March 12, 2015
Does retail need to get back to measuring and rewarding associates?
Through a special arrangement, presented here for discussion is a summary of a current article from the IMS (Integrated Marketing Solutions) blog.
Consumers are no longer driven to go to stores to conduct research or save money — they can do both online, often more efficiently. Omnichannel shoppers head to stores for the "experience." They want to see, feel and touch the products. Most importantly, they want assistance.
Highly informed omnichannel shoppers who have researched online, have new expectations for associates when they visit stores:
- They expect personal, courteous service;
- They expect associates to be able to demo or help them try products out;
- If products can’t be demoed in store, they expect associates to provide resources for where to see more;
- They expect associates to consult on what is best for their lifestyle;
- They expect to be able to talk to someone if they have a problem.
Yet finding a quality associate has become harder as labor has been treated more as an "expense." Many stores still retain the big box model of paying labor on the lowest hourly wage possible, often part-time minimum hourly wages, with the premise of being able to compete on lowest price.
Moreover, with the shift to hourly pay, many stores simply do not measure individual associate performance or identify peak performers.
To survive in an omnichannel world where consumers place a premium on their experience, stores must address five critical success factors:
- Identify, quantify and hire talent that can deliver a personal consumer experience.
- Find metrics to measure individual performance that matters to consumers. Consumer satisfaction surveys and mystery shops are among the ways stores can measure the critical associate behaviors and experiences that consumers value.
- Implement metrics that measure individual value to the retail store. Measure sales by employee; not just total products sold, but sales by hour as well as basket size.
- Reward and recognize individuals. If not bonuses or commission, retailers must start recognizing peak sales producers, as well as the best performers for consumer service and experience.
- People tend to do what is inspected, more than what is expected. The corollary is that what gets measured can be managed. Associate performance needs to be made visible on scorecards for store managers, who are ultimately accountable for both consumer experience and the resulting sales.
Future success in retail stores will require measuring and rewarding individual associates for sales and service performance.
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Discussion Questions
Should retailers implement individual associate performance scorecards? Must bonuses, commission and other rewards-driven pay structures be brought back to support the expectations of today’s connected consumers?
Poll
The piece that is missing here is the need for employers to pay a wage that will attract strong candidates, and to invest in those candidates through training and development programs that will deliver an improved customer experience and should help reduce churn.
If retailers want their marketing and message to be about something other than price, developing enthusiastic, motivated and knowledgeable associates is a must. As brick-and-mortar stores compete increasingly with “smart” websites that account for the shopper’s previous visits and preferences, a smart and engaging in-store associate is going to become table stakes to compete for the shopper’s loyalty within physical stores.
Unfortunately, in this day of cost cutting and EBITDA mania, the first thing that seems to get cut is training and labor as it is typically the largest manageable expense variable. Again, if the retailer wants to protect margins and move the discussion away from price, the investment in associate incentives and training will return tangible benefits to the retailer.
Yes, yes, YES!
We are in the midst of a ton of research around the emotional currency within shopping experiences and this keeps bubbling up as one of the top factors that affects how people feel about their store trip.
Retailers spend millions of dollars to get people to buy with them and so often the most lasting impression is in the hands of a low-paid worker. Seriously, think about how many times you have a great shopping experience and you end up with a nasty check-out teller who hardly looks at you, much less says thank you with any authenticity. Or as the article points out, it’s clear in about two seconds that your associate is woefully uninformed about the topic you need help with.
Younger workers need different things than older workers to motivate them. But money, active monitoring and support tools get both groups a lot more interested. There are so many technologies and techniques that retailers can use to support good service, but they have to recognize how much it really does affect the bottom line. Just look at Trader Joe’s.
My two cents? Start caring about “ERM” (as in Employee Relationship Management) as much as CRM.
Retailers have to do something, that much is clear. It does start with establishing a base pay structure, as Kelly points out. Starting from there, all the rest definitely follows.
But I do need to say that with the exception of high-end product, there is nothing to “bring back.” The retail store model has been built on a base of a transient, low-paid workforce forever. That clearly needs to change, for the reasons cited above. I don’t think putting all sales associates on commission makes a lot of sense. Bonuses, career-pathing and acknowledgement to peers are important.
