From Home Furnishing Business
Coach's Corner: What Do Top Sales Professionals Think About? The Numbers
By: Tom Zollar
Last month we presented an overview of what a sales manager in a retail store should be doing daily, weekly and monthly to drive sales performance improvement with his/her staff. Part of that discussion included information about some of the issues and situations that we often see in underperforming stores that are getting in the way of the sales management effort. The second key point stated:
“When critical Measurements and tracking/reporting systems are not in place or are not properly maintained, the entire coaching effort is at risk. If your numbers are not accurate and consistently reported in a way the coach can use to drive performance improvement, all the training and other efforts are wasted. Knowing how they are doing and believing in the numbers, is key to getting your people to buy into training and any other help offered to them by the sales manager!”
While tracking and properly reporting all the important measurements is certainly a major element of every successful performance-oriented team effort, just having the numbers is not what gets the job done. Certainly, what the coach does with the information and how he or she uses it to drive sales growth is very critical, but I have encountered an obstacle that gets in the way of even a very solid coaching effort. In fact, I might even say that this is the most common impediment to sales management success in stores today.
I am talking about the fact that many, if not most, sales associates on our retail floors do not understand the importance of the metrics we use, and as a result, they do not put the faith or belief in them that makes them the most powerful tool in the sales manager’s box. Without this “buy in”, they see the numbers as being there only for management’s use in finding things to complain to them about. As a result, this valuable performance data is looked at by the very people that need it the most, as being a negative element in their business life instead of the positive, success driving instrument it should be. Therefore, something that they should use to help them grow and prosper in their chosen field of endeavor, becomes worthless as both a performance driver and motivational tool. Worse than that, it can become a negative force that actually inhibits progress and reduces or eliminates the sales manager’s ability to help staff members succeed.
Does this sound familiar? Do you have salespeople that resent the fact that you track their performance and have the audacity to discuss it with them or worse yet post it for all to see? If the answer is yes, then this is a cancer that must be eliminated, or your store will never achieve its potential. With all the competition in most markets today, eventually it could become difficult for it to even survive. In many cases it only takes one negative person on a staff to bring the entire group down. If that is the case, a simple “amputation” of the infected limb can solve the problem. But what if that person is your top writer? Will the body live on long enough to grow back the missing part and prosper? Perhaps this is a bit of a dramatic way to look at the situation, but getting your people to buy into the performance data you track and then use it to drive the growth of their individual businesses, is the only way most retail businesses who rely on their staff members sales efforts, will win the battle for consumer dollars in their markets. So, let’s look at some thoughts about ways we can turn this situation around and get our people onboard with using sales performance metrics to help them develop into highly motivated professionals, who wake up each morning eager and excited to find new ways to please more customers in order to grow their individual businesses.
The key is to get salespeople to understand that in a very real way, they are actually in business for themselves with the help and support of the store. The store provides people for them to work with and products to sell, plus an office and after the sale support. Basically, two of the main ingredients in each salesperson’s personal business, opportunities to sell (Ups) and product to sell, come from the store.
Since Total Sales Revenue = Ups X Close Rate X Average Sale, it is obviously that how they do with the people they see is what separates the successful sales professionals from the also rans. Because of this, it is really our sales metrics that provide insight into each person’s ability to perform. Keep in mind that all the staff performs in the same arena, selling the same customers the same products, so comparatives to store averages are very valid as a performance benchmark. Therefore, in order to really know how they are doing and where they can improve, each staff member needs to have access to this information.
This means that a key aspect of your sales management program, and your entire management effort, must be dedicated to making certain that each of your sales staff members understand how important these numbers are and how to use them to be as successful as they can be, thus maximizing their rewards from their job, both in money and personal achievement. Let’s look at some ways we may better define the main metrics we use in language a salesperson might better understand and as a result take more personal ownership of the numbers.
Total Sales Volume is one metric that we all understand. Whether we value the impact it has on our financial success or use it as a motivational goal, this is where much of the story begins and ends for many of us. However, the major problem with only focusing on total revenue is that it is the end result of all our efforts in so many areas within our business. Unfortunately, it is virtually impossible to improve a result if that is all we focus on. We need to break it down into all of the individual factors that deliver what we want, then improve those that are deficient and maintain/maximize those that are sufficient. Selling has a number of facets that greatly influence our end results. Breaking our individual performance down to the basic metrics that contribute to the sale, is the best way to know where to focus our attention. Here are the prime numbers:
Traffic is defined as the number of the store’s potential customers (or family groups) with whom the salesperson works and is singularly the main driver of your business. Most retailers call these “Ups”, which derives from the colloquial use meaning that a salesperson is up to bat for this customer opportunity. All opportunities must be counted because each one requires that you make personal contact with the customer or prospect. Traffic counts also provide the base measurement for determining close ratios and revenue per Up, two important indicators of salesperson effectiveness discussed below.
Close Ratio is defined as: Number of sales made divided by number of Ups taken, expressed as a percentage. It is a huge number because it indicates if you are connecting with the people you see. If you cannot connect, then it is impossible to help people find what they are looking for in your store. Your performance in this area is mainly driven by your selling skills, which can be trained and coached, plus your interpersonal or “people skills”, which are harder to train and coach, but can be improved over time. Knowing if you are not connecting as well as others on the staff is a critical factor in helping you find ways to be more successful on the floor.
Average Sale is defined as: Total sales volume divided by the number of sales made, expressed in dollars. Are you maximizing your opportunity with each Up? A lot goes into creating high average sales, including; selling skills, product knowledge, design skills and relationship building skills. All of these can be improved with training, coaching and mentoring. This number is normally provided by the store’s business system and is one of the most accurate metrics we track. It also normally contributes the most to your sales volume and ability to build a client base. It is extremely helpful for you to know where you stand on the team so you can watch and learn from others how to drive this critical metric higher.
Revenue per Up is defined as: Total sales volume divided by the number of customers seen (UPs), however it can also be calculated by multiplying Close Rate X Average Sale. Revenue per Up is a critical measurement you can use to understand your true effectiveness and efficiency with the potential customers you see. This measurement takes into account the effects of both close rate and average sale by combining their effects into one comparative number that indicates how many dollars of revenue are generated each time you greet a customer. This is a key metric in your business.
The above four measurements are the most important numbers you should use to analyze your sales performance and thus the success of your personal business. In the simplest sense, closing rate is how many customers you gained a commitment from and average sale is how much of a commitment you gained from each one. If you don’t pay attention to and understand the metrics involved in measuring how you are performing, then your business will fail. As I have said before, the best salespeople we see, working for the best managers, always understand that these numbers are key to their success. Without this understanding, most people resist being coached and therefore do not improve their numbers. As a result they fail to grow.