Page 22 - LPG July 2018 Newsletter

22
The Luxury Report July 2018 Luxury Products Group
SPIFFS continued...
Just one nal piece of advice for showroom leadership before I move on — please make sure that if your employees are claiming spiffs, you/ they are not abusive to the manufacturers.
STOPPING THE CRAZY TRAIN
During my years in showrooms, I’ve talked with vendors about the amount of advertising budget that is used in spiffs, and they have told me the outlay of cash is staggering. Many have also told me they would rather see the monies used for displays, updates and training. I would, too. I think their businesses would be better for it.
Some vendors have reported that only about half of their total spiffs are being claimed by showrooms. I can’t help but wonder how quickly these programs would stop if all of the spiff money was being claimed.
SO HOW DO WE GET THIS CRAZY TRAIN TO STOP?
Will manufacturers ever nally do the uncomfortable and take spiffs away? Good question. I think that showroom owners
should ultimately make the decisions of which employees are allowed to get spiffs and from which manufacturers. You should also control the type of information that is shared in the vendor- requested reports, and how much time is spent by your staff in lling out those forms.
I suggest that showrooms institute a mandate that owners must give approval before any spiff program can be initiated. And that they should be provided reports that show how much each employee is generating in spiff sales. Since this is essentially additional income for employees, and if you want to continue with spiff programs, you
can use these extra dollars to your bene t when recruiting new employees. If your base offer is $40,000, and you can show that your employees earn an extra $5,000 in spiffs every year, that may help you convince top talent to join your team. (And for the record, I have seen employees earn in excess of $10,000 in spiffs annually.)
It’s proven that spiffs can drive the behavior and increase the motivation of a sales team. So if your showroom chooses to continue operating with spiff programs, you’ve got to build the behavior you want to see in your showroom. To do that, I think it would be wise to consider putting a few things in place:
• Set up a commission program that drives the behavior of gross pro t, no matter what is sold.
• Establish a spiff program that is based on the products you want sold.
• Be able to easily run a report on the program’s status from your ERP system. Data doesn’t lie, especially on the gross pro t side.
To all the showroom sales teams and employees reading this, I am sorry if I’ve upset the norm. Recently, I have been holding meeting with showrooms I represent, and the amount of concern expressed by showroom leaders about this topic is the most I’ve ever witnessed. I want to see showrooms operate in a smart, more healthy way — and I don’t see how spiffs help the ownership. Spiffs are an unnecessary time waster, and those resources would be so much more effective if used for updating displays, training customers and marketing.
LET’S FIX THIS TOGETHER.