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What’s a Fair Salary Plus Commission Rate and More of Your Questions for April

Bosses and workers often have different ideas on what’s equitable. Here’s how to make everyone happy.

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I have an employee who makes $16 an hour and 6 percent on retail (although for loose diamonds, commission is based on gross profit). She earns close to $60,000 a year but feels underpaid and that paying gross profit on diamonds is contrary to the industry standard. How can I convince her she has it pretty good?

She does indeed have it pretty good, says industry consultant Andrea Hill, owner of Hill Management Group, noting that her hourly rate is almost 50 percent higher than the average for retail salespeople of $11.50, and even more than the average of $15 paid by very high-end luxury retailers (think Gucci). The commission is also higher than the industry average of 3-4 percent on retail, although, significantly, Hill notes, “wise” businesses are increasingly moving away from such a formula to pay commission on gross margins. “In this way, sales professionals are challenged to balance the need to get the highest price possible with the need to close the sale. When commissions are paid out on total sales only, then it becomes very easy for the salesperson to sacrifice profits for the easy close,” she says. While exposure to such numbers should mollify your associate, what you really want to do is excite her about the potential of earning as much as $100,000 a year — which is what top luxury salespeople make — although that requires building a “strong book” of customers through active networking, clienteling and prospecting work. Keep in mind, however, that even the most generous commission rate won’t help if you’re not on top of your game, meaning advertising intelligently, keeping up with changing retail trends, providing the right technology for how consumers today want to shop, and maintaining an exciting inventory that reflects current tastes, says Hill. “If the retail business owner does not ensure that they are running a strong merchandising and marketing operation, then even the best salesperson in the world will not be able to turn the promise of commission into actual earnings.”

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I still can’t get my head around color temperatures. Can you help?

It probably helps to think of the original theoretical model that underlies the index — that of a black metal radiator, whose color changes as it is heated, from black to orange to red to blue to white hot. Similar to Celsius and Fahrenheit, the Kelvin scale marks different degrees of thermodynamic temperature, but it is the association with color change that makes it useful as a way to designate light bulbs. Where it gets confusing is how at the lower end of the scale, from 2000K to 3000K, the light produced is called “warm white” and ranges from orange to yellow-white in appearance. Meanwhile, color temperatures further up the scale, between 3100K and 4500K, are referred to as “cool white,” but the bulbs are emitting a brighter, hotter light.

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We’re planning on holding a thank-you dinner for our best customers to celebrate our store’s 50th anniversary. How do we avoid offending people, especially those small ones who have been loyal if infrequent customers for many years?

This is a tough one. We’d suggest you start with the number of people you’re able to host and then divide that figure up among your sales staff. They should know who their most deserving and valuable customers are. Refrain from advertising the event to all your customers so as not to offend those who aren’t invited. You may also want to prepare a back-up list so you can add names in place of those who can’t make it — there will no doubt be many — to cover as many people in your customer base as possible.

What’s a good way to sell our company to prospective employees — particularly top salespeople?

Just about the most valuable skill a businessperson can have is the ability to recruit and retain good people and yes, it all starts with that job posting. “When the right people read your ad, their hearts will whisper, ‘These people are like me, and I am like them,’” says Roy H. Williams, author of the business bestseller The Wizard of Ads. Bullet point what the job entails, what kind of inventory they will be handling, and also the benefits, but the core message should be about who you are as a company, your reputation and your goals. The best salespeople often have don’t have a sales background, so go easy on the requirements. Your message should be more about culture than qualifications.

Over the years, INSTORE has won 80 international journalism awards for its publication and website. Contact INSTORE's editors at [email protected].

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