The House Account – A case for using it.

By Josephine Hill, Senior Consultant, DMSRetail

House Account: The number keyed into the POS system at time of sale which does not attribute the sale to a specific employee, but rather to the store.

Retailers use different methods to record and monitor sales and to compensate their associates. Some allow, and in fact insist on, the use of a House Account and others forbid it.

The case against the use of the House Account starts with the fear that employees may use the House Account to make their own KPI’s look better. If an employee is compensated on total personal sales, sales per hour AND average sale per customer then there is reason to believe that an associate may try to attribute some very small sales to the store rather than their own identification number in order to keep their average sale per customer high without seriously affecting their overall sales and sales per hour numbers.

The problem with NOT using a House Account is that it is incredibly unfair to associates in the stores. Why should an associate get penalized with the sale of one item at a low price point if s/he did not stand a chance of being able to influence the buying decision? I can already hear the skeptics…’well, the associate has to try harder to make sure the customer doesn’t buy just one, low priced item.’ I understand that...I really do and, in the vast majority of cases I would have to agree. However, to those who just will not give an inch on this one...

My response is get real…it happens.  Have you never walked into a store and bought only what you needed/wanted and it just so happened it was only one item? Never? And, besides, don’t you have anyone trustworthy in the store (like the Manager?) to ensure that everything is being done to sell to the customers? Don’t you believe what they are telling you? Didn’t you ever hear of ‘walk-up’ customers?

The case for the use of a House Account is much more solid. First of all it assumes that the retailer is aware that some sales are made without any interference from a sales associate. In fact, the retailer should expect a certain percentage of business (however small) to come in that way. The customer comes into the store to buy a white shirt in size small (or a book or whatever) and even if an associate has made an effort to work with the customer she just picks up the item and goes to the counter to pay for it. The transaction is complete and the customer leaves. No, she did not want anything else. No, she did not want you to show her the new pants that would go so nicely with the shirt. No, she didn't want to be bothered by the associate and if you had not stopped trying she would have left and bought the shirt elsewhere. The end result could have been… no sale, no happy return customer, no future sales. You could have lost her and the ‘word of mouth’ advertising that she could have represented.

So, then, perhaps retailers should concede that some sales, or more accurately, purchases, will be made by the customers themselves. In a case like this, using the House Account is the only reasonable thing to do. The associates do not receive credit or get penalized for sales they did not make.

Retailers need to determine what percentage of store sales could reasonably be expected to fall under the 'walk-up' category. Once that is established it is very easy to monitor. If it is determined that approximately 15% of customers will ‘walk-up’ to the counter with their purchase without allowing any assistance from associates, and if the sales in the House Account are at 10%, it may mean associates are taking House Account sales as their own. If the sales in the House Account are at 20% it may mean that associates are dumping undesirable sales into the House Account. You can investigate further to find out what is really going on.

My point is that the House Account does not have to be the kind of place that so many retailers fear…that place where no one is accountable and no monitoring can be done and employees can take advantage. In fact, not allowing the use of the House Account, when compensation is based on those things mentioned above, is unfair and will make employees lose faith in their employer.

Do your homework and come up with the right percentage for your business and then educate your associates as to how/when the House Account is to be used. It will certainly show that you are reasonable in your expectations and that you trust your people.

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