The goal is to attract, hire, train and retain a knowledgeable and customer-friendly workforce.
A good article, and one that hits on a lot of the right points. Retail associates are much more important today than ever before. Accordingly, retailers need to treat them that way. More investment in the hiring process, more training, more coaching, more evaluation, more recognition, more rewards … more of everything.
Look, we’ve given customers just about everything possible as of late. It’s time to give your employees everything possible too. It’s proven to pay off.
Consumers are no longer driven to go to stores to conduct research or save money. They can do both online, often more efficiently. And highly informed omni-channel shoppers who research online have new expectations for associates when they visit stores. Should rewards-driven pay structures be brought back to support the expectations of today’s connected consumers?
Now that shoppers have access to research online and can undertake price comparisons very easily from their PC, tablet or phone, retailers are going to have to give shoppers compelling reasons to come into their stores. There’s a significant amount of evidence, both quantified and anecdotal, that retailers who receive high praise from customers for great in-store service also deliver great financial performance. And for many shoppers great in-store service trumps other elements of the overall value proposition—even, in some instances, low prices. But how do retailers ensure that store associates deliver great in-store service? There are a few components to it.
The first, and most important in my view, is the retailer’s culture and values and how these values are visibly and consistently demonstrated by every level of the company—treating all employees with respect and demanding that they do the same with customers is absolutely essential to great customer service. Second, recruitment and employee development are key: associates need to feel like the company is investing in them from a training and development perspective (these first two points are encapsulated in the great quote about training employees well enough so that they have options to leave but treating them well enough such that they will choose to stay).
Associates also need to feel empowered to address customer issues and they need to feel trusted by the company to do the right thing when customer satisfaction is at stake. Finally, as we’ve been seeing a great deal in the press lately, it’s important to pay associates a decent wage. While the very visible cost of associate pay is a significant investment for a retailer the hidden cost of unmotivated, uncaring associates can easily be a far greater cost and have a much longer lasting negative impact if it manifests itself in low customer satisfaction.
Which brings us back to the question of rewards-driven pay. Shoppers definitely want associates who are motivated to do the right thing for them but nobody likes an overly energetic associate who seems more motivated by pushing accessories, warranties, etc., because it increases the associate’s commission. But there are some good models in evidence: employee-owned retailers align associates’ incentives with the overall performance of the company, store-based or team-based rewards are also a good way to foster the right approach, recognition for providing great customer service can be good motivators for associates and discretionary rewards (some non-monetary) that are available to be used at the discretion of managers are another option.
The extent to which all of the above apply will depend on which specific retail vertical is in question, but a compelling in-store experience delivered by knowledgeable, friendly and helpful store associates will play an increasingly important role across retail as a whole.
My first thought on reading the article was I still expect the five points outlined. Perhaps it is because I have been around long enough to remember when that was the case. This is likely true for other shoppers as well which is why we are so disappointed in many, if not most, brick-and-mortar shopping experiences.
You cannot provide a good brick-and-mortar shopping experience without first having good store level associates. Expectations may vary between customers, but I believe we would all agree what the elements are. I will repeat what I have said many times before: if you want good people you have to treat people good. That means preparing them for the work you expect and compensating them appropriately.
Retailers are caught between the proverbial rock and a hard place, and it is a result of their own misdoings. This has to change or retail tomorrow will be no different than retail yesterday. Change means biting the dollar bullet to invest in hiring the best candidates who have a chance of staying around for more than a season, training them well and supporting them in the stores. This is what The Container Store has done well and successfully over the years. Turnover is a small number there.
In order to do this, retail’s mentality has to change. There has to be a full commitment to doing it right the first time when hiring and training. No more smoke and mirrors candidates. No hiring just because they are breathing and can speak somewhat. We have to remember that after all the marketing millions are spent, retailers are putting the customer in the hands of those on the sales floor. If they do not do their job the right way and service the customer the marketing dollars have been poorly spent. Now that I have said this, do I believe it will change anything? Doubtful!
Shoppers, as I do, expect the following:
- They expect personal, courteous service.
