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Ask INSTORE: October 2009



Helping a sales superstar who’s sagging, setting policies for moonlighting employees, compensation guidelines for salespeople, and more.

[h3]Sagging sales could mean time for a style update[/h3]

[dropcap cap=Q.][h4][b]After more than 20 years of solid production, my best salesperson’s performance is falling. She’s still pushing hard but the sales just aren’t coming. Is there anything I should be doing?[/b][/h4][/dropcap]

[dropcap cap=A.]It could be she needs to update her selling style. The way in which people want to be sold has changed, and associates who follow the old power-selling school of salesmanship won’t find consumers as responsive, especially the younger ones. Get her (and yourself) an update on state-of-the-art selling skills so that she sells smart and not so hard. That usually means asking more questions, listening more, and essentially letting the customer close the sale herself. Give real thought to bringing in a sales coach; implemented correctly, training will make your fading star feel valued and as if she’s growing, as well as restore some of the confidence she’s no doubt lost. (The improvement in sales should repay the cost quickly.)

You may also want to reconsider the metrics you’re using. Closing rates are good but to ensure your whole business is looking more forward, track some other areas as well, like new contacts initiated with potential customers, how contacts are followed up, and the amount of face-to-face or phone-to-phone time your salespeople are putting in. There’s a fairly direct correlation between these factors and selling success.[/dropcap]



[contentheading]Moonlighting Policy[/contentheading]

[h4][b]I recently discovered one of my employees was sending repairs to the same independent repair guy that our store uses (They sent me the bill!). What is the industry norm as to employees who do “business on the side?”[/b][/h4]

The norm is to have a policy manual that governs this. If there’s no written policy, it’s pretty hard to argue the person’s done something wrong. Sales trainer David Geller says that in his old store, the rule was that employees could not deal directly with any suppliers. “If they bought a product or service for personal use, it cost them 10 percent above our cost. The only family members who could buy through our vendors at the same rate were listed. Anyone else would get a discount off of retail.” It sounds tough but, Geller says business — as you’re discovering — will quickly leach from the store if you don’t set rules. Among the things to consider are: Will you allow staff to buy anything at your cost? (This time it was a service, but that’s no different from buying a product from a vendor.) Do you want to know about it? Who gets billed? Do you want or will you allow your employees to earn extra cash on the side (such as selling at shows at night)? Once you’ve formulated your policy, ensure that everyone gets a copy and that everyone signs it.


[contentheading]Can’t Stand the Heat[/contentheading]

[h4][b]We have track lights with low-voltage halogen bulbs that emit so much heat our store literally cooks! Can you help?[/b][/h4]


The easiest option would be to change to metal halide bulbs, says Brent Neal of Eastern Lighting. “One 70-watt metal halide fixture can light an entire showcase with intense white light” with little of the heat generated by halogen, he says, adding that the bulbs can last as long as 10,000 hours. Metal halide lights, however, aren’t without their own problems. They aren’t cheap, can be finicky to operate and to work best you really need to install a whole system.

Given these drawbacks, you may want to consider fitting an LED system. “The new generation LED lights last for years, generate very little heat, and the appearance of your jewelry will be unbelievable,” Neal says. The cost of a new LED system is not unsubstantial, but once you factor in energy savings, low maintenance and replacements costs, not to mention the cooler temperature for customers and staff, you may decide it’s worth the investment.


[contentheading]Pay Right[/contentheading]

[h4][b]When it comes to pay, we’ve always operated under the rule of thumb of paying our sales staff about 10 percent of what they sell. Is this still a good guideline?[/b][/h4]

No, it’s been obsolete for years, says Kate Peterson, founder of Performance Concepts. “‘The 10 times rule’ was the standard 25 years ago — back when margins were in the mid-60 percent range and operating expenses were around 20 percent,” she says. But today, those numbers are wishful thinking for most jewelers, and smart business owners understand that sales dollars are far less significant than the gross profit dollars you take to the bank.


In the typical store, where salespeople are responsible for a fair number of administrative duties, and where support staff is minimal, Peterson recommends a base-plus-incentive compensation structure designed to pay salespeople about 16 percent of the gross profit they produce.

If the support structure is larger (giving salespeople more time to generate and close sales), that percentage can drop to 14 percent, while at the other end, where “support structure” is part of the salesperson’s job description, the percentage can go up as high as 18 percent. As for how to pay, Peterson’s company custom builds plans for stores based on a three-tiered compensation structure that pays a base hourly rate, plus a percentage incentive based on personal gross profit production and goal achievement (paid monthly), and a bonus that is tied to overall team performance but is proportionate to contribution, e.g. $10 per hour, plus 3 percent of gross profit production, with the potential to increase to 4 percent for any month in which the store team achieves the “stretch” goal.



[h4][b]In the last couple of months, we’ve had customers bring in solitaires for appraisals that were not diamonds. They test diamond with a diamond tester, but we thought the stones looked very odd and they actually turned out to be diamond-coated Zirconites. This new “Magnificut,” which brings together four diamond “slices” to look like one big diamond, also has me worried. What’s the best way for me to test for these new boys on the block?[/b][/h4]

Gail Brett Levine, the executive director of the National Association of Jewelry Appraisers, urges you not get too worried, especially with the Magnificut. That it’s not one large stone should be evident as soon as you look at it under a scope. Determining diamond-coated CZs from the real deal takes a little more time, but again shouldn’t have you losing sleep. Brett Levine suggests you look for these indicators:

1. In your dark-field microscope you will be able to view the orange pavilion flash typical of CZ.
2. It will test “not diamond” on a thermal conductivity diamond tester and on DiamondSure instruments.
3. If the girdle or culet is chipped, you will see conchoidal texture, not the step-like pattern found in a diamond.
4. The coating appearance will be varied around the facets and particularly at the facet junctions in reflected light. Additionally, the coating could be scratched with a corundum hardness point.
5. A 6.5 mm diamond will weigh approximately one carat compared to a 6.5 mm CZ (even with the coating), which will weigh approximately 1.75 carats.
6. Most important, even with the diamond coating, you will still get the “read through” effect.

[span class=note]This story is from the October 2009 edition of INSTORE[/span]

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