the real truth about cash spiffs

11
The Real Truth About Cash Spiffs To Improve Retail Sales Performance February, 2010

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Page 1: The Real Truth About Cash Spiffs

The Real Truth About Cash Spiffs To Improve Retail

Sales Performance

February, 2010

Page 2: The Real Truth About Cash Spiffs

Paradigm

Belief: Improving retail sales can be achieved by offering a limited-time cash incentive to sales people (aka, a cash “spiff”).

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.

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.

Page 3: The Real Truth About Cash Spiffs

Reality

While having some positive impact on sales, the cash-spiff has significant drawbacks: 1. The majority of the audience does not generate

incremental lift 2. The lift that is realized may/may not be due to the

money that is offered 3. There are better, more effective ways to achieve

higher, more sustainable sales improvement.

Page 4: The Real Truth About Cash Spiffs

Factors

There are four factors that impact how effective a short-term sales initiative is: 1. Does the sales person possess the skills and

competencies to perform at a higher level? 2. Is the sales person truly “money-motivated”? 3. Does the sales person align with the short-term

and intermediate-term objectives of the retailer? 4. Is there a sufficient measurement system in

place to inform and engage the attention of the sales person?

Page 5: The Real Truth About Cash Spiffs

Reality, Part 2

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

adequately addressed.

Page 6: The Real Truth About Cash Spiffs

Why Cash-Spiffs Won’t Move 75-80% of Your Retail Sales Channel

(III)

Skilled, But 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)

(I)

Lacks Skills, And Is Not

Money- Motivated

(Cash Spiffs Won’t Work)

(II)

Lacks Skills, But Is

Money-Motivated

(Cash Spiffs Won’t Work)

Page 7: The Real Truth About Cash Spiffs

Four Categories of Salespeople

(I) Under-performers: Lacking in both skills and money-motivation. These are the bottom 20% of any sales team.

(II) Under-achievers: Are motivated by the offer of more $, but lack skills. These are the next 30% of the bell curve.

(III) Independent Contributors: Possess the skills to deliver more sales, but are not motivated by the offer of more $.

(IV) Top Producers: Know how to lift sales and will deliver more (but only up to their pre-set earnings expectations).

Page 8: The Real Truth About Cash Spiffs

What To Do?

(I) 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.

(II) This group needs training and coaching, along with sound measurement and reinforcement to produce more. Behavioral, incremental change is key.

(III) This group needs to be communicated with, challenged to set new personal goals, reinforced and aligned with company goals.

(IV) 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.

Page 9: The Real Truth About Cash Spiffs

Consider

Goal-setting is key for personal development. Self-imposed goals are met. Dictated goals are less effective.

Willingness and Ability are critical – Both need to be addressed.

Communicating a vision, and gaining buy-in is important. Everyone must have an understood, individual role in success.

What gets measured gets done. Track key results and post or report continually.

Page 10: The Real Truth About Cash Spiffs

What’s Next

Email me at [email protected]

or visit my blog at http://ideationz.wordpress.com to open a

dialog around what your company needs to get done,

and how best to get after it.

It’s all about behavior change, and money just won’t buy that.

Page 11: The Real Truth About Cash Spiffs

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.