- They expect associates to be able to demo or help them try products out.
- If products can’t be demoed in store, they expect associates to provide resources for where to see more.
- They expect associates to consult on what is best for their lifestyle.
- They expect to be able to talk to someone if they have a problem.
I really don’t need help buying or not. I can do it anytime or anyplace these days. The store is no longer a place to buy. It MUST, without exception, offer the five elements noted above.
Therefore, that is way remuneration must be structured. The idea of commissions is fast becoming irrelevant.
No, retailers always mess up performance scorecards.
Instead, I dare you to catch your associates doing something right with the customer and reward them for it in front of others.
All employees no matter what their age simply will do their best when they:
- Get a simple thank for the task is done right.
- Get the hours they want.
- Get the training they need.
- Get a living wage.
Employee incentives can work. It can be motivation to spend a little more time, work harder, engage more customers, etc.
The first question I ask is, “What are you measuring?” Is it sales, customer feedback, service? Is it based on individual performance or overall store performance. There are many reasons to bonus.
The second question is, “Is the reward the right incentive?” Is cash the right incentive? It doesn’t have to be. It can be time off with pay. It can be store merchandise. It can be anything that is important to the employee. That last one is the key. Is it important to the employee?
Yes, they should. Many (most?) retailers invest a lot of money getting people into the store and then fail with the staff—it’s like generating high traffic for an ecommerce store and converting poorly—big waste! Smart money goes on incentivizing people aggressively with multiple metrics weighed according to a brand’s character, values and business model.
I would always suggest metrics for employees that go beyond customer service criteria. Productivity improvements also help customer service. Following an individual’s overall performance consistently helps drive overall store performance. Incentives must be compelling. If the current incentives don’t seem to be working, change them. Everyone likes to be rewarded for a job well done. I have seen examples of retailers offering quarterly bonuses for all employees, even part-time ones.
I agree all those measures and tools can help. But culture will beat strategy every time, as they say. If the company is determined to raise the level of employee performance and tie any such goals to better customer experience/satisfaction, the biggest part of the battle is won. Money tied to performance is always a motivator. Scorecards and such can be very good. But the culture, or lack thereof, demanding a high level of customer service is crucial. It has to start at the top and be a real priority to prompt meaningful change.
Take a look at those retailers who seem to do best. How do they treat their employees? Exceptional experiences abound at retail, but are unfortunately overshadowed by the hourly wage placeholders. And all of the above perks, while nice, are not necessary to hire, train and motivate employees. I would submit that concern, respect and profit sharing are more meaningful.
Should retailers implement individual associate performance scorecards? Absolutely. And yes, bonuses, commissions, and rewards-driven programs could help employees step up their games, but retailers should beyond that and strive to create a company culture and environment that encourages top performance.
This can be done through a number of initiatives. Store owners and managers, for instance, can make it a point to regularly recognize good behavior and results. They can encourage peer-to-peer recognition. Or they can provide feedback in such a way that the associates can see the direct impact that their hard work has on sales or the customer experience.
Absolutely it would help. When behaviors are rewarded, people respond. Training will be needed, and pay needs to be commensurate with responsibilities and skills, something retailers have not really done in the past (i.e., labor should be cheap). But once we regard retail employees as crucial to keeping customers coming to our stores, their value is seen as much more important and therefore will be paid accordingly.
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The piece that is missing here is the need for employers to pay a wage that will attract strong candidates, and to invest in those candidates through training and development programs that will deliver an improved customer experience and should help reduce churn.
If retailers want their marketing and message to be about something other than price, developing enthusiastic, motivated and knowledgeable associates is a must. As brick-and-mortar stores compete increasingly with “smart” websites that account for the shopper’s previous visits and preferences, a smart and engaging in-store associate is going to become table stakes to compete for the shopper’s loyalty within physical stores.
Unfortunately, in this day of cost cutting and EBITDA mania, the first thing that seems to get cut is training and labor as it is typically the largest manageable expense variable. Again, if the retailer wants to protect margins and move the discussion away from price, the investment in associate incentives and training will return tangible benefits to the retailer.
Yes, yes, YES!
