How Many Sales are Enough?

Is it realistic to expect a full-time, $25,000-a-year jewelry salesperson to generate annual sales of $250,000?

Yes, say a number of leading jewelers. Some even endorse a multiple of 12 rather than 10. But a check on available figures suggests that a multiple of 7 is much more likely for the jewelry business as a whole. That comes by dividing $148,696 by $21,125 – the first figure being the average annual sales of full-time jewelry store employees, according to Jewelers of America’s 1997 Cost of Doing Business Survey, and the second the median salesperson’s pay, according to JCK’s own 1997 salary survey.

Realistic or not, the 10-time multiple is possible. Take the case of Samuel Gordon Jewelers in Oklahoma City where president Gary Gordon has what he calls the “Rule of 10’s.” Simply put, the rule is that a salesperson who achieves a monthly quota based on the 10-time multiple receives a bonus; if the salesperson doubles the quota, there’s a significantly larger bonus. With six salespeople, that staff has 72 opportunities a year to qualify for the double bonus; last year, its members did so on 20 of the possible 72 occasions. Now that’s selling!

Significantly, Gordon says he considered but rejected a 12-time multiple. “That can lead to a stressful situation,” he says.

There are many reasons why a jewelry store salesperson won’t achieve a high salary-to-sales ratio. Perhaps the most common is that the typical sales employee often has duties other than selling. This can be anything from helping with office duties to reorganizing inventory to doing appraisals to designing a piece of jewelry. There’s also the fact that quite a few jewelers shy away from sales goals and quotas, arguing that these can make a staff too competitive – resulting in a fall-off in good staff relations and in customer service.

“Sales goals are not the most important goals,” declares a New York State jeweler when asked if an employee should be fired for failing to make goals. “Honesty, reliability, relationships with customers, ability to turn over a sale to another associate” all are important.

The debate on setting or not setting goals, on commission versus bonus and on a pat-on-the-back versus a few extra dollars isn’t likely to end any time soon. But one thing is clear from a poll of JCK Retail Panelists: jewelers today take sales productivity much more seriously than they did only a few years ago.

Six of ten panelists say they have a formal plan to measure sales productivity. About the same number meet with their salespeople at least once a year to set goals. The most popular approach still is to set a store-wide goal, but a sizable number of these jewelers set specific individual goals for total sales figures, for improving closing ratios, for more add-on sales and/or for bringing in new customers.

Graham Rees of Rees Jewelers in Glen Allen, Va., sets an unusually challenging goal for his staff: “Be better than yesterday but not as good as tomorrow.”

Whatever the goals, once agreed on they are taken seriously. Just over half the panel checks them once a month and quite a few stores (12%) check daily. In some cases, as for example with the New Jersey-based Littman Jewelers chain, managers set and measure hourly goals and provide special coaching for those who fail to match the pace.

Carrots and carats. Panelists offer a wide range of incentives to encourage higher sales productivity. These include individual or store-wide bonuses, varying commission payments, spiffs on certain products, higher rewards for moving out old products or for building extra sales in a slow season, free lunches or dinners and trips to modest or exotic locations. At Whitehall Co. Jewelers in Bakersfield, Calif., top producers may end up with a diamond lapel pin, a dinner for two or a trip to Chicago.

Commissions can run anywhere from 1% to 8% of total sales that exceed the employee’s or the store’s monthly goal.

Gary Gordon’s “Rule of 10’s” program “works beautifully for us,” he says. He explains it this way:

Take as an example a salesperson with a base pay of $25,000 a year. That person will have a sales goal of $250,000 divided with the assumption that 75% of the sales will fall in the first 11 months of the year and the remaining 25% in December. Now, 75% of $250,000 is $187,500. Divide that by 11 to get $17,045 – which becomes the salesperson’s goal for each of the first 11 months. December’s 25% of the total is $62,500, which becomes the goal for that month. Each person who reaches his or her monthly goal receives a bonus of $100 ($400 in December). Each person who doubles the goal receives $400 for each month that this goal is met ($800 for December).

In addition to this bonus system, the store also has a sliding-scale commission program based on profitability.

