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Business Models Versus Consumer Models

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I have a friend who works for a major consumer brand. I can’t name the company, but it’s certainly one you know. He’s a great salesman and I’m happy to come buy products I want from him in his store. Unfortunately, this makes for a terrible customer experience.

Let me back up. Here are the main points:

  • Everybody knows that Major Consumer Brand has the kind of stuff I like to buy, and my buddy works there.
  • My friend (I’ll call him Avery) can sell me this stuff. Avery is a great salesman, and he’s always making sure his friends and contacts know he can help them out if they come in.
  • Because Avery’s my friend, I know he won’t steer me astray. He’s only going to sell me stuff I need and will always let me know if there’s a good sale that matches my interests.
  • Avery gets a commission from my purchases, and it’s the same amount to me anyway so I might as well buy from my friend.

So how could this possibly go wrong? Oh, let me count the ways:

  1. Although Major Consumer Brand has lots of locations in my city, I still have to drive to Avery’s location if I might want to buy from him. It’s a long way over there.
  2. Avery can’t take orders over the phone, even with my credit card number. So I have to actually go into the store.
  3. Major Consumer Brand is first-come, first-serve, so I have to wait around for Avery to be available. He’s good at networking, so lots of his contacts are waiting in line ahead of me.
  4. Other customer agents are hanging around with nothing to do, but I have to wait for Avery. If I don’t, Avery won’t get the commission.
  5. In the end, it takes me three times as long to buy something just to do my friend a favor.

Yes, this is an absolute business process mess.

Indianapolis speaker on waiting in line

© Flickr user ButterflySha

The problem is that the business model runs directly counter to the consumer model. The business wants to reward high sales, so it creates a system by which people win if they sell more. But as a customer, I’m most interested in getting great advice and fantastic prices. I have to do what’s bad for me (waiting, waiting, waiting) in order to help out Avery. In fact, I’m likely to get a negative opinion of the Major Consumer Brand while trying to help my friend make more money. What’s worse, Avery is making enemies out of his fellow salespeople. Why would they want to help each other if doing so only keeps them from succeeding?

I’m not here to say that all commission systems are broken. Rather, that whether you realize it or not, your business has a workflow. The customer and the employee both have a sequence of choices that are driven by individual incentives. If those values don’t align, friction appears. Business processes need to be consciously designed to reduce these issue and ensure that all stakeholders can actually collaborate.

As for my relationship with Avery, I am not sure where it’s headed next. I have to admit, I’m tired of driving halfway across town and waiting for him to be available. But like the business process methodology of the tip-sharing waitress or the tale of the end-of-month commission check that affected worker productivity,  there are probably smarter ways to work.  Hopefully the Major Consumer Brand will realize how to become more productive and more satisfied before their competition.

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Robby Slaughter
Robby Slaughter is a workflow and productivity expert. He is a nationally known speaker on topics related to personal productivity, corporate efficiency and employee engagement. Robby is the founder of AccelaWork, a company which provides speakers and consultants to a wide variety of organizations, including Fortune 500 companies, regional non-profits, small businesses and individual entrepreneurs. Robby has written numerous articles for national magazines and has over one hundred published pieces. He is also the author of several books, including Failure: The Secret to Success. He has also been interviewed by international news outlets including the Wall Street Journal. Robby’s newest book is The Battle For Your Email Inbox.
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Troublemaker and productivity/workflow expert. https://t.co/lJk8tIwe9q. Slightly more complex than 140 characters will permit.
@BigLiciousT Not for you or in your field, but for many people it will subconsciously communicate they can email yo… https://t.co/qHnyntz6jp - 4 months ago
Robby Slaughter
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  • http://www.writenowindy.com Chris Vanasdalan

    I’d be interested in knowing if Major Consumer Brand allows salespeople to make referrals & share commissions. It would be nice if your friend “Avery” were able to recommend another salesperson at your local store and still make a cut of the commission.

    You could still consult with your friend when asking about certain products and not feel so guilty about making the purchase from someone else. It would also encourage salespeople to build better relationships and work together.

    I’ve never worked in retail or on commission, but it seems like there must be a better way to motivate a sales staff.

    • http://www.accelawork.com Robby Slaughter

      Thanks for the comments, Chris!

      According to Avery, the answer the is the there are no shared commissions at MCB. They do have store bonuses that are shared equally if the store beats projections, but that’s not much of an incentive to hand a customer to a friend.

      FYI: Some retail brands have tried eliminating commission entirely, such as Best Buy
      http://money.cnn.com/magazines/fortune/fortune_archive/2006/04/03/8373034/

  • http://www.benrisinger.com Ben Risinger

    You have a very interesting topic. A person is great, but if I know what I want I will just go to Amazon or a similar website to buy it.
    A way around that system…I have a good friend who works in high end jewelry sales ALWAYS had commission until his company changed the way the system works. Every employee has a sales goal, but nobody makes commission off of any sale. Employees are instructed to hand off a customer if they don’t feel a vibe. He says it is a great way to work and everyone benefits.
    If the store as a whole hits their monthly goal, everyone (including management) gets their bonus. If the store doesn’t hit their goal…no bonus.
    This might be a better system for customer service…but you still have to drive to the store as a destination.

    • http://www.accelawork.com Robby Slaughter

      Thanks Ben!

      At first glance, that sounds like a pretty good system. It solves almost all of the problems with my friend Avery, except (as you say) having to drive across town to support him.