When the new business strategy faces opposition
A high-end retail chain based in the United States wanted to boost its sales per square foot—a key performance metric in the retail industry. To reach the goal, management defined a new strategy—one that focused on converting sales associates into teams of style consultants. According to the new approach, salespeople wouldn’t merely help shoppers in their own individual specialty departments such as jewelry, shoes, or fragrances. Instead, they would “own” their customers by working together to help customers navigate the store, help them find what they sought, and help them decide what to buy.
This was a major departure from the chain’s previous approach, and management was trying to decide how best to roll out the new strategy. The company asked us to assess the organization and offer suggestions for putting the strategy into action.
Gaining buy-in is critical to success
We started off by conducting a rapid diagnostic for several dozen of the company’s stores—a process that included extensive interviews with salespeople. We saw immediately that the company’s current incentives weren’t aligned behind the style consultant approach. All the salespeople were under a 100% commission incentive structure. And when it came to sales representatives’ performance, there was no middle ground: they were either extremely effective at what they did—or not effective at all. The best among them were already making a lot of money, so they didn’t want to change how they did their work. For instance, a successful high-end-jewelry salesperson saw no upside in walking away from the department to help a customer buy a relatively inexpensive scarf. Conversely, the lowest-performing reps were wary of the new approach because they worried about not having the knowledge or skills needed to do well under it. So, it wasn’t surprising that the new strategic direction faced intense opposition. In fact, we estimated that the company was at risk of losing the top 5% of its sales representatives if the strategy got implemented.
We presented our findings to the senior leadership team, recommending that the team members revisit the style consultant strategy. They did more than just take our suggestion: they scrapped the original plan and started over. Ultimately, they defined a new, hybrid strategy that salespeople could opt into if they wanted. Executives framed the idea as an opportunity for highly motivated and talented reps to become concierge service providers for customers. Those that opted into the model could own a book of clients who would, over time, become regulars and would ask for them by name. Any purchases made in departments beyond a salesperson’s specialty area would generate financial rewards for that representative.
To further support the new plan, we also offered ideas for redesigning the company’s incentive program, including establishing more-stringent performance metrics for long-standing underperformers. And we designed initiatives for helping salespeople acquire the knowledge and skills they’d need to excel under the new approach.
The company rolled out the new plan within four months of the launch date they had targeted for the original version of the strategy.
When it really matters
Our work helped this retail company score several major successes. For instance, within just six months of launching the revised strategy, actual increases in sales per square foot were exceeding the targets that management had set for the old version of the strategy. Team engagement, as measured by annual surveys, had improved considerably. And what’s more—those gains ultimately helped prepare the company for sale to another major retail group.