Monthly Issue
From Home Furnishing Business
February 21,
2017 by Jane Chero in Business Strategy, Industry 
By Tom Zollar
Our issue themes for the first two months of the year, merchandising and advertising, play a major role in how well you do with the potential customers that enter your store. In this column, we are most focused on the third element in that process, the in-store experience provided by the sales staff. This ultimately delivers the results that we measure as closing rate and average sale/ticket. We have previously discussed the fact that training selling skills and coaching them can have a positive impact on closing rates, but we have not spent as much space addressing average sale/ticket. We have discussed its importance and some of the business dynamics that contribute to it, but I do not believe that we have specifically addressed ways to drive improvement to this extremely important number.
The good news is that it has been growing all by itself over the past decade rather nicely. We can probably take a little credit for that, but not too much, because for the most part, that has been more a result of the changes the consumer has made than to our efforts in the stores. They came out of the recession ready to buy and as the they have aged, Millennials, Generation X and others, have moved up to better goods, custom orders and lifestyle driven decisions that tend to lead to whole room/house make-overs. All this was predicted and has come to pass, driving increases in this vital statistic.
Today, better retailers across all product categories are using advanced research to maximize how much they know about their targeted customers. As a result, many are doing a much better job creating advertising that drives these motivated consumers into their stores and using targeted merchandising to have what they want, displayed how they want to see it. The result is that even in some product areas where retail prices have declined, we have seen increases in average sale because the customer is buying more. Our industry most certainly has benefited from this overall trend and the fact that so much focus has been placed on the home by the media and the public as the center of our life.
However, are you just riding the wave here or are you doing all you can do, to push it as far as it will go? Only you can answer this question for your company, but before you do, you need to realize one extremely important fact: you can do a fantastic job of driving in the right customers and having the right product for them, but in the end, it is the sales person that CONTROLS your average sale! They and they alone are ultimately responsible for this result, because it is their skills and desire to maximize the sale that delivers higher tickets. It is their attitude that influences what they do with each customer and when they stop trying to build the sale. Therefore, if you are not doing all you can to hire, train and coach your staff on how to increase their tickets with each and every customer, then the answer to my question is no.
Since it is your sales person who decides when to complete the sale, they are the ones that limit the size of it. Whether they do this in order to move on to the next Up and see as many people as they can, because they lack the skill to develop design/in-home opportunities or just are not motivated to give their all to each customer they meet, it is up to your sales management team to define the individual situation and take the appropriate steps to improve it or replace the person.
As a sales coach, I am often asked which of all the various sales numbers I would target for improvement in the coming year. For 2017 my answer is always average sale/ticket, the amount you actually sell to each customer with whom you successfully connect. Not only is there abundant opportunity for growth with today’s consumers, it is also the easiest number to drive improvement on from a training and coaching standpoint. Much more so than closing rate, which is more tied to people skills in most cases than selling skills. From an owner’s perspective, average sale is also the prime profit driver of them all, delivering more to the bottom line than any other single metric (except perhaps protection closing rate).
So, what can your sales management effort do to drive growth in this critical area? Here is a list of a few areas you need to look at and some activities that would deliver improvement to your average sale/ticket.
Sales Process and Selling Skills
Opening the Sale – The Greeting and the entire process of opening the sale has become the most critical step with today’s consumers. It is here that your sales staff most often makes or breaks the relationship needed to develop enough trust that the customer will share their needs and wants. It is the sales staff that will drive the sale and allow the development of larger tickets. Make certain that your sales people are not moving onto product or discussing business subjects before the customer is ready. Those sales, if made often, become more product than room focused and deliver lower tickets.
Needs Analysis – This is where average ticket development is really centered. The key is training your staff to ask the right questions, at the right time. Low average sales are often the result of a line of questions that is mainly product focused as opposed to room or lifestyle driven. If we concentrate first on finding only the product they seek, then we will miss out on the opportunity to help our customers develop their dream of a perfect room or home environment. Make sure your staff is room/lifestyle focused and not just a tour guide showing product after product to their ups.
