From Home Furnishing Business
Obviously, there are a lot of moving parts involved in the process of managing a sales staff and delivering the best results possible for a store. For the most part, the sales manager must develop and lead a group of dedicated professionals to make this happen, much like a coach or team manager functions in a sports team. While they deal with athletes skilled in various aspects of their game, we direct the efforts of sales people that must fulfill the needs of our customers. Much different end processes perhaps, but as we have said before, how the two managers guide their charges to success is actually very similar.
Before we get down to the things our sales managers should be doing, lets get an understanding of what their role in the organizations is really focused on. Here is an interesting way to look at it.
Sales Manager’s Role
In its essence, the sales manager’s job is about performance and the salesperson’s job is about selling. To put it another way: The sales manager’s job is about salespeople and the salesperson’s job is about customers.
The sales manager’s job should not be focused on selling, but rather, on the outcomes in terms of salesperson performance and goal achievement. How the sales manager uses the process to train salespeople is their main connection to selling. They do not apply these methods themselves normally, because they are not there to serve customers on a regular basis. So, to be effective, they must take on the role of teacher and coach where the act of selling is concerned.
Serving the Right Customer
Basically, the manager’s customer is the salesperson, because the manager’s have things they want (and need) the salesperson to “buy” and even though they often don’t know it, the salespeople need the things the sales manager has to sell. Once sales managers get their product (i.e.: selling skills, product knowledge and design skills) into the salesperson’s hands and heads, it is necessary to provide continued service and support for these products. This is what we refer to as coaching or sales management. The salesperson’s job should be clear to anyone by simply reading the store’s mission statement.
Part of the challenge for owners and upper management is to develop ways to help the sales manager sell their products to the salespeople. This can be done through consistent coaching and support on the issues of adequate staffing, goal setting/management, plus continued performance improvement in all the other areas of the store.
Here are a few of the main things we see in stores that get in the way or hold back sales performance and the manager’s ability to positively impact it:
- Staffing issues dominate most store problem lists. Until properly staffed, it is virtually impossible to maximize customer interaction and the resulting sales. Until the staff is almost forced to work each customer to the maximum extent, because there are so few to work with, most sales people do not feel the need to buy the sales manager’s products. Choosing instead to merely burn through Ups to make enough sales to hit their numbers. This is a great loss for both the store and its customers.
- 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. Without discipline and accountability, it is just not possible to create a highly motivated and effective team in any sales (or sports) organization. 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.
- When setting and achieving goals are not the most important thing to everyone nothing much happens in the way of feedback, one-on-one meetings or performance improvement. Most sales managers don’t know how important income goals are to their people, so turnover and mediocre performance continues. No one bursts out leading the pack to new heights and progress is snail-like. Goals drive growth and those that sales people buy into because they understand their direct link to resulting income increases, are key to driving sale performance improvement. They provide the answer to everyone’s all-important question: “What’s in it for ME?”
- When one-on-one meetings don’t happen (because without goals in place there is little reason to have them) the forum for relationship building and positive challenge is not in place. Without this connection, managers have no power over salespeople and can’t get them to do things the right way. Setting goals that the sales people own, meeting regularly about them and providing daily feedback gets it done. Even if it is just a pat on the back or a brief comment, keeping them aware that the manager cares about their success is one of the best ways to add power to your goals process.
- In-Home Sales are one of the biggest missed opportunities we see in many general furniture stores today. This is a service that they can provide to customers, which most of the big boxes, online retailers and other competitors do not. With a proper In-home selling process in place, the house call is the product initially being sold. The end result of “selling” this service to those that need or want it is of course that the customer will purchase products from the store. So, most stores have two kinds of businesses: In-store and In-home. Someone needs to drive both of them. Like any other selling effort in the store, the sales manager must direct it on a daily basis with training, tracking, goal setting and coaching. Often though, having an In-home design leader reporting to the sales manager to help this process is the best way to go.
Fixing these five issues would provide most of the sales improvement results owners seek and they are the first things we look at when trying to help a client grow their business. Obviously, your sales manager is the key person in all of this and having these ingredients in their effort will help make them successful.
Here is an overview of of the main things we think your sales manager should be doing for your organization followed by an example of a simple checklist of the tasks a typical store might hold them accountable for performing on a daily, weekly and monthly basis. The list will vary by store, but this should give you a starting point.
