Definition
Push Money (PM) refers to additional monetary compensation or incentives provided by manufacturers to retail salespeople to promote and sell their specific products. This compensation, sometimes known as promotional money or prize money, serves as an extra motivation for sales staff to prioritize certain products over others. While it can boost sales for specific items, it may also cause tensions within retail environments due to potential conflicts of interest.
Examples
- Electronics Retailer: A manufacturer of laptops offers a $50 bonus to retail sales staff for each unit sold, encouraging salespeople to promote that brand more aggressively.
- Cosmetics Store: A skincare brand provides an additional 10% commission on each product sold, incentivizing store employees to recommend these items to customers.
- Car Dealerships: An auto manufacturer offers substantial bonuses to sales representatives for each car of a specific model sold within a particular timeframe.
Frequently Asked Questions (FAQs)
Q1: Is push money legal?
A1: Yes, push money is legal but must be disclosed and handled transparently to avoid conflicts of interest and ensure ethical sales practices.
Q2: Can push money lead to biased recommendations from salespeople?
A2: Yes, push money can potentially lead to biased recommendations, as salespeople may prioritize pushing products that offer them additional incentives over what may best suit the customer’s needs.
Q3: Do all retailers allow push money?
A3: No, not all retailers allow push money as it can create divided loyalties and may conflict with the retailer’s internal policies and customer service standards.
Q4: How do customers react to push money incentives?
A4: Customer reactions may vary. Some might perceive it negatively if they feel the salesperson’s recommendations are driven by personal gain rather than their best interests. Others may remain indifferent or unaware of such incentives.
Q5: How is push money different from regular sales commissions?
A5: Regular sales commissions are typically provided by the retailer as part of the employee’s compensation structure for all sales, whereas push money is an additional incentive specifically from the manufacturer to promote their products.
Related Terms
- Sales Commission: A fee paid to a salesperson for their role in facilitating a sale, usually a percentage of the sales amount.
- Manufacturer Incentives: Benefits provided by manufacturers to various stakeholders, including marketers and retailers, to encourage certain behaviors or increase product sales.
- Spiff: Another term for push money, often used in the retail and automotive sales industries.
- Vendor Allowance: A type of incentive given by vendors to retailers, often in the form of discounts or funds used to promote their products.
Online References
- Investopedia: Push Money
- Retail Dive: The Ethics of Push Money
- The Balance Small Business: What is Spiff?
Suggested Books for Further Studies
- Sales Management: Analysis and Decision Making by Thomas N. Ingram, Raymond W. LaForge, Ramon A. Avila, Charles H. Schwepker Jr., and Michael R. Williams
- Sales Compensation: Second Edition by George W. Milkovich and Jerry M. Newman
- Customer-Centric Selling: How to Influence and Persuade Customers to Buy from You by Michael Bosworth
- The Challenger Sale: Taking Control of the Customer Conversation by Matthew Dixon and Brent Adamson
Fundamentals of Push Money (PM): Marketing Basics Quiz
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