My first experience with layaway came a few months before my 10-year high school reunion (think 80’s). I recently left my advertising agency job for work in ministry. My mother took pity on me and bought me a gorgeous dress, but I needed a comparable pair of shoes. I passed Neiman Marcus where a sign touting 50% off shoes nearly bit me. Drooling as I entered, my eyes spied the most gorgeous pair of navy and white leather Spectators I had ever seen. They were a perfect match for my dress and they had my size. The price on the bottom read $80. Knowing I couldn’t afford $80 shoes, I timidly asked if they were part of the 50% off promotion. The saleswoman smiled, “Why yes!” I pulled out my checkbook. She rang up an $80 sale. I reminded her of the 50% off I was to receive. She lowered her gaze and promptly said, “That is 50% off.” The shoes were originally $160, but I was already in love. Thus began my first layaway journey. (You’ll learn about the outcome at the end)
Layaway is a customer service benefit that can be a nightmare for the shop owner but a blessing for the customer. The concept began during the Great Depression. Shoppers bought items they otherwise could not have afforded. The benefit to the customer to use layaway vs. credit is the difference between a nominal service fee and the interest that accrues on their credit card. Since the recession of ’08, layaway has seen a resurgence. Today’s consumers are aware of the massive amount of debt they’re under and are looking for ways to save. If your shop is looking to gain pre-recession type sales numbers, offering layaway may just be the ticket, especially for the holidays. When properly managed, layaway can be the difference in a small sale vs. moving a large ticket item. Anytime a shop can make it easier for customers to purchase, the more chances they’ll have to move merchandise.
This is where the shop owner comes in. Layaway involves instructing your salespeople about clearly written policy guidelines. POS systems such as SimpleConsign make the process easier by automatically setting the number of days you allow for layaways; the required down payment based on the percentage you’ve predetermined and even show the recalculated total and payment history on a customer’s receipt. However, this doesn’t take into consideration the necessary storage space needed. Your backroom has to keep a customer’s item secure so it can be found quickly once their bill is settled. Since layaway items cannot be considered a completed sale until all the payments have been met, your sales numbers will have to be adjusted properly as well. Often, each layaway item must be listed as a separate transaction. RetailMeNot offers some great suggestions and lists this year’s layaway guidelines for several of the larger retailers.
Recently, Moneyish suggested Millennials in particular are showing more interest in layaway. Already cash strapped due to high student loans, this generation is avoiding credit cards. Layaway is the perfect answer to buy now, pay later. Some merchants are even offering FlexPay. By automatically pre-setting a regular number of payments and the total dollar amount of each payment, the purchaser is forced to budget accordingly. Remember, make it as easy as possible for your shoppers.
After 4 payments of $20 each, I eagerly picked up my new shoes. My high school reunion was a huge success. However, by the end of the evening not one attendee had commented on my gorgeous shoes. So after a few glasses of wine and a memorable time dancing to Earth, Wind and Fire’s “Boogie Wonderland,” I threw my feet up on the table and demanded that everyone ogle my extremely elegant $80 shoes. To this day, I have those shoes tucked away, lovingly wrapped in tissue and living in their original box as a reminder that layaway can save the day.
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Sometimes it’s necessary to add a little extra incentive to keep your sales people motivated. Sales incentives can either provide a boost to employee morale or cause destructive infighting. Knowing what to do to energize employees, specifically your sales staff, is the first place to begin.
WhizBang Training suggested this one. Decide ahead what dollar amount you will award. Let’s say you choose $20. Give the first person to make a sale that day a $20 bill. The winner gives the $20 bill to the next salesperson who makes a larger sale. The bill gets passed around the entire day and finally stays with the person who had the highest sales total for the day. You can use any denomination you feel would be the biggest motivator.
WhizBang also suggested placing a small tree in your stock room. Decorate it with lights and “ornaments” for a specific sales period. Draw a number on the back of each ornament. Put together a variety of incentives such as gift cards, coupons for time off or an extra percentage off merchandise. Be sure to have varying values. Include one expensive gift that everyone would want to win. Make two lists of the gifts. The first list is posted for your employees and the second list is kept hidden with their corresponding number to something on the tree. Create goals such as achieving a certain number of add-ons, selling a particular “item of the day” or being top seller for the week. Include other goals such as not missing a day of work for an entire month. Or, doing a job that isn’t your normal duty. Offer ways to include your entire staff. When an employee reaches a goal, he or she gets to choose an ornament. Seeing that tree day after day will help energize them to do more.
1.) Incentives don’t have to be expensive to be effective. Often the sillier the prize, the more jovial the competition becomes. Perhaps the winning employee gets to choose the music played in your shop for a designated time or design a World Wrestling Federation (WWF) winner’s belt that the employee wears throughout the day.
2.) Hang a poster in the stock room and name the contest after the previous week’s winner. For example, this week’s contest is called “The try-to-beat-Jane-Smith Contest”. Make sure you have a large, cheesy picture of Jane to place on the poster.
3.) Luxury prizes of cash, time off, a longer lunch hour, gift cards, a bouquet of flowers delivered to your shop (shoppers always ask what the occasion is for the flowers), a favorite dessert delivered, chocolates, a massage or a special discount on merchandise are always appreciated.
Sometimes it’s better to motivate your staff as a whole, setting up goals that can be reached by the team rather than individuals. If your sales team as a whole reaches a particular quarterly, monthly or weekly sales goal provide a prize. Offer a team pizza party, bring milk and cookies in to work or send the team to a movie or fun event. As you can see by the following chart, sometimes money or prizes isn’t the biggest motivator. Often, it’s the recognition a person receives from their peers or the owner that motivates a person to work harder. Consider a personal handwritten note thanking them for their hard work.
Find what works best with your staff, but make sure, however you achieve it, they know they are valued and appreciated.