Through a special arrangement, presented here for discussion is a summary of an article from Retail Paradox, Retail Systems Research's weekly analysis on emerging issues facing retailers.
In a refrain I have heard from many other retailers, the participants at Manhattan Associate's recent customer event expressed frustration over how to compensate store employees for cross-channel sales.
Is it fair to ask a store employee to send a sale to a different channel when they receive no compensation for it? Is it fair to ask an employee to spend customer time fulfilling an order from another store when that other store gets the credit? The general response to this question is no -- but without a good answer for how to compensate store employees in an increasingly cross-channel world. The challenge becomes even more interesting when you view it in the light of order capture vs. order fulfillment. What are you incenting store employees to focus on more, order capture or order fulfillment?
Incentives today are largely based on the assumption that both happen simultaneously, so retailers have never really spent a lot of time thinking about which one is more important to stores. I would posit that both capture and fulfillment are equally important, but perhaps they need different measures and incentives.
A store that doesn't necessarily grow revenue, but has perfectly balanced sell-through and a healthy store-based fulfillment business shouldn't necessarily be held to the same performance standards as a high-traffic store that is blowing out the doors but has little time to fulfill other channels' orders. Should employees be penalized for working in one kind of store over another?
I think incentives based solely on sales, whether explicit commission or some kind of performance bonus, have made retailers lazy. Sales are easy to measure, easy to track, and thus easy to pay on. But when "sale" spans multiple touch points -- from consumer desire through fulfillment -- perhaps it's time to get a little more creative.
Discussion Questions: How should store employees be compensated for cross-channel selling? How should incentives be aligned around order capture and order fulfillment?