What The Sales Manager Should Be Doing
- Change the focus of sales from things in the store to rooms in the customer’s home
- Change the focus in the store from company goals to individual salespeople’s goals
- Team up with each sales associate to help them achieve their goals
- Make the goal the thing. Keep goals at the front-of-mind every day
- Measure the key factors. Traffic, close ratio and average sale. Improve the average sale.
- Keep score daily and give feedback to the salespeople
- Meet at least monthly with each person to review performance versus goal for the month and year-to-date, plus to establish future performance agreements
- Provide training and coaching when needed
- Be accountable for the performance of each individual and of the team as a whole
- Be accountable for building long-term customer relationships through the sales clientele development by the associates
Sample Task List
- Walk the showroom to check for cleanliness, order, holes, etc. for any review with the sales team. Review merchandising issues with buyer.
- 15-minute sales meeting huddle before opening - Use and follow agenda
- Insure numbers from day before are properly entered into tracking system
- Review sales and in-home results for yesterday and MTD
- Schedule observations for those below goal or store averages
- Be available on the floor for questions, sales and product assistance, closing sales
- Give immediate feedback from observations
- Review individual sales, Sketch Books and Client Records
- Review and update store goal progress with the sales team members
- Interview sales prospects (walk-ins)
- Track and monitor the Ups log and that all are filling in the information properly
- Review sales orders for clarity, two phone numbers, email address, delivery instructions, product numbers/descriptions and other necessary information
- Review special orders with the sales person
- Run the store goal report for review – MTD and YTD
- Meet with Owner
- Review goals of each salesperson and store goal
- Create and/or discuss action plans
- Create agenda for the week ‘s sales training meetings
- Maintain ongoing recruiting process, including going out of the store to find people, carrying recruiting cards and interviewing prospects
- Review time sheets or online attendance records (In/Out reports)
- Anyone choosing to do contract sales set an agenda for them with goals and a written report turned in daily of their contacts
- Formal one-on-one sales meetings scheduled third week of each month to review where each salesperson is to goal
- Follow an agenda format
- Schedule next month’s meeting date
- Schedule vendor product training
- Follow-up applications or résumé’s on file with a touch call
- Competitive shopping schedule set
- Create and post store monthly goal in break room
- Run monthly store reports for owner
- Set up and then rotate areas of responsibility for floor
- Meet with owner to discuss store monthly results and improvement plan for next month
Hopefully this brief attempt to give you some idea of what a sales manager should be doing for their company will help you focus on this critical position in your organization to determine if your effort can be improved in any way. As stated, it is not intended to provide a complete “how to” document, merely some of the points we have found important over the many years we have helped clients improve their store’s sales performance.
But while consumers are staying relatively optimistic, CEOs have been generally pessimistic over the last six months. According to the Conference Board’s March report, CEO confidence during the first quarter of 2019 was 43 – up 1 point from last year’s fourth quarter. Note that a reading of more than 50 points reflects more positive than negative responses. In the fourth quarter of 2018 the CEO confidence was at its lowest in six years. After years of recovery and huge Consumer Confidence Index (CCI) increases, current Consumer and CEO Confidence point to an overall perception of moderation in economic growth. This article picks up from Statistically Speaking’s November 2015 article Consumer Confidence Drives Furniture Spending.
As shown in Table B, the Consumer Confidence Index declined in March, after increasing in February. The Index in March stands at 124.1 (1985 = 100), down 7.3 points from 131.4 in February. Other indexes tracked by The Conference Board get less attention than the CCI, but nonetheless offer additional perspectives. The Present Situation Index – based on consumers’ assessment of current business and labor market conditions – declined 12.2 points, from 172.8 to 160.6. Though this index shows a decline, again indicating a possible moderation in growth, the numbers are still high. The Expectations Index – based on consumers’ short-term outlook for income, business and labor market conditions – decreased from 103.8 last month to 99.8 this month.
Since the bottom of the Great Recession in 2009, the U.S. has experienced continuous and historic growth. Although year-to-date Consumer Confidence in 2019 has taken a dip from the high of 130.1 (average) in 2018, confidence continues to be high at 124.1 in March (Table C).
Table D shows the swings in consumer attitudes over a given year. Each year since 2013, the annual average index finished higher than the previous year. March of this year saw confidence dip slightly below March 2017 and March 2018.