Sketching – There is no tool or element in your selling process more important to building average sale than sketching. It is by far the main ingredient in developing both the relationship and knowledge to build larger room and home centered sales. This has been addressed in several previous columns, such as the one from our June 2015 issue, “Sketch to Build Sales”. Read it and make sure your staff is using this valuable tool to the fullest with every opportunity!
Design and In-Home Business Development – We all know that the biggest tickets come from design projects and in-home visits. This does not mean that everyone must be a designer but they do need to be able to recognize customers that need or want that type of service, then direct them to someone else on staff that can deliver it. If your process does not provide this great opportunity, both your customers and team are missing out!
Product Knowledge and Category
Performance
Product Knowledge – Having knowledge of your products and knowing how to use it to drive sales growth is at the core of successful selling in all industries. However, it is not the nuts and bolts, technology based situation we see in computers and other areas that are important to us. It is what the ingredients and look/feel of our products really do for the customer that matters. We must train and coach our sales people to understand that it is the happiness and satisfaction our products deliver that are key to answering our customer’s needs in the home. Make sure your staff is using lifestyle focused vs. only technical, product centered knowledge to excite their clients.
Product Category Sales – In virtually every low average salesperson or store that I have studied, a common cause is inconsistent or poor performance in product areas that drive higher tickets. A store that is under performing on average sales is almost always a low achiever in case goods, premium bedding and/or better goods. This can be caused by a lack of product knowledge, a limited understanding of relative value or a poor attitude towards a vendor/product. Whatever the reason, this is the single biggest average sale opportunity I see in most stores. Make sure your staff understands your good – better – best story in each category and how to sell it. Some sales people will not sell a product because they would not pay that much for it, or they don’t like the company/rep/delivery, or are just too lazy to work a little harder for the sale. Run category and vendor performance reports for your total store and each staff member. Target those that underperform with any category or vendor for improvement. Find out the cause and train, coach or replace each person.
Average Sale Ingredients and Focus
Numbers to Track – Just like close rate and average sales are ingredients in revenue per up, that can be tracked and coached, there are also performance elements in average sales that can be tracked, trained and coached. Here are a few that will indicate how a sales person is doing:
o Items Per Ticket
o In-Home and Design Sales Percentage
o Better Bedding Percentage
o Leather Percentage
o Power Motion Percentage
o TLA Percentage
o Special Order Percentage
o Sketching Percentage
o Personal Trade/Be Backs
Drive Focus with Coaching and Contests – Harry Friedman always said that the only reason to track a statistic is so you can improve it. Every one of the above numbers contributes to increasing average sale in a furniture store. I am sure you won’t be surprised to learn that you have people on your sales team that don’t sell better bedding, don’t waste their time on custom orders, seldom have more than a few items on a ticket, don’t sketch at all, etc. All of them are hurting your business. Find them and fix them. Run contests aimed at each statistic to create focus and drive improvement. A Saturday “Pass the Buck” contest for the Ticket with the most Items on it works wonders!
There are many more ways to improve your average sale and the great thing is that almost everyone on your staff can do it. Even your best people can grow by being more consistent and adding in-home or design skills to their toolbox. The key is to get them focused on it and make sure they are not rushing through customers just to wait on as many ups as they can each day – that is a real volume killer!
February 21,
2017 by Jane Chero in Business Strategy, Industry
By Bob George
I have just completed my semi-annual pilgrimage to the city in the desert, a place created by the power of marketing and, more specifically, advertising. It is somewhat ironic that one of our major marketing events occurs in a place that is our major competition for the consumer’s disposable income – leisure travel. This is the number one answer when consumers indicated where they would allocate disposable income.
I realize that many of the visitors to Las Vegas are business-focused as opposed to vacationers. However, the selection was motivated by the promise of “fun city” rather than a destination to conduct business while having some fun on the side. No one anticipates that intention in High Point even though the Market Authority expends a great effort to provide some diversions.
Why does the consumer pay homage to the glittering strip that most locals avoid? The fact is that it is the “aspirational” satisfaction that the consumer seeks. This is the marketing genius of Las Vegas. There is something for everyone. From the time that one deplanes it is the noise of the slots and the oversized video screens that provide glimpses of the glamour that waits just down the strip. Yes, Las Vegas lives up to its reputation as Sin City, providing access to gambling and adult entertainment. Many may sample the fringes. However, most are content just to be in the presence of the city.
