Cover Story: Build It and They Will Come

May 10, 2018  by HFBusiness Staff in Business Strategy, Industry   

But life doesn’t always imitate art. The stores have been built, the doors are open, sales associates are waiting … all that’s missing is the shoppers. Furniture retailers have built it, but consumers have failed to do their part.

Fortunately, though, furniture stores haven’t overbuilt, either because of strategic insight or lack of capital. Destination stores for furniture retailers are fast becoming a fading memory, as time-strapped consumers elect to allocate their free time to soccer games and family pursuits. In fact, 82% of consumers drove less than 25 miles for their last home furnishings purchases.

This trend—consumers driving fewer miles to buy furniture—has forced retailers to locate their stores in more expensive shopping areas, eliminating real estate accumulation as a strategy for building wealth.

            Old best practices have been modified to evaluate advertising expenditure and occupancy as one factor, recognizing that a good location offsets the need for additional advertising—a concept that some retailers have trouble accepting.

So where does sales management begin? It’s often difficult to define. Does it occur when the consumer walks through the door, or is it when they visit the retailer’s digital store—its website?

We know, from FurnitureCore research, that 72% of consumers visit websites for research before visiting the retail store, with 49% first visiting stores before going to a retailer’s website.

Where the frustration lies for traditional retailers is the difference between unique consumers visiting their site and traffic into their store, often between 70% and 80%.

The question must be: Where did the consumer go?

Several vendors are addressing this question by engaging website visitors to obtain contact information. 

PERQ intercepts the visitor with a message offering a drawing for a product or an offer of shopping assistance. The risk of irritating the consumer is measured by an increased bounce-back from the retailer’s site.

“PERQ is an AI-based online guided shopping solution that, when applied to a retailer’s website, turns their website into their best salesperson,” says Scott Hill, co-founder and executive chairman of PERQ. “This can be done with any website and requires no work from the retailer. It’s easy to implement with just a simple line of code.”

The resulting leads, if followed up, could drive traffic to the retail store. According to Hill, the results for retailers have been significant.

“When someone engages with our technology, the average time on site lift is three times,” says Hill. “Most of our customers see visitors actually spending an average of 12-14 minutes. When a retailer’s website is helpful, consumers are more likely to stay on site than head to a competitor’s site.”

This is a significant improvement over the industry average, as shown below.

“All of the consumer data we capture enables the industry to start leveraging marketing automation options, which further increases lead to sale conversion,” he adds. “Our exclusive partnership with the industry’s only dedicated CRM—Who’s Up—and our ‘Nurture’ automation solution can be used to increase results by creating processes to help take advantage of the website leads.”

According to Impact Consulting (parent company of Home Furnishings Business), with a properly designed website that includes pricing—a necessity—the number of inquiries from consumers have been reduced to 1-2% of the unique visitors.

A microsite on the retailer’s website, DesignCliq offers a friendly approach to intercepting the consumer by offering a style quiz—a less-invasive way of intercepting these invisible shoppers. In fact, the quiz’s questions don’t mention furniture at all.

According to Fred Starr, DesignCliq’s president and founder, of the consumers who engage in the quiz, 95% or more complete it and 40% or more provide contact information. And, most importantly, more than a third make a purchase—sales ticket averages run more than 25% higher due to increased customer loyalty.

“DesignCliq is a unique, highly effective way for the retailer website to bring the consumer and retailer together for a personal shopping/purchasing experience,” says Starr. “The friendly, personalized DesignCliq quizzes give retailers special ways for the retailer to serve customers as the home furnishings expert and establish immediate loyalty.”

At the end of the style quiz, the consumer is presented with a graph showing what styles they like—and what styles they don’t like. “Upon completion of the quiz, we have a page that comes up and asks them to register,” says Starr. “If they do, they get the graph, and some of our retailers offer an incentive [such as a discount or style help from an in-store decorator].”

Starr says that more than 75% of consumers shop for home furnishings without an understanding of style options and their likes and dislikes. “They’re flying blind,” he says. “And overall consumers establish an immediate trust and loyalty with the retailer offering overall home furnishings expertise. Style quizzes give the retailer an especially high level of expertise to respond to this major need.”

A next effort for DesignCliq, Starr says, will be to create a series of email blasts tailored around the consumers’ style preferences. “Maybe once or twice a month mailings where we emphasize their style—if their style is contemporary, we have a contemporary product shown and content about contemporary,” Starr says.

Another method to engage website visitors is a “chat application” that allows the consumer to interact with knowledgeable sales associates about the products they’re seeking. This is an essential requirement for e-commerce retailers, with more than 60% of all sales involving chat. It has proven difficult for the traditional retailer to execute insofar as to whom to assign the responsibility; sales associates often believe these contacts to be poor opportunities to make a sale.

Podium has launched its Podium Webchat, a service that enables businesses to convert website visitors into customers by taking them offline into text messages. According to the company, empowering consumers to text a business from its own website allows both the consumer and the business the flexibility to respond, helping initiate offline, in-person interactions. Podium Webchat’s interface allows business owners to manage and respond to all webchats from a single dashboard, consolidating SMS/text, Google Business Messaging and Facebook Messenger conversations into the Podium Inbox.

