How should commissions work in the era of omnichannel retailing?
With online revenues siphoning sales from physical stores, some Canadian retailers are considering allocating commissions from online sales to store personnel near the shopper’s residence.
That’s according to a report from for the Financial Post that explored how stores are considering “overhauling” commission structures amid the rise of showrooming and less loyal customers. It also reflects the faster growth in online shopping and the degree to which interactions with store associates may support online growth.
The only other example of a solution in the article came from Harry Rosen, the men’s clothier, which is able to pay its associates a commission whether their regular clients purchase in-store or online.
A report that came out earlier this year from O Alliance likewise found that using the store as a fulfillment center — both for buy online/ship from store and buy online/pick up in-store — was meeting with push-back from associates who felt they weren’t being incentivized enough for supporting online sales. In some cases, associates hold back “best sellers” rather than fulfill online orders to ensure the items are available for their clients.
If bonuses are tied to store goals, non-commissioned staff could also feel supporting an online purchase works against the in-store purchase.
The problem appears to be that commission or pay-attribution structures at the store level have long worked on the “last touch” model: basically the commission falls to whomever guides the customer to the register.
The issue seems similar to the “multi-touch attribution” challenge in campaign marketing, in which attribution is often fully-credited to “last click” when the decision to purchase may have happened at another key point in the shopper journey.
The Financial Post article noted that adjusting an in-store commission structure for online influences would depend on a variety of factors including the type of retailer and the responsibilities of each associate.
Randy Harris, president of consultancy Trendex told the business publication, “It’s complicated as hell, to be honest with you, and I think they are almost opening a Pandora’s box.”
- Canadian retailers consider overhauling employee commissions after growth of online sales – Financial Post
- Store fulfillment is creating associate tension – RetailWire
- New Research Report Finds Retailers Struggling to Put the Customer at the Center of Business – O Alliance/Business Wire
- Why do retailers struggle to measure marketing campaign results? – RetailWire
- Entailment Is a Click Too Far for Investors – The Wall Street Journal (sub. required)
DISCUSSION QUESTIONS: How should commissions and general pay structures for associates be revamped, if at all, to acknowledge the support stores provide for online sales? Do you see the challenge as being similar to or different from last-click multichannel attribution for online marketing?