Now what does this have to do with furniture and advertising, the focus of this issue? Simply put, Las Vegas has mastered the art of transporting the consumer for the moment to a place that evokes a perception of escaping the “everyday.” Can we do this for the furniture consumer, spotlighting the excitement of the “reveal” when their customized new living room is delivered and placed in the home? Just read the positive comments on the real time delivery surveys. If we are honest, it is similar to the “James Bond – 007” feeling that we experience when we walk through the lobby of a glamorous hotel or restaurant. That is marketing!
As it is in Vegas, this requires segmentation of our consumers, recognizing that each consumer cluster has specific aspirations. We cannot mix aspiring needs with the more practical needs of low prices in conjunction with long term financing. The consumer group that lives for the “deal” is a small percentage of our target. There are many more consumers that aspire to a beautiful room or a comfortable functional environment. The majority of our messaging, however, is about “What a deal we have that is over by Monday!”
What is the penalty for our not creating that aspirational consumer? A Consumer Price Index of 71 compared to 100 in 2010 shows that we lost $32.8 billion in six years by undervaluing our product in the eyes of our consumer. This is more than double our growth rate. It may be time to consider an industry campaign such as “Got Milk” to communicate our product. I know we tried this 25 years ago and failed because industry leaders could not compromise. Maybe the pain now will overcome our individual egos.
February 21,
2017 by Jane Chero in Business Strategy, Industry
Furniture industry veteran Lorri Kelley became president of contemporary furniture resource BDI Furniture last summer, taking the reins from the company’s founder, Bill Becker, who is remaining with the company as design director.
Kelley, who was executive vice president of sales and marketing at Palliser Furniture immediately prior to accepting the BDI post, brings three decades of furniture industry experience to the job. She recently spoke with Senior Business Editor Larry Thomas and Editor in Chief Bob George about why she took the post and the challenges and opportunities BDI is facing.
Home Furnishings Business: What attracted you to the job?
Lorri Kelley: It was a true honor to be asked to step in and lead the company. I absolutely loved my role at Palliser. We were a fabulous team and I loved every minute of it. Palliser and BDI share a good number of the same retailers, so when I was traveling ... I could see BDI on the floors and was aware of their impeccable reputation. As Bill Becker and I started talking about this opportunity, I was very flattered, number one, and secondly, what was so exciting for me was that BDI had so many great retail partners. When I was asking them about their BDI experience, it was glowing. The remarks that I got from the retailers centered on about how much of a pleasure it is to do business with BDI, how much they respected the leadership, the thought that went into the product development, and salability of the styles. They loved talking about just how successful they were partnering with BDI. That is rare.
I was expecting the other shoe to drop. (laughs). So when I was asking what the company could do better, it was just ‘bring us more product,’ because the product sells. The service is exceptional. The quality is great. The designs are obviously good. And the relationships are good. BDI has that exact same philosophy, so it blended well with my own philosophy on how I build relationships with retailers.
HFB: Has it been a difficult transition to a design-driven company, given that many furniture manufacturers have more price-driven business models?
LK: It really hasn’t been a big change for me. Product design is critically important to the assortment. It certainly has to be product that is well designed with great quality, and the research is done to make sure what you are designing and bringing to market has a purpose and will be successful. So I didn’t really see a major diversion here when I joined BDI. This company is known for its exceptional design. One of its core values is driven by design and sweating the details to make sure we produce a product that is not only beautiful, but its functional and incorporates great technology.
HFB: What challenges and opportunities do you see for BDI?
LK: I think the opportunity is to partner with the right retailers and the right distributors to get the word out about BDI. I believe there are not enough folks who know a lot about the company and how beautiful the product line is, and how successful they can be selling it. We need to look at the business model and continue to expand on the product assortment, while not losing the eye for that great design and function. Getting in front of more retailers is one of the main reasons why we expanded our (High Point) showroom. By investing in a larger showroom -- we got lucky and were able to be right across the hallway so our retailers who had bought from us for a long time knew right where to find us – it gave us an opportunity to expand and give the product room to breathe, and showcase them in the manner that they deserved.
