Ron Johnson, the former head of Apple Stores, who is now trying to revitalise J.C. Penney, the historic US department store chain, has started with a good idea – eliminating sales commissions.
The Dallas Morning News reports that J.C. Penney hourly workers at its 1,100 stores have been told that commisions are being eliminated and they will instead receive a higher hourly rate (via Business Insider).
The idea is to get away from sales staff simply pressing customers to buy whatever item they will get the most from selling. This is an noticeable problem in electronics and big box stores, as well as J.C. Penney.
Ron Johnson explained his approach in the Harvard Business Review:
“People come to the Apple Store for the experience — and they’re willing to pay a premium for that. There are lots of components to that experience, but maybe the most important — and this is something that can translate to any retailer — is that the staff isn’t focused on selling stuff, it’s focused on building relationships and trying to make people’s lives better.
That may sound hokey, but it’s true. The staff is exceptionally well trained, and they’re not on commission, so it makes no difference to them if they sell you an expensive new computer or help you make your old one run better so you’re happy with it. Their job is to figure out what you need and help you get it, even if it’s a product Apple doesn’t carry.
Compare that with other retailers where the emphasis is on cross-selling and upselling and, basically, encouraging customers to buy more, even if they don’t want or need it. That doesn’t enrich their lives, and it doesn’t deepen the retailer’s relationship with them. It just makes their wallets lighter.”
Implementing this at J.C. Penney has not pleased everyone:
Some employees who earn commission said Tuesday that their hourly pay will be increased significantly, but they will be given fewer hours and will no longer be full-time workers. That means some will not be eligible for health insurance.
Others said the new pay scale is based on last year’s averages. But with hours and commissions being cut, many of them are calculating that they will make significantly less under the new structure.
Mr Johnson’s initiative is nonetheless right. One of Apple’s great innovations is to turn stores in to places in which staff are helpful, rather than pressing you to buy stuff. The details must be fair, but the principle is correct.
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