Are you motivating your staff to do the things you want them to do? It isn’t cynical to say that without the proper incentives, people will do what they perceive as giving them the biggest reward, and that may not be aligned with your business goals.
Retail commissions are a good example of how incentives can go awry, and one I have had experience with recently. When on the hunt for the ideal pair of jeans a few months ago I went to one of the stores that specializes in denim. The sales person brought me zillions of pairs of jeans to try on until I was convinced, against my better judgment, that a certain size and style was right for me. Call it shopping hypnosis if you like but really, the salesperson is the professional and, as part of the social contract, I put my trust in her to give me good advice in the absence of my own expertise. Of course when I got home and tried on my investment in denim in the harsh light of reality, I saw that they were horrid. A few days later I went to return them and learned of the store’s “No Returns” policy. Since I’d already tried on every product in the store, I was (and still am) stuck with a store credit. Oh, and quite a bitter taste in my mouth.
What has gone wrong here? The store’s policy of not accepting returns is great for the salesperson because once my AmEx was swiped, the commission was locked in. So the objective is to sell as much as possible. But it is in direct opposition to the customer’s interests because the salesperson’s “expert” advice cannot be relied upon which, in turn, reflects poorly on this retailer’s brand. Additionally, by not giving the customer a chance to void the transaction (ie, return the jeans) the risk associated with making a mistake has just significantly increased, making the customer less inclined to not only make the purchase to begin with, but also to try something new or buy two pairs of jeans instead of one.
This particular store’s policy was also that exchanges would not be permitted after 7 days. So now I’ve learned that not only does the salesperson not have my best interests I mind, but the store also does not stand behind its product. “Big deal” one might say. The store has its money and there are fewer accounting issues because you don’t have to worry about refunds. That may be fine if the store doesn’t need repeat business, but ultimately cultivating a happy, repeat clientele is much less expensive than continually drawing in new customers. And the reputational damage is a high price to pay as well.
The moral of this take? Take a close look at policies and incentives because they can make all the difference.
