Is Your Reward Program Boosting or Busting your Bottom Line?

Sales, sales, sales.  The person that sells the most specials today wins a prize.  For every room upgrade you sell, you receive $10.  Sell x amount of widgets and the bonus is there.

Here’s the problem.  When you reward based on how many widgets are sold, the focus becomes the widget, not the customer.  And when the focus is the sale or the widget instead of the customer, customer satisfaction goes down.

If you are looking to increase revenue, focus on measuring and rewarding excellent service.

John McCormack of Visible Changes, a chain of hair salons in the US, proves that measuring and rewarding service works.

To encourage excellent customer service stylists at Visible Changes are expected to build a ‘request-by-name’ clientele. When requested by name the stylist receives an extra 10% commission. When that happens 50% of the time the bonus increases an additional 10%.  Finally, when a stylist is requested by name 75% of the time, the bonus kicks up another 10%. Once the particular hairstylist is among the top 50 requested in the chain he pays another super-bonus.

Result:  McCormack’s operations outperform the industry in almost every measure and his hair stylists earn three times the industry average.  

By the way, there is also a bonus program related to product sales.  I could not find any stats to prove my next statement, but I would venture to guess that the stylists with the highest ‘request-by-name’ clientele are also selling more product. Why? Because they care about and know their customer and their customer’s know that; therefore, when a stylist recommends a product, the likelihood of closing the sale is higher.   Relationship first, sale second.

Visible Changes does a lot of things differently than the ‘normal’ salon. Perhaps that is why they also enjoy employee retention rates unheard of in the industry.  After all, in addition to the final rewards, there is the intangible ‘feel good’ of having a fan following.  To find out more, read here.

What are you rewarding?  Is your employee reward / incentive program building relationships and profits or is it annoying customers and pushing them away?

Something to think about ….

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