We are in the midst of a ton of research around the emotional currency within shopping experiences and this keeps bubbling up as one of the top factors that affects how people feel about their store trip.
Retailers spend millions of dollars to get people to buy with them and so often the most lasting impression is in the hands of a low-paid worker. Seriously, think about how many times you have a great shopping experience and you end up with a nasty check-out teller who hardly looks at you, much less says thank you with any authenticity. Or as the article points out, it’s clear in about two seconds that your associate is woefully uninformed about the topic you need help with.
Younger workers need different things than older workers to motivate them. But money, active monitoring and support tools get both groups a lot more interested. There are so many technologies and techniques that retailers can use to support good service, but they have to recognize how much it really does affect the bottom line. Just look at Trader Joe’s.
My two cents? Start caring about “ERM” (as in Employee Relationship Management) as much as CRM.
Retailers have to do something, that much is clear. It does start with establishing a base pay structure, as Kelly points out. Starting from there, all the rest definitely follows.
But I do need to say that with the exception of high-end product, there is nothing to “bring back.” The retail store model has been built on a base of a transient, low-paid workforce forever. That clearly needs to change, for the reasons cited above. I don’t think putting all sales associates on commission makes a lot of sense. Bonuses, career-pathing and acknowledgement to peers are important.
The goal is to attract, hire, train and retain a knowledgeable and customer-friendly workforce.
A good article, and one that hits on a lot of the right points. Retail associates are much more important today than ever before. Accordingly, retailers need to treat them that way. More investment in the hiring process, more training, more coaching, more evaluation, more recognition, more rewards … more of everything.
Look, we’ve given customers just about everything possible as of late. It’s time to give your employees everything possible too. It’s proven to pay off.
Consumers are no longer driven to go to stores to conduct research or save money. They can do both online, often more efficiently. And highly informed omni-channel shoppers who research online have new expectations for associates when they visit stores. Should rewards-driven pay structures be brought back to support the expectations of today’s connected consumers?
Now that shoppers have access to research online and can undertake price comparisons very easily from their PC, tablet or phone, retailers are going to have to give shoppers compelling reasons to come into their stores. There’s a significant amount of evidence, both quantified and anecdotal, that retailers who receive high praise from customers for great in-store service also deliver great financial performance. And for many shoppers great in-store service trumps other elements of the overall value proposition—even, in some instances, low prices. But how do retailers ensure that store associates deliver great in-store service? There are a few components to it.
The first, and most important in my view, is the retailer’s culture and values and how these values are visibly and consistently demonstrated by every level of the company—treating all employees with respect and demanding that they do the same with customers is absolutely essential to great customer service. Second, recruitment and employee development are key: associates need to feel like the company is investing in them from a training and development perspective (these first two points are encapsulated in the great quote about training employees well enough so that they have options to leave but treating them well enough such that they will choose to stay).
Associates also need to feel empowered to address customer issues and they need to feel trusted by the company to do the right thing when customer satisfaction is at stake. Finally, as we’ve been seeing a great deal in the press lately, it’s important to pay associates a decent wage. While the very visible cost of associate pay is a significant investment for a retailer the hidden cost of unmotivated, uncaring associates can easily be a far greater cost and have a much longer lasting negative impact if it manifests itself in low customer satisfaction.
Which brings us back to the question of rewards-driven pay. Shoppers definitely want associates who are motivated to do the right thing for them but nobody likes an overly energetic associate who seems more motivated by pushing accessories, warranties, etc., because it increases the associate’s commission. But there are some good models in evidence: employee-owned retailers align associates’ incentives with the overall performance of the company, store-based or team-based rewards are also a good way to foster the right approach, recognition for providing great customer service can be good motivators for associates and discretionary rewards (some non-monetary) that are available to be used at the discretion of managers are another option.
The extent to which all of the above apply will depend on which specific retail vertical is in question, but a compelling in-store experience delivered by knowledgeable, friendly and helpful store associates will play an increasingly important role across retail as a whole.
My first thought on reading the article was I still expect the five points outlined. Perhaps it is because I have been around long enough to remember when that was the case. This is likely true for other shoppers as well which is why we are so disappointed in many, if not most, brick-and-mortar shopping experiences.