Historically, consumers appear to be most confident in the third quarter of each year, and the least confident in the fourth quarter. The average confidence level from 1970 to 2018 was 94.1 in the third quarter, compared to 90.9 in the fourth quarter (E).
Consumer Confidence and Economic Indicators
In a sense, the CCI is a lagging indicator in response to several economic catalysts, among them the health of our jobs market, growth in wages, and the GDP. Confidence tends to fluctuate more strongly than actual economic data. As shown in Table F, after a kneejerk reaction 2007 to the bottom of the Recession in 2009, Consumer Confidence tended to mirror the growth in personal income and the rising value of goods and services with the CCI responding more sharply to economic downturns.
During the Great Recession, the number of employed U.S. workers peaked historically in 2007 at 138 million workers, but dipped 4.5 percent before bottoming out in 2010. Since then, the number of employed workers has risen by 14.4 percent – roughly 1.8 percent a year from 2010 to 2018, with growth continuing in the first quarter of this year to a total of 150 million employed workers in March.
Meanwhile personal income and the GDP fell only slightly during the recession but quickly gained momentum after 2009 – personal income increasing 46 percent and GDP by 42 percent.
Consumer Confidence and Goods and Services
Consumer Confidence is perhaps the prime external driver of consumer spending. Population and household formations form the base for growth in spending; however, Consumer Confidence drives demand, especially when it comes to durable goods. Table G shows the indexed growth of selected products. Note: Data for the first quarter of this year was not available at press time.
New Motor Vehicles follows a similar trajectory as Consumer Confidence with personal consumption dropping dramatically from 2007 to 2009 (down 29 percent) before growing by 71 percent from 2009 to 2018. Also taking a nose dive of 15.8 percent in 2009, consumption of Furniture and Home Furnishings items has since continued an unwavering climb – up 44 percent by 2018. Since 2017, however, spending on Furniture and Home Furnishings has not kept pace with the rising confidence levels. After peaking in 2008, the Video and Audio Equipment industry has declined and remained flat with a slight increase from 2015 to 2018 of 5.9 percent.
Consumer Confidence has a lesser impact on non-durable goods, which tend to avoid the peaks and valleys of confidence swings more so than durable goods. As shown in Table H, consumers may slow non-durable purchases like food and clothing, but only significantly during periods of extremely low confidence. Gasoline and other motor fuels tend to follow a different pattern based on price, availability, and seasonal changes in demand.
Similar to non-durable goods, consumer spending on services did not show massive declines in consumption during the recession despite the plummet in Consumer Confidence (Table I). Since 2009, consumer spending on healthcare, eating out, and foreign travel has skyrocketed. Healthcare spending has increased by 60.7 percent since 2007.
Spending on eating out and foreign travel both dipped slightly in 2009, but have since grown by 53.9 percent and 85.2 percent, respectively.
Consumer Confidence and Housing
The other piece of the consumer spending pie is housing, especially new home sales. Economic conditions drive the homebuilding industry and once building slows, it takes a while for housing starts to catch up once the consumer starts to regain confidence. As shown in Table J, Consumer Confidence has well exceeded new home sales and housing starts – surpassing both in 2013. Due to low inventory across the housing industry, consumer spending on new homes cannot keep with demand and the positive economic outlook. Indications in the first quarter of this year show stronger new home sales, but a disappointing period for housing starts. Meanwhile, existing home sales for the first two months of this year are still down 3.9 percent compared to last year even though February sales are 11.8 percent over the previous January.
Consumer Confidence and the Future
How high can Consumer Confidence go before a downturn in the economy? Ten years out from the last recession, many economists are predicting the next one. Figure 1 paints a daunting picture of the pattern of high Consumer Confidence followed by a recession. At an index of 140.1, 2000 was the most confident year on record before plummeting down to 78.6 by 2003. After climbing back up to 105 in 2006 and 2007, the U.S. experienced its least confident year on record with an index of 45.2 in 2009.
According to a February survey from the National Association for Business Economics, half of 280 business economists think a downturn in the economy will occur by the end of next year and 75 percent believe the U.S. will be in a recession by 2021.
