I recently had a discussion with a store manager about doing spiffs for the staff to get rid of old inventory. The manager liked the idea of putting a red dot on the tag and paying $50 for every piece they sold rather than putting all old items in one showcase, to keep like items together. I disagreed on both counts.
I like the idea of keeping the items together, but I’m not always as thrilled about giving a set dollar amount as a spiff. I usually find the amount is too little to make it enticing for salespeople. If they sell one old piece a week and get $50, you might think that’s a lot of money. But there are two things to consider:
- Lunch is $10 around town. One spiff pays for lunch for the week. Whoopee!
- Your staff comes to work for the “guaranteed pay” you’ve already promised them, not extras.
If they are making $700 a week ($36,400 a year), then $50 in one week isn’t really a big to-do. Besides, many a salesperson thinks they are “shoving old, outdated product down the throats of their customers” and hate the idea. They’d rather sell new and fresh merchandise. Hey, I would, too.
If you give them $50 for a spiff, that’s the ceiling on what they can earn. But if you give them a percentage of what they sold that was old, it just might make a difference. After all, if you have a $600 piece of jewelry sitting next to another piece that sells for $900 and both have a $50 spiff, where’s the thrill in selling the higher-priced item?
You can’t make any money from inventory over a year old anyway, so you need to move it. An incentive is the way to move old merchandise.
You might think $50 is an incentive, but if you’re unhappy with how old merchandise is moving, then take a new approach. Get rid of old merchandise that ties up your cash, and allow your salespeople to make some serious money, not just lunch money.
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Pay the staff 8 percent on whatever old merchandise they sell, no matter what the margin or age. Then they’ll be more likely to sell even higher-priced merchandise for you, and you’ll get the cash. Just have them remove the red dot tag, staple it to a copy of the invoice, and hand it over to the bookkeeper for pay day.
Everybody wins!