HFB: Do the large number of furniture markets make it more difficult to focus on good design since there’s pressure to unveil new product at every show?
LK: Right now, we show only in High Point, so it does alleviate a little bit of that pressure. In my past jobs, we tried to have something new for each market. It became a real challenge to determine what introductions are introduced at what time. At BDI, we have worked really hard with the product design and development team on implementing a process that allows us be a little more forward thinking, which allows for time to do homework, and make sure the products are brought out at the right time to fit the right opportunities. That process will help us to attack each of those High Point shows.
HFB: How are you addressing the apparent lack of interest in the home office category at many retail stores?
LK: I actually look at that as an amazing opportunity. There have been very traditional companies like Aspen and Hooker that have driven a lot of the office business in the traditional executive office settings with the bookcases and the big executive desk. We’re seeing that consumers, particularly younger ones, and even the Baby Boomers, are shifting away the more traditional styling to something that is cleaner. Gone are the days where you need lots of file cabinets because we’re keeping documents electronically. And as a result, people are wanting work spaces that are better suited for mobile devices or tablets. That provides us with a great opportunity.
I also believe that retailers are beginning to shift into the more transitional to contemporary styles. Actually, one of our most successful office collections, the Corridor collection, I would classify as more of a softer contemporary, even making the statement that it could be defined as transitional. But we do see the beginning of a shift away from the big, home office … into something that’s more modular, certainly cleaner, and takes up less space.
HFB: Do you see BDI expanding into other categories such as bedroom and dining room?
LK: I believe in focusing on your core competencies. I think there are a lot of opportunities for us yet in the categories where we have a leadership role, like office, entertainment, media cabinets, occasional, storage and shelving. I think there’s great opportunity for us to continue to focus on expanding that assortment. We want to continue to maximize the categories where we do have a leadership position. For right now, the team is focused on finding ways to continue to own those categories.
There’s a lot of (new) pieces that I think make great sense at it relates to those areas — such as work tables. Not conference tables, but work tables that still allow flexibility. There are a lot of rooms in homes where you need a nice work surface or multi-function cabinets for basic storage. And shelving, I know that has tremendous opportunities. And for media pieces, we’re still watching what’s happening with electronics. We’re constantly looking at how we can take those media cabinets and expand them to address the ever-changing audio and TV markets.
Additionally, I believe that if you design a cabinet that is beautiful, it can serve many places in the home. So we’re designing cabinets in that credenza category that allows for multiple uses within the home. Maybe you might want to use it as a dresser, or you like more eclectic styling.
HFB: Will there be a lot of distribution issues if BDI expands into more traditional furniture stores?
LK: BDI already sells a lot of traditional retailers. And we do a wonderful business with contemporary stores and small to mid-size independents. I don’t really see that changing. I do think there is a market for a softer, transitional styling -- maybe softer contemporary is a better way to say it -- that might broaden the appeal, but again, I don’t really see a distribution issue. We’re very protective of the brand, and we want to make sure we’re partnering with the right retailers who understand what we do. We’ll look at other opportunities that may come up, but I really see us looking to continue to be important to our current partners.
HFB: Does it present any special challenges being a female CEO in a male-dominated industry?
LK: I started in this business when I was 25 years old. I am just used to … being in an industry that has a lot of men in executive positions. There are a lot of very smart women in our business that are serving in a lot of different roles. A lot of people outside this business don’t understand that (because) it’s still dominated by men, even though women are making the buying decisions.
From my perspective, I have been very blessed throughout my career working for some really, awesome men. If there was ever a hint of (sexism), I never really felt that at all. Never did. Not one time. That taught me a lot. n
January 23,
2017 by Jane Chero in Business Strategy, Industry
By Bob George
In the last year, there has been much discussion about the “last mile,” the delivery of product to the consumer. As the major e-commerce players have used free delivery as a differentiator, the traditional industry has had to respond. But this letter is not about delivery, but what happens in that 30-45 minutes between the sales associate greeting and the close before the delivery.