You cannot provide a good brick-and-mortar shopping experience without first having good store level associates. Expectations may vary between customers, but I believe we would all agree what the elements are. I will repeat what I have said many times before: if you want good people you have to treat people good. That means preparing them for the work you expect and compensating them appropriately.
Retailers are caught between the proverbial rock and a hard place, and it is a result of their own misdoings. This has to change or retail tomorrow will be no different than retail yesterday. Change means biting the dollar bullet to invest in hiring the best candidates who have a chance of staying around for more than a season, training them well and supporting them in the stores. This is what The Container Store has done well and successfully over the years. Turnover is a small number there.
In order to do this, retail’s mentality has to change. There has to be a full commitment to doing it right the first time when hiring and training. No more smoke and mirrors candidates. No hiring just because they are breathing and can speak somewhat. We have to remember that after all the marketing millions are spent, retailers are putting the customer in the hands of those on the sales floor. If they do not do their job the right way and service the customer the marketing dollars have been poorly spent. Now that I have said this, do I believe it will change anything? Doubtful!
Shoppers, as I do, expect the following:
I really don’t need help buying or not. I can do it anytime or anyplace these days. The store is no longer a place to buy. It MUST, without exception, offer the five elements noted above.
Therefore, that is way remuneration must be structured. The idea of commissions is fast becoming irrelevant.
No, retailers always mess up performance scorecards.
Instead, I dare you to catch your associates doing something right with the customer and reward them for it in front of others.
All employees no matter what their age simply will do their best when they:
Employee incentives can work. It can be motivation to spend a little more time, work harder, engage more customers, etc.
The first question I ask is, “What are you measuring?” Is it sales, customer feedback, service? Is it based on individual performance or overall store performance. There are many reasons to bonus.
The second question is, “Is the reward the right incentive?” Is cash the right incentive? It doesn’t have to be. It can be time off with pay. It can be store merchandise. It can be anything that is important to the employee. That last one is the key. Is it important to the employee?
Yes, they should. Many (most?) retailers invest a lot of money getting people into the store and then fail with the staff—it’s like generating high traffic for an ecommerce store and converting poorly—big waste! Smart money goes on incentivizing people aggressively with multiple metrics weighed according to a brand’s character, values and business model.
I would always suggest metrics for employees that go beyond customer service criteria. Productivity improvements also help customer service. Following an individual’s overall performance consistently helps drive overall store performance. Incentives must be compelling. If the current incentives don’t seem to be working, change them. Everyone likes to be rewarded for a job well done. I have seen examples of retailers offering quarterly bonuses for all employees, even part-time ones.
I agree all those measures and tools can help. But culture will beat strategy every time, as they say. If the company is determined to raise the level of employee performance and tie any such goals to better customer experience/satisfaction, the biggest part of the battle is won. Money tied to performance is always a motivator. Scorecards and such can be very good. But the culture, or lack thereof, demanding a high level of customer service is crucial. It has to start at the top and be a real priority to prompt meaningful change.
Take a look at those retailers who seem to do best. How do they treat their employees? Exceptional experiences abound at retail, but are unfortunately overshadowed by the hourly wage placeholders. And all of the above perks, while nice, are not necessary to hire, train and motivate employees. I would submit that concern, respect and profit sharing are more meaningful.
Should retailers implement individual associate performance scorecards? Absolutely. And yes, bonuses, commissions, and rewards-driven programs could help employees step up their games, but retailers should beyond that and strive to create a company culture and environment that encourages top performance.
This can be done through a number of initiatives. Store owners and managers, for instance, can make it a point to regularly recognize good behavior and results. They can encourage peer-to-peer recognition. Or they can provide feedback in such a way that the associates can see the direct impact that their hard work has on sales or the customer experience.
Absolutely it would help. When behaviors are rewarded, people respond. Training will be needed, and pay needs to be commensurate with responsibilities and skills, something retailers have not really done in the past (i.e., labor should be cheap). But once we regard retail employees as crucial to keeping customers coming to our stores, their value is seen as much more important and therefore will be paid accordingly.