In the world of retail, it is always the bottom line that counts. A retailer, in extremely simplistic terms, needs to make more than they are spending. Although this seems to be an obvious statement, why do so many retailers go bankrupt each and every year? Obviously, they are not selling products fast enough or for the right price and without the benefit of Financial Recovery Systems like insurance providers have access to, there is no easy way to audit and measure outcomes in order to recover overpayments to save a dying business. Here are a few things retailers could learn from Physician Incentive Plans which are commonly utilized by insurance providers to award medical providers for a cost-effective job well done.
First a Look at a Basic Financial Recovery System
To keep this short and to the point, insurance providers often utilize software known as Financial Recovery Systems. Especially when something triggers a red flag, the insurer needs to find out why one doctor or medical group seems to be getting paid inordinately high amounts of money in keeping with the size of a given medical practice and the services a practice that size should be providing.
An FRS audit ensues and the exact problem in overpayment is identified so the insurance provider can ‘take back’ any overages paid. It would be unlikely that a retailer could do this, but the same underlying principles could save a dying retailer by indicating where they are spending too much money for the outcomes (profits) being realized. Now it’s time to look at how a PIP could benefit those retailers in terms of incentivizing the entire retail team with a fourfold focus.
What a PIP Is – A Fourfold Focus
With cost effectiveness at the heart of the issue, insurance providers seek to reward physicians based on four areas which include:
- Patient Experience
Those areas are pretty much self-explanatory in terms of the medical profession. The processes are those actions that lead to good outcomes, which in this case is better health. Next on the list of possible reasons to reward a physician would be patient experience and in the world of retail, this is huge. Finally, a PIP seeks to reward doctors or medical groups based on how they are organized and whether or not they are adopting the latest technology within their practice.
How a PIP Would Look in a Retail Setting
Now let’s relate this to a retailer! The process is going to be of extreme importance in a retail setting because it means keeping product and operating costs low while seeking to serve customers so that the outcome (sales) is profitable. In other words, the retailer is not spending more than they are making in order to increase volume. Customer experience, often referred to in the world of technology as User Experience, or UX is going to be the key component in all this, the glue that ties it all together.
If a customer has a great experience on the showroom floor, whether or not they bought this time around, will be back because of the experience they had initially. Structure goes hand in hand with process in a retail setting and these are areas which need to be recognized and rewarded right along with those bonuses and monetary awards the sales staff gets for high-volume sales.
Here’s What You Just Learned
What retailers can learn from PIPs is that since there is no way to recover losses directly in terms of overpayments commensurate to sales volume, they can institute a similar incentive plan for the entire team beyond the sales force. Altogether too often the sales team is rewarded when the backend of the establishment held costs together through process and structure. By awarding incentives, the team forms a cohesive whole and each man or woman is rewarded for a job well done.
Retailers – Customer experience is huge but so too is the backbone of your business. By only awarding sales staff you are tying the hands of the business ‘grunts.’ With an incentive plan modeled after a PIP – everyone on staff has the potential to be rewarded for a job well done and that, in a nutshell, is how you grow a business.