Obviously, it is important that we close the sale with fewer shoppers coming in and the need to achieve that 35% close rate. The pressure is on.
The question is what did we sell the customer? The focus of this month’s magazine is merchandising, the process in which we create the product that entices the consumer to move from a utilitarian purchase to an aspirational purchase. We are confident that the talent exists on the supply side to accomplish that task.
However, creating the product is only the first step in the process. The sales associates must close the sale. This raises an interesting question – What do we sell the consumer? The answer is not, “Whatever they will buy.”
Impact Consulting has just completed an interesting study focused on the age and income of the consumer who purchases specific price points by major product category. The study covered 500M+ transactions that represented $1.2b in sales from a national sample of traditional furniture retailers.
We naturally assume that the more affluent consumers purchase higher price point products. This was indeed the case 10-15 years ago. However, much has changed, especially since the Great Recession. The matrix above presents the percentage of purchasers by age/income for a stationary/fabric sofa at the $400 to $499 price point. As can be seen from the graphic, over 27% of this price point was purchased by consumers with household incomes over $100K. Must be a lot of basement playrooms!
Scary isn’t it? We obviously are not conveying value to the consumer or the consumer does not perceive value. How do we break the commodity cycle? More interesting findings in later issues.
January 23,
2017 by Jane Chero in Industry, Special Events
Ring In Your 2017 Retail Resolutions
By Tom Zollar
This is the two-year anniversary article for the Coach’s Corner Column and as predicted, 2016 was an exciting and eventful year for our nation, its economy and our customers. Obviously, the election caused a lot of drama and trauma, with many families and friends struggling with each other’s decisions. It appears that the shock to the economy has worn off a bit and the consumers are once again ready to buy products for their homes. We can only hope that the good economic news, such as a seven-year high for consumer confidence, continues and the government does not create any more hurdles than we already have in our path to business growth.
The goal of this magazine is to help our readers navigate these treacherous waters by providing critical information and so they can develop successful strategies for their business. To assist you with that process each year, the January Coach’s Corner article will review the last 12 months of columns to give you ideas about some Retail Resolutions you can create to help your business prosper in the coming year. What follows is a repeat of the positioning statements from last year’s February Resolutions column that introduced this process, plus a listing of the 2016 articles with a brief description of each one.
Most big-time sports teams have an off-season to reflect on what happened last year. Owners evaluate their players, their coaches and management based on the results they achieved. They study their game planning and personnel moves to determine how those processes dealt with the challenges of the last season. When done, they create a plan and set goals for positive change within the organization that will drive performance improvement. Year-in, year-out, the winningest teams are the ones that do the best job performing this process.
In our business we do not have the luxury of an “off-season” for reflection and planning, but that doesn’t mean we do not need to go through the process as much as a sports team does! It is every bit as important for us as it is for them, since historically the most successful businesses are also the best ones at reflecting, correcting and planning. They are always the most prepared for whatever the economy, the consumers and their competitors can throw at them.
Therefore, sometime in the first couple of months of each year, after we’ve gone through the hustle, bustle and distractions of the holiday season, owners, managers and staff need to take time to look back at how they performed last year and analyze what caused it to happen. Obviously you want to replicate or repeat those things that gave you a positive result and replace or rethink those that did not.
Most of you probably take the time to review your sales performance and set goals for performance improvement in that critical area. But do we do enough? A goal is not a plan; it is the result you want the proper execution of your plan to deliver. Many times we want growth and set targets for it without charting a new path to attain them. Einstein is credited with saying: “Insanity is doing the same thing over and over again and expecting different results.” Therefore, in order to get the desired improvement in results, we need to make changes. Selecting what changes to make is a very critical activity, so many just avoid it.
My hope here is to help you with that process. Each month for the past year we have presented you with an opportunity for positive change that will impact the sales side of your business. Each column targeted an area or process that many stores can improve and provided a brief overview of what could be done to make it happen. Looking back at our last twelve issues will give you a dozen ideas that could help you grow your business. Therefore, this “Dirty Dozen” is a great starting point for your planning process.
