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The fear of losing is stronger than the desire to receive. Personnel motivation as the main resource for sales management
14.05.2019 5066

The fear of losing is stronger than the desire to receive. Personnel motivation as the main resource for sales management

Who really determines the retail business revenue ceiling? Owner, manager or sellers? What is a financial “comfort zone”, and why does the company's profit growth depend on it? When does a retail business owner become a “hostage” in the comfort zone of his subordinates? What are the sales plan implementation corridors for? The questions are answered by expert on increasing sales of shoes and accessories Evgeny Danchev.
Evgeny Danchev Evgeny Danchev -

director of WConsulting, coach, retail consultant.

@evgenydanchev, https://onlineschool.wconsulting.su/

Who really determines the income of your business? Owner, top managers, sales consultants? Logically reasoning, we can assume that, most likely, the owner, because it is he who determines the financial goals of the company and the strategy for their achievement. In practice, this happens only when the business is at the initial stage of development: when the company takes its first steps, the owner is actively included in all business processes, so financial indicators begin to grow from the degree of his enthusiasm and activity. But after a while, when the business reaches a certain financial level of wealth, comfortable for the owner, he gradually begins to delegate to employees what can be delegated, and is not so actively involved in all business processes.

Any person (and the owner is no exception) strives for a certain financial comfort zone, and when it occurs, then work efficiency gradually begins to decline. For this reason, business owners from a certain stage in the development of the company become "hostages" of the comfort zone of their subordinates, a chain of which can be clearly seen: top managers - line managers - sales consultants. And since sales consultants communicate more directly with the client whom the business “feeds the business”, it is they who will limit the income of the business owner and determine his “ceiling”.

From the zone of discomfort to the zone of euphoria

Each employee has expectations on the level of monthly wages, a certain corridor in which he will be comfortable living and satisfying his needs. It’s clear that sellers have it less, top managers have more, but the essence is the same - the desire to consistently earn at least a certain amount every month. If the amount of wages is much less, then the employee will fall into the zone of "discomfort", if much more, he will fall into the zone of "euphoria". How these zones appear on the results of work next month can be seen from the example below:

  1. The seller receives 100% of the desired salary - runs on 70-90%.

  2. The seller receives 120% of the desired salary - runs on 50-70%.

  3. The seller receives 90% of the desired salary - runs on 100-110%.

  4. The seller receives 80% of the desired salary - runs on 110-120%.

The above example shows that our expectations in terms of wages and the money we receive in fact very much affect performance. A certain nonlinearity of the development of events is traced here. The linear thinking of the manager suggests that the more “my sellers earn, the more they become motivated by the result”, this seems logical to him. That is why the motivation schemes “salary +% of sales”, which fit into the logic of linear thinking, are still so popular. But the whole catch of this motivational system is that it does not take into account the “comfort zone” of employees. And sooner or later, sales of shoes and accessories simply stop and do not grow, since sales consultants are not interested in their further growth. Rather, they may want to, but are not ready to do more for this. To sell more shoes and accessories, you need to approach customers more often, offer related products, work with insoles that compensate for the lack of the right shoe size? .. Does all this require sellers to be more focused, energy, perseverance, concentration, the ability to translate customer failures into consent , but if the seller is already earning stable and has enough to live on, then his motivation for sales growth begins to fall.

Nonlinear motivation system

Obviously, in real life, a non-linear motivation system works in business. It turns out that having reached a certain level, the company and employees must constantly adjust their financial goals in such a way as to keep employee performance close to 100%. This raises the question of how to do this.

It is necessary to switch to another motivation system, which includes key performance indicators (KPI):

  1. Fixed flange.

  2. Set a monthly sales plan for the store and, depending on its implementation, pay a bonus to sellers and managers.

  3. Set a monthly sales plan for each employee and, depending on its implementation, pay a bonus to sellers.

The sum of all the personal sales plans of each seller will be equal to the sales plan for the store. The bonus for fulfilling a personal plan should be greater than the bonus for fulfilling a store’s sales plan. The main difference between this motivation system is that the bonus amount (percentage of personal sales or percentage of sales of the entire store) is paid, depending on the percentage of sales plan completion.

It is necessary to specify several corridors in which the company will evaluate the results of the sales plan. For example, in the table below, on the left are the percentages that will be paid to sellers when fulfilling a personal sales plan, on the right are those that are due to them when fulfilling a store’s sales plan.