There are many advantages that come along with solid wood products, like each product’s unique character or ease of maintenance to name a few. But most notably, wood is known for its longevity, which alone is a point of product differentiation from engineered wood alternative furniture, and places solid wood products in the high or premium quality category. Consumers have begun to rediscover their taste for these durable products and appreciate the quality and fine craftmanship. “Demand for American made hardwood furniture is on the rise,” says Ivan Keim, of Abner Henry Fine Furniture. “We enjoy providing designers with options to give their clients what they want. High end consumers want it the American way, which is quality that will last and is a one of a kind piece.”
Many solid wood manufacturers are quick to note another point that is ever important to today’s consumer: a fresh update. “Over the last few years,” says Luke Simpson, president and CEO of Durham Furniture, “our dealers have resoundingly shared with us that consumers are looking for solid wood furniture that has traditional bones, yet is updated for today.” Speaking on his featured product for the category, he notes that, “The Prominence [collection] hits the mark with its sophisticated silhouettes which are updated with contemporized finishes and hardware for today’s consumers.”
The thought is echoed by Charles Curry, vice president of sales and strategy for Simply Amish, “One of the biggest challenges of having the name Simply Amish is being stereotyped stylistically.” He says, “It’s fun to offer a collection [Elroy Bedroom] that hit a little design groove, that makes consumers smile, and that sells!”
With the rising demand for solid wood pieces, consumers were happy to chime in on their preferred tastes for a FurnitureCore survey (developed by Impact Consulting Services, parent company to Home Furnishings Business). When asked, “Based on your most recent bedroom purchase, why did you choose a wood bed over an upholstered bed?” an overwhelming majority (62.75%) of the consumers polled reported that they simply preferred the look of wood. This was followed by 21.57% noting their concern that an upholstered bed would become dated quickly, and 9.8% were concerned about the quality of an upholstered bed. These concerns are answered directly by what solid wood manufacturers have been offering all along— timeless, durable classics designed with the consumer in mind.
As a result, when Neil MacKenzie, vice president of marketing, arrived at Universal four years ago, it was a company that was already very much in transition. His role since coming on board has been to help define the emerging Universal reputation and experience.
"They had already done a lot under Jeff Scheffer direction to really up their game from a product standpoint, but there were just a couple more dots that needed to be connected," he said. "I think now, we're pushing the envelope in redefining the experience for everyone—designers, retailers and the end consumer. We want to be the brand that inspires."
MacKenzie recently sat down with Home Furnishings Business to discuss the transformation of Universal Furniture. Read further as he share's his thoughts on Universal's key marketing strategies and partnerships—including the debut of the Nina Magon collection.
Q: How is Universal Furniture using marketing as a competitive advantage in the marketplace?
A: We're obviously promoting and supporting our brand in the marketplace to a number of different customers, whether that be the end consumers, designers or our No. 1 customer—the retailer. So there are a number of different audiences, and my belief is that if you treat everybody like the end user, I think that's a better way of getting your message across. Because at the end of the day, I think everybody is a consumer of things. But then there are little components of that messaging that would be more tailored to who we're talking to. They can have very different needs, even though they're similar at the end of the day.
Email marketing and social media are probably the two strongest tools we have right now. And we have a defined content strategy. We're planning six to eight months out, as if we were running a magazine. This way we can lead into the Market launch and the marketplace launch.
We're also heavily invested in photography. Of course everyone in the industry relies on photography, but we've refocused to be more on brand with who we are. And, ultimately, we revamped our approach to who Universal is. It was previously very B-to-B centric. When I was getting started here, the concept was "good, affordable, smart design;" my wife said to me, "Why is it just good?" I thought that was smart. And while that slogan is still at the ethos of what we do as a manufacturer, we've also surpassed that.
We have gone from just offering casegoods to now offering upholstery—so now it's more of a whole-home approach. So we kind of rebranded and under this mantra of "explore home." We were making a lot of changes on the back end, so for us it was how do we change the front-end story. It was through marketing that that facelift occurred.
Q: What kinds of marketing tools are you currently providing dealers, and which are they finding most successful?
A: We do a lot of educational forums during market. So we have probably six or seven talks, and we'll bring in and partner with different designers, bloggers—you know, media people, if you will. We also put together toolkits for retailers to tap into and leverage our imagery and video footage. We want to make it super easy for them, and we've been trying to get more involved at the store level to make it easier for them.
The other thing that has been helpful is designing the spots more for social media and relying less on TV spots. So we have these 15-, 30- and 60-second spots where they can just drop their logo in at the end and have something they can use as easily on Instagram as in the store.