I recommend you review those that look interesting to you and select at least three to include in your sales improvement plan for 2017. They are presented in the order they were published, but that might not be how you need to approach them. Best to select those that are most important, then prioritize them based on urgency.
1. January 2016 – “Blueprint for Success” – Product knowledge and display are absolutely critical elements in the selling process for your staff. Do they have all the information they need to maximize their sales? When, who and how are new products being introduced to them? This is a great way to increase sales without spending a dime - improve your team’s communication about why something is on the floor and who would buy it.
2. February 2016 – “Retail Resolutions” – This was the first anniversary column that listed the previous 12 Coach’s Corner topics as referenced above. If you have not already gone back and reviewed those 2015 offerings to create your Retail Resolutions for last year, you now have twice as many potential game changing ideas you can look at for this year’s planning process!
3. March 2016 – “Selling Delivery?” – Since the delivery is the completion of the sale, the final touch so to speak, selling it and/or adding value to it, is something that should be part of the sales process. This article presents some points to help you improve how you add value to this service during the sales process.
4. April 2016 – “WOW ‘Em” – The in-store consumer experience is an area where retailers can differentiate themselves and become a true competitor in their market. You have already done something right by enticing the customer into the store. They believe you have what they want or they wouldn’t waste their time coming in. This article discusses a few critical considerations that could help you stand out from your competitors.
5. May 2016 – “Training the Team” – If we have not properly trained our staff to deal with today’s customer by breaking through their fears and resistance to gain their trust, then we will fail! Updated and effective Sales and Sales Management training is the answer for most retailers. So here are some ideas about how the approach, structure and content of your program can provide the best training for your staff to deliver the impact you desire.
6. June 2016 – “What is not measured cannot be changed” – We all tend to focus our goals and coaching efforts on total sales volume. However, the major problem with focusing on total revenue is that it is the end result of our efforts in so many areas within our business. Unfortunately, it is virtually impossible to improve a result if that is all you focus on! You just can’t “Coach” a result. You need to break it down into the individual factors that deliver what you want. This column presents some ideas about that process.
7. July 2016 – “Furniture Store Evolution and Tomorrow’s Leaders” - This column discusses that fact that given the proliferation of promotions, the commonality of product and the ever-growing consumer demands for service excellence, our systems, processes and facilities will need to keep pace with all the competitors, and so will your people. The key to that happening is state-of-the-art management skills and leadership. How do we develop them?
8. August 2016 – “Tracking the Sales Power of your Advertising Efforts” - Most retailers look at their sales metrics as only giving them the results of their selling effort. When in reality, virtually any sales report also provides great insight into how your advertising is delivering sales. This article looks at ways for you to use some existing sales metrics reports to help you improve the power and focus of your efforts in that area.
9. September 2016 – “How Can the Internet Support and Enhance your Selling Effort?” – Probably the single greatest impact on the entire retail landscape since the turn of this century has come from the introduction, growth and evolution of the Internet as both a research/educational tool and retail distribution channel. Here are some ideas on how to use it to help us instead of hurt us!
10. October 2016 - “Avoiding Some of the Pitfalls of New Technology” – Sometimes in our excitement and desire to embrace new ideas, we rush forward without properly considering if it is actually the best thing for us to do. Other times we might not have the discipline to properly implement a new program. This article discusses how to reduce the possibility of having an unintended negative result from bringing innovative new ideas, systems and/or processes into your selling organization.
11. November 2016 – “Two Opportunities for Improvement with Today’s Consumers in Our Stores” – We all agree that the consumer entering our stores today is far different than the ones our industry served 20 years ago, yet many of our staff are still using the same approach to selling them that they learned way back then. This column presents the two biggest things we need to change in the selling process to be more successful today.
12. December 2016 – “Future Focused” – This article is a great preparation tool for the resolution process that this current article presents because it talks about “How to Plan for a Better 2017” by setting goals and creating an Action Plan in all the areas that impact your sales success. Read it before you begin your planning and resolution setting process!
If you need any further advice or help with your plan or these “projects”, please feel free to contact me at: tomzollar@impactconsultingservices.com
You can find the Home Furnishing Business archive of past issues at: http://furniturecore.com/Default.aspx?tabid=676