Not all businesses compensate their employees in the same way. While some pay retail workers a salary, others use incentive programs such as a commission or bonus to reward sales efforts. These incentive programs come in several different varieties, each providing additional money or other rewards to employees who excel at sales.
A percentage commission incentive program rewards retail employees for making sales. The commission is paid as a percentage of the sale amount. This means that the higher the sale, the better the commission. For instance, a 10 percent commission program allows an employee to earn $100 from a $1,000 purchase.
A percentage commission program can help motivate personnel to sell expensive items and to up-sell additional products to customers. Percentage commission programs can be used in addition to a standard base salary, or as the sole means of employee compensation.
Flat Rate Bonus
A flat rate bonus, sometimes called a "spif," is a set amount of money paid to a salesperson based on the item being sold. Retailers can assign large bonus amounts to products with high profit margins or as a way to promote new products.
As an example, a new high-end computer being sold at an electronics store might have a flat rate bonus or "spif" of $200. Because this bonus is paid to employees only if the specific product is sold, salespeople are motivated to promote the desired product. Flat rate bonus programs can be used as the only incentive program, or combined with a percentage commission to increase the total monetary sales incentive.
Like the flat rate bonus program, a point incentive system rewards sales employees when a specific product is sold. Instead of being paid with money, however, employees in this system receive redeemable points.
The points can be traded in for several rewards, such as gift cards, tickets, or travel vouchers. Employers can create rewards that require different levels of points, allowing sales employees to either save their points toward more valuable rewards or spend them immediately.
While cash bonuses can be effective, non-monetary recognition programs also provide incentives for retail salespeople. Recognition programs work by giving positive attention to employees who are performing well. An "employee of the month" program, for instance, can boost enthusiasm and allow top employees to be looked up to by their peers.
Recognition programs can also be combined with other rewards. For example, a dinner with the executive officers of the company can reward retail employees with free food and also the recognition of their supervisors.