From Home Furnishing Business
How to Drive Average Ticket Sales and Profit Growth in 2017
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
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!