Breaking it down: Five mistakes when writing motivational programmes for merchandisers

Merchandisers are one of the most challenging positions in retail, with one of the highest turnover rates and one of the lowest remuneration levels.

First and foremost, we would like to point out that manufacturing companies are not always aware that merchandisers, sales representatives and consultants, while overlapping in function, are completely different positions that are chosen by people with different drivers and values.

ANCOR's summer 2020 Merchandiser Portrait Study found that the lion's share of merchandisers are not interested in career advancement, but rather in having a stable, full-time job close to home and receiving predictable remuneration.

We see sales representatives and product consultants, on the other hand, as being interested in development and career progression. So when creating a motivational programme for merchandisers, it's important to consider the specifics of the target audience.

Stability

One of the most common reasons for merchandisers to quit is the instability and unpredictability of the payout. The average income of merchandisers in Moscow is about 35-40 thousand roubles, in the regions it is 25-30 thousand. More than 80% of specialists are merchandisers aged 25 to 45 years, that is the part of the population that already has families and actively uses mortgages and consumer credit. Therefore, the instability of payments for employees poses risks to both family well-being and the solvency of loans.

Even minimal wage delays will prompt the employee to look for a new job. And he will find it quickly, because offers are plentiful on the market, and merchandiser loyalty to the employer is usually quite low if the latter is not eager to meet the needs of this category of employees.

Experience has shown that stability and fairness in payment help to almost halve the turnover for this position.

Transparency

Merchandisers' compensation figures and formulas are often so complex that even people with degrees in economics and mathematics cannot always make sense of them. In practice, this means that merchandisers do not even try to understand such calculations, and take a philosophical attitude towards remuneration: they manage to earn more - fine, but they fail - I do not understand why, so be it". Clearly, this attitude is not conducive to creating additional motivation.

The solution is to link remuneration to specific results of merchandiser's work and to a clear bonus scheme with an easy calculation. That is, the employee should clearly understand for what deficiencies the remuneration may be reduced, and what may contribute to its growth. It is very good if this information is easily accessible online, such as in SFA-system (Sales Force Automation) or in e-learning platform, showing the progress in achieving the goals during the month and, therefore, the likelihood of obtaining a reward. And, of course, such information should be updated promptly if there are any changes in the company related to the merchandiser's tasks and focus.

When calculating KPIs for merchandisers, it should be borne in mind that it is not always up to the merchandisers to ensure that the products on the shelf are presented. And if the logistics service, for example, does not deliver the goods on time, this has to be taken into account: the merchandiser's remuneration should not be reduced because of deficiencies in the services over which he has no influence.

Real KPIs

A typical situation in the life of a merchandiser: A manufacturer has negotiated with a chain for x% of the shelves. The manufacturer's commercial services negotiated with the chain's buyers and agreed on that x percent. And then the merchandiser's KPI puts a share of the shelf higher than the official contract. And this is considered the norm in many companies. If a merchandiser presents goods within the terms of the signed contract and does not take up more space on the shelf, he can be fined.

Yes, merchandisers sometimes have the opportunity to increase product representation and shelf space. Sometimes, for example, competitors do not deliver products on time, merchandisers of other manufacturers do not put products on the shelf, and so on. However, such opportunities may appear unplanned, so tasks of this kind cannot be included in mandatory tasks and KPIs for merchandisers. Opportunities may be in the form of expanding the shelf share above the contracted share, undeclared placement on the checkout equipment, placement of additional points of sale, displaying goods better than the network's fixed planogram. It is good if the merchandiser receives an extra bonus for taking the initiative and using the opportunity to do more in good time. This encourages him not to miss out on similar opportunities in the future. Attempts to pass on the responsibilities of a supplier's commercial services to junior staff, on the other hand, are highly demotivating.

Gone are the days when it was considered normal, even in the federal chains, to "move" competitors on the shelf, bypassing the contract, easily expand the share of the shelf and negotiate for additional space in the shop, displaying goods according to the manufacturer's planogram.

Rating

One of the tools for evaluating the effectiveness of merchandisers is the rating of employees within a project. It clearly demonstrates who in the team is seeking career growth, who is seeking maximum bonuses, and who is satisfied with stable payments. From experience, 15 to 25% of merchandisers are ready to move up the career ladder and take active steps towards it. This information helps to balance the motivation system and offer each successful employee relevant bonuses within a single information space. However, it is important to understand the fine line in the rating story so as not to lose focus on teamwork, and to remember that constant competition becomes a source of stress for many merchandisers.

When setting up a rating programme, we recommend using short-term ratings and awarding points not only for completed tasks and KPIs, but also for active participation in educational programmes, mentoring programmes, completed online training sessions and tests taken. Then both experienced employees and newcomers can prove themselves, avoiding the "cumulative advantage" effect.

The effectiveness of merchandisers depends to a large extent on how well they are organised and the realities of their work with specific brands and the specifics of a particular retail chain are taken into account. Therefore, each time you create an incentive system, you have to take into account not only general data, but also to a greater extent the specifics of working with the brands of each particular company.