Percentage of seller seller’s personal sales plan

Percentage of personal sales (bonus)

Percentage of completion of a store’s sales plan

Percentage of store sales (bonus)

Less than 79%

1%

Less than 79%

0,04%

80-89%

1,2%

80-89%

0,06%

90-99%

1,5%

90-99%

0,08%

100-109%

1,8%

100-109%

0,1%

110-119%

2,1%

110-119%

1,2%

More than 120%

2,3%

More than 120%

1,3%

With a sales plan for a store of 2 rubles and four salespeople for each of them, a personal sales plan will amount to 500 rubles. To implement this scheme, you will have to draw up a sales plan every month and distribute it among the sellers. Sellers can have different sales figures - someone will easily fulfill the plan of 000 rubles, and someone will even exceed it. And some sellers will never be able to reach this sales target, and what to do with them?

The answer to this question hides the company's internal resources to increase and manage sales. After all, if one seller can sell goods for 625 rubles, why can't another? There are only two answers to this question:

  1. He doesn’t want to.

  2. Can not.

If he does not want, then he is a candidate for “expulsion”. Why do you need a seller in the company who is satisfied with low sales volumes? So, he is in the “comfort zone”. Such sellers go to work not so much for money, but for communication, to show themselves and others to see, to distract from household chores ... You can and should try to motivate such an employee with the help of sales plans and preventative conversations, but, as a rule, this does not help . Either such an employee leaves in a few months after the transition to a new motivation system, or he will be asked to vacate a job due to the constant and significant non-fulfillment of the sales plan.

If the seller does not know how, then "you will not bend over your head." Need to learn it. To do this, there are specialized trainings, sales standards that should be in the company. If at least once a year your company does not improve the skills of sales personnel, then it is not entitled to count on an increase in sales. When you begin to plan growth and gradually increase sales plans, you just need to bring new resources to the company in the form of skills that, of course, motivated sellers will want and use.

Your task is either to reach the “weak” sellers to the level of “strong” ones, or to hire new ones who are ready to work according to the new scheme. And only then will you have the right to count on “breaking through” that sales ceiling, which, perhaps, now limits you in growth.

What are the sales plan implementation corridors for?

Imagine a situation where there is already a significant lag on the 25 day of the month. And to fulfill the sales plan for 100% is almost impossible for the remaining 5-6 days. With current sales, the plan execution forecast will be 86%. To keep sales at a decent level in 90% and get a bonus, even a little less, you just need to pull up another 4% to 86%. In five days, make up 4% to 90% or 14% to 100% - I think the difference is obvious. In the first case, sellers are still motivated, in the second their faith is already lost.

The same situation can occur with exceeding the plan. If the indicators of the forecast for fulfilling the plan are 106%, then you can always motivate sellers to the 110% bar, ask them to add the same 4% and get an increased bonus.

How is sales planning structured?

Every month until the 27-28 day, the company must establish a sales plan for the next month, taking into account the seasonality factor. Since February-March in the shoe business are periods of low buying activity, during this period the sales plan will be lower than in April-May, when the peak of buying activity is observed. The sales plan for the next month is established taking into account the sales results for it for the last 2 years, as well as the forecast of the sales results for the current month.

Why do I need a store sales plan if each seller has a personal plan? The fact is that if one seller has already completed his personal sales plan by the last days of the month, then his motivation for additional sales starts to fall. And if there is one or two sellers who are behind the personal sales plan, then the general plan for the store, quite possibly, also comes with a lag. The manager is much more important to implement the overall sales plan than individual plans.

If the store’s planned performance is not achieved, all sellers will have a lesser bonus, therefore, the seller who has completed his sales plan will try to exceed it even more, “glancing” not so much at a personal bonus, but at a bonus on sales of the entire store. Psychologists revealed this effect when they established the following: there is a certain correlation between the desire to gain and the fear of losing. 2,5 times people are more motivated to avoid loss than to gain anything. In a non-linear motivation system, avoiding the loss of bonuses for not fulfilling the store’s overall sales plan will motivate the seller more than increasing bonuses for overfulfilling the personal sales plan.

Summing up, I want to emphasize that changing the motivation system is a very painful process for both employees and managers. The transition to a new motivation system always goes through a crisis. But we must remember that any crisis or recession must be followed by a new rise. The only question is how quickly this will happen. As soon as you yourself establish personal sales plans for sellers, you can take control of sales management. You will no longer depend on the “comfort zone” of individual employees for whom work is a way of realizing their personal values, very remotely related to your specific plans to increase sales.

This article was published in the 149 issue of the print version of the magazine.

Who really determines the retail business revenue ceiling? Owner, manager or sellers? What is a financial “comfort zone”, and why does the company's profit growth depend on it? When…
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