omnichannel lift, and measure individual performance in new ways.

Jeff Sward
BrainTrust

Why is this not a simple software or programming issue? We can watch helicopters being piloted on Mars, but we can’t allocate sales to channels or individuals? Really?

Mohamed Amer
BrainTrust

A store or chain that uses a sales commission model needs to evolve its compensation system to accommodate tech-enabled changing consumer purchase behavior. While in-store sales via a POS system make for clear and unambiguous attribution, scan and pay, and other similar processes require creativity and collaboration within the organization. Options include creating a shared commission pool (possibly at a reduced rate) on the non-attributable transactions. Another is to offer the customer the opportunity to identify an in-store consultant for sales credit. The point is that organizational processes always lag advances in technology that go along with changes in consumer behavior. The longer it takes to adequately respond to these external changes, the greater the organizational pain on all sides.

Dr. Stephen Needel
BrainTrust

I’m not as sure as Bob and Neil are that the solution is a simple programming answer. Example – I go into Best Buy, I shop around, come home and show Toni, she picks the one she likes, I order it online. Short of asking me a.) if I first shopped for this at a store, b.) if so, which one and when, c.) did I get help from an associate, and d.) if so, whom — how are they going to know?

Stop commission based sales and you solve much of this problem, although you might open up other cans of worms.

Bob Phibbs
BrainTrust

This evolved from commission salespeople not getting credit after doing the work and the customer standing in a special queue to check out. Commissions work for people who actually work and drive high-value sales. There should never be a question. And someone who doesn’t buy from you that day means you did not make the sale – I don’t care if it is online or in person. Attribute where it closed and be done with it. Train your employees to care more about the person in front of them than crying about the lost sale as “theirs.” Keep the silo to online and don’t give an inch – websites convert at 1-2 percent, stop trying to cook the books to say that they are the ones driving sales. They drive awareness like a window or a brochure.

Venky Ramesh
BrainTrust

In today’s digital world, where product discovery mostly happens online and so also the final sales transaction, retail stores are increasingly becoming display centers. When commission-based compensation was designed, it was to drive incentivization for helping navigate the customer through the entire path to purchase process. Therefore I think it’s time to revisit the compensation design. Employees need to be incentivized for providing a great customer experience. And now matter which channel the sales finally happens in, they need to be paid a bonus funded from a shared profit pool.

Ken Morris
BrainTrust

This problem is real and needs to be addressed as more and more stores become showrooms and distribution centers for e-commerce sales. Some of our clients in the furniture segment have chosen a geographic compensation model where all online and app sales are attributed to the store with the closest proximity to the sale and then apportioned equitably among the commissioned sales people. To me this is the cleanest model.

Gene Detroyer
BrainTrust

I go to the Levi’s store and and try on several styles and sizes. I am nicely helped by the sales associate. I find the size and style I like and for the next 10 years I buy my Levi’s online. Should that associate get commission for 10 years and the next 10 years as I continue to buy online?

Certainly a ridiculous but real example. Maybe less real, but just as ridiculous, might be if I go to the a Levi’s store in California while on vacation, yet I order for the next 10 years from my home in NYC.

Habits are changing. Shopping and buying are changing. Technology is changing. Gee, maybe the objective to the store associate’s job should be how to take care of the customer best? Is that such a unique idea? We could even reward them with pay raises and promotions.

Jlauderbach
Guest

This is a perfect time to rethink the compensation structure and business model. Commissions played an important part of the sales process in the analog era. The sales associate was the source of product information and in a perfect world would advise the customer, so the proper item was purchased. There was a direct linkage of location, sales associate, and transaction. The digital sales process is loosely coupled. Product information is garnered in a myriad of ways. It may come from the corporate website, social media, or direct from the producer of the product. The transaction may involve multiple internal locations of the retailer (several stores, warehouses, logistics). There is no direct linkage of location, sales associate, and transaction. Sales attribution is arbitrary.

Why spend time and effort trying cobble an imperfect fix to outdated processes? Retailers need to step back and reevaluate the root cause of the issue.

Robin Mallory
Guest
1 month 10 days ago
Big picture: is commission the fairest way to pay employees? Does it lead to the strongest business plan? Does it attract, train & retain the best staff? Does commission (vs higher hourly vs salary) create employee career growth paths? RetailWire has been covering this same topic for many years: here we are. Is the future TRULY based on trying to fix (and re-fix for future sales channels) the way to pay employees? At what point is the “band aid” too small. Time for the stores and employees and unions to come to 2021 type compensation (which will still have to be revised in future!). Multiple sales attribution paths are intermingled. Attribution of a product, staff service effort, merchandise price, staff’s time. And reversing the attribution for returns? Do sales staff give back the commission (of any channel) if item is returned? RFID works on the merchandise. Cash register works for a linear sale. But exponential paths of consumer purchase? Intent, trial, geo, sales prices (returning higher priced after re buying at lower priced), BOPIS, etc.… Read more »
Peter Charness
BrainTrust

Decades of logic are coded into legacy systems, which are not that easy to change, but frankly nothing will happen until the retailers create sound and logical policies that reflect the shopper journey of today. Many retailers have yet to create clear and logical practices for attribution of costs and revenues. Until that happens the systems side of the problem can’t be untangled.

Mary Pietsch
Guest
1 month 11 days ago

The commission-based pay structure needs a revamp. People shop differently today. If I research an item online, decide to purchase, check online for store availability, then drive to the store and purchase, the sales associate had nothing to do with the purchase except taking a minute or two to ring up the sale. But they are compensated the same as an associate who took a fair amount of time in-store to help me with my search. It’s time to find a new way to compensate sales associates in many types of merchants.

Doug Garnett
BrainTrust

Attribution is not knowable — certainly not to the degree which retailers want. I’ve spent 30 years working around questions of attribution of advertising and online/offline sales. It simply cannot be done.

Why? What we want to measure is what happens inside the customer’s head. At best, we can roughly estimate it.

We must be careful NOT to trust those who have sophisticated attribution systems. These systems are all based on assumptions for what happens inside the customer’s head. In my experience, these systems give entirely erroneous results.

That it is NOT knowable is no surprise. Mandelbrot showed us 69 year ago that coastline length is essentially infinite and unknowable and while we can figure out how two bodies affect each other, we cannot calculate the effect of gravity among three bodies of significant size.

Our question should be: Since attribution is not solvable, how then should we proceed?

David Mascitto
BrainTrust

The root of this problem is that the physical store and online store are still being treated as separate, siloed businesses. Omnichannel should be providing a seamless experience across digital and online stores. This needs to extend to sales attribution and commissions.

Trevor Sumner
BrainTrust

What’s most disconcerting is that the technology for attribution is not that hard. Tracking codes are not new technology and mobile and web offerings should be configured to record these with default infrastructures like Google Analytics, Omniture, etc. It’s really just a question of prioritization and part of the issue might be organizational silos. Who in the digital group is fighting for proper attribution of the store, which often may be a competing budget? How much productivity and optimization is lost by a lack of visibility that might benefit digital group budgets who can claim credit for in-store attribution? The Macy’s decision is yet another highlight to the breadth of costs associated with a lack of attribution visibility to the power of the store as omnichannel marketing vehicle.

Yogesh Kulkarni
BrainTrust

There are two very different problems here. One is sales attribution, which has to do with what is the contribution of each channel and incentive driving the sale. This isn’t very easy and science in this space at best is very immature. To top that, now comes the issue of compensating a store associate with that sale. In a traditional world where the product discovery to sales was contained within the store channel, designing a commission structure is easy. In the omnichannel world, starting with attribution and then assigning commission is a tall order. This isn’t just a small system change.