Q: What is your vision for your licensed collection initiatives? And how would you say licensed collections are helping you extend your brand?
A: I think it's a fine line when you're doing these. You don't want to erode your brand equity in the process, which we've done a lot of work to build up. These partnerships need to support our brand, not take over what we're doing. Our goal isn't to become the house of brands, were it's like we're renting all these partnerships. But there's certainly some more room for these initiatives, and really each one is unique and presents different opportunities. Certain things pop up that make sense and create a niche for us and our retailers. So really, it's how they fit into our overall vision.
Q: What is your process for selecting licensing partners? For example, what made you choose to partner with Coastal Living and Nina Magon?
A: When considering a partnership, the first thing we always ask ourselves is, "will it bring with it a lifestyle that somebody wants to live?" If it's just name, that's not necessarily bad, but that's not what we want. We think the lifestyle approach is an easier way for us to go because it fits in with who we are as an approachable, livable brand. But we do address a spectrum of lifestyles, as you can see with our Costal Living and Nina Magon collections.
With these two collections, we have two very different entities. Costal Living is a magazine entity that has millions of followers and consumers at many different levels. So being able to partner with a company like Meredith with a brand like Costal Living is a very unique opportunity for us, and we've tried to leverage that a number of different ways, on behalf of the retailer, to drive people into stores.
With the Nina Magon project, we think of it as more of a design collaboration, and the scale of it is much different. She has a very strong point of view, and it's very fashion-forward, aspirational living. Plus, she has an expanding audience, which is exciting. I think with both partners, we have approaches that are authentic to who the partner is, and each brings us a much different look.
Jeff [Schaeffer?], our president, always says, "We'll listen to everyone, because you just never know." And we've met with some people where first we were like, "oh, that will never happen," but then we started talking with them and thought, "hey, this could actually be a very big deal."
Q: In recent years you've developed a number of programs at Market and throughout the year to cultivate your business with interior designers. Can you tell us more about your vision for this segment and how these marketing initiatives are going?
A: I think for us, our first big initiative was moving this showroom downtown. That was our way of literally being on the map for designers to know that we're here to do business. We also launched a program for interior designers. That's when they began to see this very wide spectrum of options, whether it be for, you know, the different rooms of the home or, frankly, just the different style categories we execute. And then supporting that is that when they work with us, they can get it all pretty quickly from one resource.
We also have no order minimum, so it's very easy for them to get started with us and not feel like it has to be a massive, upfront investment. Our goal is to be the easiest company they can transact with.
Then, at Market, we have a learning center initiative to engage designers. They can come over here and listen to a particular speaker or take a CE course. We also have a designer-only lounge for them. We're partnering with Krypton and Moore & Giles to design a space that includes WiFi, a bar, food and smoothies, an "unplugged" area, a beauty lounge for touchups, pop-up stores, and probably much more. We hope they'll see it as a hub for them during Market, so we're letting them know they can use us as their basecamp throughout the week. We certainly understand that they'll be shopping other places as well, but our hope is that they will want to start and end their days here with us.
Many of my discussions with retailers are around the lack of traffic and resulting lack of customers. There is a search for the best way to advertise, best way to present the merchandise, best selection, and best on and on. Are we making it too complicated? What happened to the times when you sold Mr. and Mrs. Consumer just like you sold their parents and sometimes their parents? What caused this commitment to purchase?
I realize that as the industry moved from mom & pop stores with the owner at the front door to multiple stores with professional sales managers there had to be a loss of that connection. We have lost the merchant class that prided themselves on maintaining that relationship.
In presentations, social media is touted as opening up communications connecting the world, but what about the furniture retailer and their customers?
But back to my discussions with retailers—the first step is to simplify the discussion. For example, let’s take Virginia Beach. How many households? 650,000. What price points do you sell? Upper/Premium. Primary customers? 35-65+ / $75-250k = 195,000 households. What psychographic clusters (lifestyles) have you best attracted? About 80,000? How many of them are your customers? Do you sell at least every eight quarters? 16,000. Now, how do you touch everyone of these consumers, 3x per year—without “selling” them—to remind them that you can assist them in creating a beautiful home? It’s fairly easy to get down to one on one, isn’t it?
Why bother? Simply put, this consumer household represents a revenue stream of $45,000 over their lifetime. For every $1.0m in revenue, you need 1,000 customers that consistently buy from you. The following are the statistics.