Who satisfies CE shoppers most: commissioned or noncommissioned help? - consumer electronics

Discount Store News, May 3, 1993 by Pete Hisey

Who gives the customers better service at the floor level, commissioned or noncommissioned sales help? While more and more retailers are switching from commissioned help, particularly in the consumer electronics industry, the answer is far from clear.

"The problem is not sales commissions per se but how this tool is used," noted Dr. Leonard Berry, professor of marketing at Texas A&M's Center for Retailing Studies. Berry feels that companies that pay selective commissions, ie., certain products have a payout, others do not, or differential commissions, where certain products have a higher payout than others, are more likely to experience problems.

"Selective and differential commissions induce salespeople to promote the targeted products rather than satisfy customers' needs," said Berry. "Moreover, firms that reward only selling behavior and ignore serving behavior are asking for trouble." He contends that it was just such a mindset that led to the Sears auto service debacle last year.

The issue is truly thorny, with advocates of each approach becoming more and more militant.

Minneapolis-based Best Buy, for instance, ended commissions in its new Concept II warehouse stores three years ago. President Brad Anderson said that one reason was that the commission basis discriminated against sales help who were really serving the consumer, and favored those who took advantage.

"If someone was really good at selling extended warranties, their numbers would be much better than someone else's," Anderson said. "We had to make a decision. Were we in the consumer electronics business or were we in the warranty business? We saw that again and again, we were losing our best people, often because they didn't feel comfortable steering the consumer to higher-margin products."

Added senior vp, sales Wade Fenn, "We now have sales help with no independent interest outside the customer's interest. And, we're finding that the end of the commission system has increased cohesiveness. In the old days, a salesman would never jump behind a register when things backed up; he was there to sell. But we've stimulated a team feeling here, a larger sense of responsibility to the consumer. And, with a friendlier and more cooperative environment, the positive feelings rub off on the customer."

Service, Fenn said, has improved under the new format. "In this business, everything you do well, from advertising to floor service, can be lost in the processing of the order. If everything goes great, but there's a half-four wait at the cash register, you've failed. We think that by dropping barriers between sales and operational staff, we've improved service overall, and that the customer likes and trusts the noncommissioned sales assistance more than the old model."

Rich Hollander of Tandy's The Incredible Universe, concurred. "People are tired of getting beat up by trained gorillas," he said. "The consumer electronics purchase is complex in nature, so some advice is usually needed, but it should be just like in a good restaurant--there when you need it, invisible when you don't."

All Incredible Universe employees salaried, with a onus added if the store hits quota. "Stimulating people to sell more merchandise is important, but rewarding them to steer people to products they don't really want ... that's disgusting."

Nathan Morton, ceo of computer superstore chain CompUSA, also chose not to offer commissions when his chain was born. "We wanted to differentiate ourselves from the average computer reseller, where the sales staff would grill the customer about their finances before they'd talk about product," he said. "Commissioned sales help tends to oversell and sell too much, rather than build a long-term relationship with the consumer. And that's what we're after."

CompUSA prefers to pay its staff up front, he said.

Of course, those who pay commissions feel quite differently. Tops chairman Les Turchin, for instance, noted that because of the complexity of the buying decision and the expense of pulling the customer in the first place, trained professionals are needed to close the sale. And, employees of the Edison, N.J.-based chain are instructed to, under any circumstances, save a sale to build the long-term customer relationship.

Added Miami-based BrandsMart USA's Mike Perlman, "The commissioned system is very effective for us. The problems arise when a retailer penalizes its sales staff for not selling what it wants sold. The sales person's job is to make the customer happy, not to fatten margins."

Perlman also said that noncommissioned sales staff simply aren't as motivated as commissioned. "When we made the decision to go to commissions, we saw right away that the people who were really good got better. And the ones that were happy just to pull in their paycheck couldn't make enough to live on. Now we have references from word of mouth; the word is out that if you're really good, you can do very well at BrandsMart."

The advantages of the system, he added, include motivation to step consumers up to value-added models. "At a lot of the noncommissioned houses, all they sell are entry level models. Now, that might be good for the retailer, but it's not so good for the manufacturer and, ultimately, the consumer. The mix of what you sell has to make sense for everyone."