A JEWELER EMAILED ME this question: “I have always heard that a jewelry sales associate should sell 10 times what they make as a gross wage. Do you think it is still true today? What about associates with other responsibilities who aren’t always on the sales floor?”
Here’s your answer: 10 times sales as salary (or being paid 10 percent of what you sell) is “sort of correct.”
The number is actually between 8 to 13 times their pay. If they sell 8 times (or cost you 8 percent of their sales), they are very efficient. If their cost is closer to 13 percent, they are inefficient.
So if a salesperson is paid $35,000 a year, they should sell between $270,000 to $437,000.
But here’s the question: How much do you personally sell out of total sales of the store? That includes product sales, appraisals, repair and custom.
If the store does $700,000 in sales and you only wait on diamond customers and your sales are $500,000, then that leaves a remaining $200,000 available for sales staff to sell. So the salesperson is physically unable to sell even the minimum of $270,000, much less the higher end.
Take your sales away from the total and see what’s left for staff to sell.
Don’t tell me what they could do to bring in more sales. That’s an excuse. Why? Because you have to be the sales trainer.
You’d have to train them to:
- Increase their average dollar sale.
- Try to add on to what is sold to each customer. Goal would be add on to 25 percent of their sales.
- Keep a client book of some type, keeping track of birthdays and anniversaries and contacting customers to remind them to buy something for these events. This starts with sending thank-you cards after every single sale.
If you’re too busy to be a sales manager, then don’t complain that they don’t sell enough.
What about employees who have other duties? That makes it impossible to sell 10 times their pay if they are only on the floor 15 hours a week out of 40. They would be considered “fill in.” Just pay a salary or wage and be done with it.
But if you wanted to pay them some type of bonus or commission plan, you’d figure out what percent of the week they are on the floor. So in this example, if the employee is on the floor 15 hours out of 40, then 38 percent of his workweek is selling. If he makes $35,000 a year, 38 percent of it is equal to $13,000 of his pay to be on the floor selling. Divide $13,000 by 0.08 and 0.13, and his sales should be $100,000 to $162,000.
There are many ways to compensate for excellence in selling. When I was a store owner, I paid straight percent of sales. You can pay a percentage of the gross profit, which ensures that the more they discount, the lower the percent of profit you pay. There are spiffs: sell these things over here and I’ll give you a set amount of money. There is share: if we all reach a goal amount this month, I will give everyone an amount of money. Or you can give things: sell so much or a particular item, and I’ll give you tickets to a show/fancy dinner out/day off/spa day.
All salespeople come to work with their car radio set to WIIFM: “What’s In It For Me.”