Outside distribution channels are impacting sales management. The advent of online design assistance, such as laurelandwolf.com, is interfering with what has traditionally been a service offered by furniture stores.

Commonly called “home plans,” the close rate increased by two times and average tickets by four times when consumers were offered these services. How can the traditional retailer be more proactive?

Moving the consumer from the digital world to the real, brick-and-mortar world is the next step.

Over the last decade, the cost of creating the store visit (ups) has increased, now an average of $25 per UP.

 

While advertising for all retailers is averaging 5.6% revenue, Impact Consulting believes that is understated and should include 3.4% of the revenue that is the cost for outside financing.

Traffic through the door has only been a conflict between store management and senior management. Overhead reduction has eliminated the receptionist in most stores, which ensured that the mailman did not influence the traffic count.

Impact Consulting still favors self-recording by sales associates, turned over to the sales manager to enter into SalesWorks, an online management tool that has been around for 25 years, and double-checked by a simple door counter.

“While not as sexy as the facial recognition software, the daily discipline of accessing individual sales associate performance is essential,” says Tom Zollar, vice president of retail operations for Impact Consulting.

“By keeping that score on a daily basis for each individual person, and the store, then you know which people are performing at the store average and which people are performing below it,” he says. “It’s a constant improvement process, and as we say so often, data doesn’t give you answers, it just lets you ask better questions.

“The only reason you look at the numbers is so you can track it and improve it, and the only reason you track and report them the way we do is so you know which salesperson you have the best opportunity to improve and which ones will give you the biggest return when you improve them.”

The key overall metric of sales management is revenue per UP, or simply the sales generation for each buying group through the door.

Revenue per UP is a component of close rate and average ticket; focus is needed on both in order to see improvement.

“Revenue per UP is basically a result, and you can’t coach a result,” says Zollar. “Average sale and closing rate are the two things your salespeople basically deliver to you. Revenue per UP becomes a great red flag because it’s basically a very measurable number that tells you how well you’re doing in the store with the traffic you’re advertising.”

Traffic was down more than 7% in 2017, even though industry sales of total home furnishings was up 4.7% and furniture stores was up 1.9%. The reason: increased close rate and increased average tickets from better informed (better researched) consumers.

Who’s Up is a new application to monitor UPs status for retail sales associates.

It's three main components—UP-List, CRM, and analytics—provide automated sales team rotation and customizable workflows, push notifications for salespeople and managers, the ability for salespeople to capture contact information on their smartphones, daily emails to show active deals and scheduled follow-ups, and reports for managers and owners showing the information needed to measure, track, and improve their sales teams’ performance.

“Who’s Up provides valuable analytics that help managers measure and improve the performance of their sales teams. As the Up-List is being used, we capture data on how many UPs, be-backs, and other activities salespeople are taking, and how long they are spending with customers,” says Brad Eaton, co-founder of Who’s Up. “After finishing up with a customer, we ask the salesperson for information on what happened—whether they made the sale, and if not, what was the objection or reason the customer left the store without purchasing.”

This data, says Eaton, is provided to managers and owners in reports that allow them to see how each of their salespeople stacks up against the others. The reports also show how many UPs and be-backs they’re taking, how much time they’re spending with customers, what objections they’re struggling with, and how often they’re getting contact information and following up with customers to make the sale.

“Retailers are seeing happier sales teams with a lot less chaos and disagreements around the rotation system,” says Eaton. “Their conversion rates are improving because they’re armed with the tools to measure and coach. And, they’re more empowered to follow-up and nurture the relationships with customers going through their buying process.”

Another challenge for retailers is attracting good sales associates, especially with low unemployment in many markets and a younger demographic with an aversion to commission sales. However, unemployment projections indicate a decline of retail employment.

A case in point is the recent bankruptcy and liquidation of Bon-Ton stores, which has displaced more than 1,900 experienced furniture sales associates.

The value of a sales manager is something that cannot be overstated. The role—and often the process—is often delegated to the store manager or their assistants.

“When somebody says, ‘I have sales managers, but they sell too,’ or ‘I have a sales manager, but he manages the store and takes care of the operational issues too,’ I say, ‘In order to be a successful salesperson on your floor, you need to work full time, right? In order to be a successful sales manager, don’t you need to work full-time too? Which job is not a full-time job if you have the same person doing both?’” Zollar says. “And the truth of the matter is for most stores that have five or more salespeople, managing them is a full-time job if you want to make a difference.”

The more “other” things you give your sales managers to do, such as taking care of customer service or dealing with other issues in the store, the less likely they are to not spend enough time coaching the sales force, Zollar adds.

A major complaint of consumers is that the retail sales associate pounces on them when they walk in the door. Are we now, with modifications to the retailer’s website, invading the digital store in the same way?

Consumers today want to shop and buy on their terms; they don’t want to be “sold to.” Shelter magazines, at one time, served the purpose of letting the consumer dream about what could be; is the website now the place to not only dream, but conduct research?

Some retailers are eliminating the UP system, allowing the consumer to self-select—a major fear for traditional retailers. But consider: If the consumer has already researched what they want before walking in the door, what is the purpose of the retail sales associate? Maybe just to help them imagine what could be.