Inappropriate Expense Initiatives
by Joe Milevsky, CEO
Recently I have encountered several retailers
that have made significant changes to their organizations in order
to save money that concern me:
Changing Commission Structure
One example is a retailer that called our company looking for
help because their sales had fallen off significantly. The
retailer went from paying on written sales to paying on
delivered sales. His rationale was that it would help him with
his cash-flow.
In ordinary or good times I would support this change if it is
properly facilitated. I want salespeople to be held
accountable not just for writing the sale but to follow through
all stages of tracking the order through ensuring a satisfied
customer post delivery. Paying on delivered sales encourages
just that.
The problem is that we are not in ordinary or good times. The
transition was not facilitated properly. His top salesperson
left the company and the balance of the staff felt de-motivated.
Lowering the Number of Salespeople
I
believe that we need to be less tolerant of poor sales
performance during tough times. If we can honestly say that we
have given certain salespeople all the tools and support
possible, and they simply refuse or are unable to take advantage
of those things, then termination is certainly appropriate.
In tough times the level of service must go up not down. If you
are receiving less store traffic, then your average sale and
your close ratio must go up in order to protect your revenue
base. Service is the true competitive edge for the independent
retailer. If you are understaffed on the sales floor, you are
setting yourself up for failure.
Blindly Cutting Advertising Dollars
If something is not working, change it. There may be some cost
cutting opportunities in this area. Advertising should be
designed to bring qualified customers into your store. Assuming
that you have the appropriate staffing level to handle your
stores’ traffic, significantly reducing the number qualified
customers can only lead to decreases in revenue.
|
