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David Geller

David Geller: Dangle Carrots from a Stick

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See the immediate results of holding out carrots.

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[h3]Commission will beat your salary plan[/h3]

[dropcap cap=M]any store owners are afraid of paying their staff on commission. The truth is, a heavy commission or bonus plan will actually cost you less than a salary plan and has a great chance of paying the staff more. Your costs as a percentage could drop and sales dollars could increase.[/dropcap]

Start by giving your sales staff a taste of how a bonus plan can pay out for them. Like most jewelers, you probably have too much old inventory. Take a large sampling of jewelry that’s over 18 months old, clean the pieces and place them in a special case just for them. Put a pretty sign in the case that reads: “Extreme Value Showcase.”

[inset side=right]Give discounts of 25 to 60 percent off. The older the item, the greater the discount.[/inset]

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Give discounts of 25 to 60 percent off. The older the item, the greater the discount. Give the sales staff 7 percent of the selling price. Look at it as a deeper discount. You’ve got to make the pie sweet enough to make it worth their while.

I’ve seen many jewelers be cheap and give only 2 percent. If the staff sells a $500 item, 2 percent is 10 bucks. It costs 10 bucks to eat at Subway, with chips and a drink. It’s just not an incentive.

If possible, have the bookkeeper issue separate payroll checks and hand out just the bonus checks at a sales meeting. You’ll find the staff will start showing the extreme values we have for our customers more often.

Don’t worry about not selling the new items; they’re pretty and they always sell. This is about getting money back out of old inventory.

As you grow more comfortable with your bonus plan, you can expand it by adding extra incentives:

[number color=red value=1]You get 7 percent of everything sold in the extreme value case.[/number]
[number color=red value=2]Anyone who sells $10,000 (you decide on your number) in total sales from the case in a month will get an extra $500 bonus check. (That’s only an extra 5 percent for such a great feat.) [/number]
[number color=red value=3] End of the month, the single largest sale from the case, give 10 percent commission on that sale rather than 7 percent.[/number]
[number color=red value=4] The person with the most quantity of sales from the case (units sold, no matter the price) gets dinner at Longhorn Steak House.[/number]
[number color=red value=5] You could even try this one, which requires some attention on your end. Keep track of everyone showing an item from that extreme value case, whether they sell it or not. Give the staff $1 every time they show a piece and the customer tries it on. Pay this out once a week in cash, especially at a meeting.[/number]

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Soon, your staff will love bonuses, and you can try a heavier commission or bonus system.

[componentheading]HIGHER HOLIDAY SALES[/componentheading]

In fact, want to increase sales a lot this Christmas? Go out and buy two flat screen TVs: one for $600 and another for $300. The $600 one would be a good sized one, the $300 one would work in the kitchen. Put these in your back area for the staff to see. Put a sign on the TVs:

Big TV: “Awarded to the staff member with the highest total sales during the season.”
Smaller TV: “Awarded to the staff member with the second highest sales.”
See what kind of results that brings!

David Geller is an author and consultant to jewelry-store owners on store management and profitability. E-mail him at [email protected].

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

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