Home Depot uses customer ratings for employee incentives

ATLANTA — "Service with a smile" could take on a whole new meaning under Home Depot's new cash incentive program for store employees.

The bonus program, dubbed Orange Juiced, offers big bucks to stores and certain standout sales personnel whose stores score high in the retailer's online customer surveys. Employees could earn an extra $2,000 a month — and $10,000 a quarter — under the plan.

Like a growing number of chain retailers, Home Depot invites customers via sales receipts to go to a special Web page and offer feedback on their store experiences.

But Atlanta-based Home Depot, which receives about 250,000 completed surveys a week, is taking the feedback a step further by tying bonuses to them. It's part of a push to improve service within the retailer's sprawling warehouse stores, which have lagged in external customer service ratings in recent years.

"One of the key drivers of this is overall customer satisfaction," said Jose Lopez, senior vice president and chief customer officer at Home Depot. "Stores that improve the most ... will win a monthly bonus. In addition, select associates within the stores will get an award, too."

Top prizes each month include $2,000 to the winning store, for an employee fund, and $2,000 to a single associate at that store. Other monthly winners will get $1,000.

Winning sales associates get picked based on nominations from managers, fellow store employees and customers who mention them favorably on surveys.

In addition to monthly awards, one store from each of Home Depot's three divisions will win a quarterly prize. Five associates will get $10,000 each, while the store gets $25,000 for a party and other goodies.

"We want to make sure the whole store celebrates," Lopez said.

The customer-service bonuses will be an addition to Home Depot's existing Success Sharing program, which rewards employees when their store beats sales projections. Home Depot paid $44 million in the last quarter of 2005 under that plan.

Lopez said Home Depot has committed $30 million this fiscal year for the new customer-service bonuses.

Home Depot's main competitor, Lowe's, declined Tuesday to say whether it had a bonus program for store employees.

The prizes will make an impression on winning employees, but they also might have an impact on customers, said Bart Weitz, executive director of the Center for Retailing Education and Research at University of Florida.

"A critical element in any program to improve customer service is to figure out a way of rewarding and evaluating the people who are providing the service," Weitz said. "A monthly reward is great idea — the best thing is to give rewards as close to the activity as soon as possible."

Although bonuses and prizes are nothing new on the retail scene, Home Depot has raised the bar as cash goes with its new program, said Andy Fromm, president of Service Management Group, a Kansas City-based company that conducts customer service surveys.

"That's a lot of money. ... It sends a strong message," Fromm said. "A lot of companies use incentives, but nothing of this scope."

Patti Bond writes for The Atlanta Journal-Constitution.