A less elaborate, though well-thought-out incentive plan is operated by Safian & Rudolph Jewelers in Philadelphia. Among the incentives: a Christmas bonus; $20 individual spiff for each new customer; $20 individual spiff for the percent of profitability on individual sales; and $20 spiff for the salesperson with the most weekly sales.

Then there’s this remarkable diamond sales incentive plan from Danny Bales, who runs Susan’s Jewelers in Corpus Christi, Tex. His deal:

When you sell 25 1-ct. diamonds, you receive a 1-ct. diamond.
When you’ve sold 50 1-ct. diamonds, you receive a vacation for two anywhere in the continental U.S., including air fare and $1,000 spending money.
When you sell 75 1-ct. diamonds, you receive a 2-ct. diamond with the 1-ct. taken back as a trade in.
When you sell 100 or more 1-ct. diamonds, you receive a check for $10,000.

Rewards obviously come over time with the Bales plan. But for more conventional rewards, panelists vote most often for monthly payouts, though a considerable number (18%) say a reward should be given the day it’s earned.

Coaching for success. Staff training is an on-going process – daily, weekly, monthly – for many jewelers. It becomes particularly important if a salesperson falls behind in meeting expected goals.

Most panelists are ready to work with non-producing staffers. Their most popular approach is to talk with the employee to find out why goals are not being met, then work to overcome any problems the talks uncover. They often increase monitoring of the salesperson’s work to see where improvements can be made; quite a few set up special training programs. Of course, a few panelists concede that if an employee’s work is not up to speed, too often they “say nothing but feel upset.”

Whether or not a store sets specific sales goals and whether or not the owner counts meeting sales goals as only one of many employee values, no store can continue to operate with consistent non-producers.

In general, panelists are willing to give non-producers a reasonable chance to make a turnaround. If a salesperson has failed to meet goals for three consecutive months, the majority of these jewelers will give the employee up to six months to show definite improvement. If the employee does not, then it’s the door. Other jewelers are willing to wait a year before taking such a drastic step. Still others say move fast to get rid of someone who’s not cutting it – acting within one to four weeks.

Firing an employee is an unpleasant last resort. Indeed, panelists by and large say that having to fire someone is the least pleasant business task they face, even more unpleasant than being behind in paying bills. But sometimes it isn’t all that bad! A California jeweler who puts firing at the top of her hate-to-do list notes that “once in a while this can be very satisfying.”

Then there’s the Ohio jeweler who says proudly that “I have never terminated an employee.” He adds, however, that he did fire a partner – his brother.

SETTING GOALS

Percent of panelists who have a formal plan to measure sales productivity	59%
Percent who meet with individual salespeople at least once a year to set specific sales goals	62%

The sales target	% of panelists who use it
Help store as a whole meet specific sales goals	27%
Meet a specific sales goal	22%
Surpass previous year’s sales by a set percentage	19%
Bring new customers into the store	16%
Improve add-on sales by a specific percentage or number	8%
Improve close ratio by a specific percentage or number	6%
Other	2%

When to discuss sales goals	% of panelists choosing this period
Monthly	51%
Daily	12%
Randomly	12%
Quarterly	7%
Yearly	3%

Incentives to raise sales productivity	% of panelists who rated it most effective
Bonuses, all forms	32%
Commission, all forms	27%
Spiffs	12%
Other recognition (trips, show visits, etc.)	10%
Cash	9%
Free dinners, lunches	5%
Miscellaneous (pay increase, higher hourly rate)	5%

When to provide reward	% of panelists who rated this timing best
Monthly	37%
Yearly	27%
At once	18%
Quarterly	10%
Every six months	4%
Varies	2%
Bi-weekly (with pay check)	1%

Action taken	% of panelists calling it their first choice
Discuss why goals were not met and agree to try to overcome problems	36%
Monitor employee’s work more carefully to see where improvements can be made	33%
Set up special training program for employee	21%
“Say nothing but feel upset”	4%
Reset goals and say they must be met for continued employment	4%
Says it doesn’t really matter, try to do better next month	2%

When to let go for failing to meet sales goals	% of panelists who call this the best time
After six months	47%
After a year	37%
Varies or should not be fired for failure to meet goals	9%
After three months	5%
After one month	2%

JCK

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