1. What do you see as the advantages and disadvantages of the incentive system that DeMarco's is using for sales associates? What impact do you think it's having on the DeMarco's culture? Explain.
2. Do you think the complaints of lower-paid sales associates are legitimate? Why? How do you suggest that Lauren respond to these complaints, such as the gripe that the system offers few opportunities for large commissions in some departments?
3. Have the successes of sales associates such as Katherine or Damien created a situation in which customers' loyalty to particular salespeople is stronger than their loyalty to the store? For example, if a successful associate leaves DeMarco's, might the customer leave also?
DeMarco's Department Store manager Lauren Brewster's "Wow" moment came when she observed a Chicago restaurant staff 's gushing treatment of an international celebrity.
"Everyone dreams of that kind of star treatment," Lauren told her assistant, Jack Klein. "Think about it. People brag about their bank or the local bar where 'everybody knows your name,' or enjoy showing off a favorite restaurant where the hostess always remembers their favorite table."
DeMarco's, like other upscale department stores, suffered the double whammy of a slumping economy and increased competition from discount retailers and online shopping. How could the store, the "box," compete, retain its old customers, and build a strong future customer base?
"We've always known that it's all about customer service," Lauren said. "But what's so great about grabbing a giant plastic shopping cart and slogging through some giant warehouse in your shorts and flip-flops, and then joining the herd at the checkout? That is not a shopping experience."
"And what isn't great about being treated like Oprah from the moment you hit the door until the sales associate swipes your card and hands over something lovely that you just purchased?" Jack asked.
Lauren's idea was that store customers receive that personal, upscale, "you're somebody special here" treatment at DeMarco's. Sales associates would raise their own professional level, regard customers as worthy of personalized service, and build their own clientele. As added incentive, the entire DeMarco's sales team was changed over from hourly pay to straight commission. "Your pay is built through your own initiative and individualized service that makes customers return to you again and again," Lauren instructed the sales force at the outset of the experiment. The idea intrigued Corporate, which approved a two-year experiment.
As expected, the new plan created a minor exodus among those who wanted the assurance of a "regular paycheck." But as the program moved through its first year, both store and corporate management was pleased with the overall results. Marketing pushed the new image of elite, personalized customer service, and statements such as "Katherine at DeMarco's helped me select this outfit," or "Damien always lets me know when something new arrives at DeMarco's that he thinks is perfect for me" became the typical boast of savvy shoppers.