Compensation and Incentives That Make Cents…

by | Farr Factor

(And get employee actions & retention)

As the old saw goes, turn over your inventory… not your people. Retaining good retail help is part art and part science. The part that is art is your leadership style, which I’ll discuss next month. For now, let’s talk about the “science” of compensation. First, there is what you should pay for a base wage. Review what your objective is: keep good, natural interactive sales abilities with salespeople who are inviting to your customers and your salon. They can work for many retailers and don’t need to necessarily work for you or your salon. There are simply too many competitive retail outlets that would love to have good help. If the difference between great and good help is another dollar or two per hour, then your payback in up-selling and good reputation is well worth it.

The best way to set it up is a starting wage, (more than that of most retail competitive outlets… remember, “competitive
outlets” are not JUST tanning salons) and then set a merit increase schedule that increases their rate after an initial “training period” including completion of a mandatory certification program. And then, assign a job title to mirror their promotions and increases – start with a title of “Sales Associate I” for their initial training then go to “Sales Associate II” after certification. A third step can be a “Sales Associate III” after six months of “meets expectations” performance. This schedule sets up a career path and performance expectations and forces everyone (you and your sales associates) to face up to performance reviews.

For incentives, pay in three directions: Graduating lotion commissions that move from 10% from dollar one, and then 15% after a set dollar amount is sold in a month. Next, pay a meaningful dollar spiff for an EFT package sold and again increase that amount with EFT package sales in excess of a set amount. Base both the lotions and EFT incentive increases on the salon’s current trends compared to the same months of the prior year. Lastly, run a monthly competition between your sales associates on the biggest percent increase of their per tan average from the prior month. That allows even the lowest performer a shot at getting recognition and reward. Nothing kills contest incentives more than if associates believe that they will never win. And after all is said and done, the key is dollars per tan average – if that goes up, your profit will, as well.

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