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JCPenney Dumps Associate Sales Commissions

May 10th, 2012

But those sites will be fast, efficient, convenient and lower cost. The only advantage a physical store has is the associates. To the extent that they are enthusiastic, knowledgeable and truly helpful, to the extent that they go above-and-beyond, E-tailers don’t have a chance. But if those associates are lackluster and doing the bare minimum, the store will lose.

To make that transition from commission to non-commission, you need an extensive training program for associates as well as multiple levels of managers. That takes time and money. And during the transition, you’ll likely have the worst of both worlds. Is JCPenney, stinging from weak financials, really going to make the level of training investment necessary? And if it doesn’t, what will the result likely be?

One of the best retailers at fighting off online incursions is Apple. Apple cheats, though, because it controls 98 percent of the products it sells, dictates prices universally and controls who can sell its products. Apple, therefore, can’t really be undersold by Amazon. Its used products can certainly be priced low on eBay, but a used iPad is so last year.

For those reasons, mimicking many of the Apple Store techniques won’t work at places like Target, Walgreens and, certainly, JCPenney. Ron Johnson, the Apple Senior VP who has served as JCPenney’s CEO since November, should know that better than most.

Stealing the Liberace-like décor of Apple is one thing. But assuming that Apple’s sales are the result of not paying commissions to its store associates, that’s very different. Not only does Apple pay its associates quite well, but its process certainly doesn’t make upselling—regardless of what the customer needs—any less common.

In a wonderful Popular Mechanics piece published last year, an Apple Store associate described the sales process there.

“We aren’t paid on commission, but you fear for your job if you’re not selling enough. We have a posted list of our metrics, and you can see everybody else’s. It shows you how much money each person is pulling in for the company. If you aren’t doing very well, you start getting manager meetings, and they sit you down and try to figure out why you aren’t selling more,” the Apple associate said.

And here’s the key phrase, the—please forgive me—money line. “When I’m there, I get sucked into the competitive culture. Normally I’m pretty low-key, but when I’m at the store, it’s all sell, sell, sell!” said the Apple associate. “I wanna work my way up, get promoted and eventually get to the Genius Bar—which is where you want to be. Who doesn’t want to be a genius?”

Be honest. Does that sound like what you expect a non-commission, paycheck-reduced JCPenney associate will sound like?


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