Page 21 - LPG July 2018 Newsletter

Luxury Products Group
The Luxury Report July 2018
AN OWNER’S PERSPECTIVE
If owners aren’t controlling their spiff programs, they’re likely selling the wrong products at
the wrong pro t margin. Some owners are ne with their employees selling what they can and making a few extra bucks. But I would encourage them to consider what could happen if they sold manufacturers’ dedicated showroom products at a higher dollar amount with a corresponding higher gross pro t. Of course it’s always more challenging to sell higher-level products, but showrooms
are supposed to provide a unique and special experience, right? By following that practice, showrooms would be more pro table, and their employees could be paid on a commission that would offset any spiffs.
I have observed situations in showrooms
where the consumer was steered toward products that had a hefty spiff — and while the consumer walked away satis ed, the bottom line consequences for the showroom were painful. As an example, when an employee is unaware
of any rebate program or growth goal you have arranged with your dedicated vendor partner, your showroom risks losing that year-end bonus because your employee is now steering your goals. If an employee is good at selling and using social media and marketing tools, they could even create enough demand with the non-partner vendor that your ERP system begins stocking products you don’t really want on the shelf. Then when the spiff ends or changes, you’re sitting on dead inventory.
There are sales people who are so focused
on getting a spiff that all they do is try to sell particular products to customers, without regard to price, and get them out the door so they can collect. Then they claim a competitive issue forced the sale. The employee walks away with $10 (or more) and you get virtually nothing. It’s really happening out there. If you recognize this type of
employee, you may want to rethink your overall strategy and your team.
It can also cost owners valuable time and potentially other showroom business to just collect the spiffs. Some manufacturers want showrooms to provide excessive data, including cumbersome forms about customers that your employees must ll out after each sale. This means that your staff is spending an hour of your time lling out manufacturers’ reports to send
in. This ties up your resources and prevents your staff from prospecting new customers or following up with bids they have created. I consider this
a theft of their time. Your non-aligned vendor is now keeping your employees off the sales oor.
I’ve also seen many spiffs that I believe have gone too far. Sure, I think a $100 spiff for a tub is a great treat for the employee — but imagine what could have been the result if that money was invested in displays and actual advertising to get more customers in the door. Enough is enough.
And while that those extra treats are fun when salespeople receive them, they can really skew tax returns. Salespeople receive 1099 forms for income that hasn’t been taxed, so if they’re not good at stashing away the money they’ll owe
for their spiffs they’ll get a nasty surprise when ling their taxes. I strongly suggest that at the very least, showroom managers should insist that manufacturers provide all spiff money to them directly so it can be distributed through payroll. Food for thought — some showrooms charge their staff a processing fee to help offset the costs of performing this function.
It can sometimes be a challenge to maintain integrity of the program. For example, tracking whether the sale came from the showroom? Or if it was generated from the wholesale side of the business? To conclude my And I’d like to share one last piece of advice with showroom managers.
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