Part 6: What do you do when 20% of your traffic disappears?
Sales Management Magic by Joe Capillo
Alright already! Almost 18 months of tough times for our industry is a little hard to take. This is one of those rare times when most things I thought I knew, and everything I’ve learned in my 35 years of experience in the industry become questionable. That’s because this kind of economic environment is new for all of us and I, for one, am learning that the same old, same old (thinking) doesn’t work here.
Here’s what hasn’t changed: The lady still wants a beautiful home. That need never changes, and we should all keep this in mind as we try to fine new ways to deal with conditions we’ve not seen before and over which we have no control. $4.00 or $5.00 gas isn’t in our realm of control, or even influence. What we can control is how we deal with those customers who still have needs and are still shopping.
In the beginning of this series of articles FURNITURE WORLD readers were asked to consider what they would do if 20% of their customer traffic disappeared? That has been the foundation for most of these articles. If your business is traffic-driven, and you change nothing you do, when traffic declines by 20%, your sales will decline by 20% as well. If you drop your prices through promotions and discounts, but are unsuccessful at increasing traffic, then your sales will decline by more than 20%, and your margins will be lower. This is the same-old-same-old type of thinking.
So what can you do? Here are some suggestions for staying alive, and maybe even doing better, in these tough times:
Give The Lady What She Wants
Take the advice of the department store icon Marshall Field, who had a sign on the wall of his office that read, “Give the Lady What She Wants”. We already know that she wants a beautiful home – so do what you have to do to help her get it from you. But, don’t think that this means simply selling her furniture at a discount or for long finance terms – that’s more same-old-same-old. To really connect to more customers who still are shopping so as to improve your closing ratio on those 20% fewer shoppers, you have to provide those hard-to-sell customers with the things they need – more help.
In other words, you have to change your thinking from furniture, to rooms. You have to believe that our business, furniture retailing, isn’t really about furniture at all. It’s about rooms.
Stay Connected and Bring Them Back
If you truly measure all of your customer opportunities, you know that your store’s overall closing ratio is around 20% of all shoppers. Remember, that’s your average performance level, so you have some salespeople performing over that level, and unfortunately some salespeople performing at lower levels.
You also will know that shoppers who come to you for the first time on a particular purchase project, make that purchase the first time in your store less than 10% of the time. When some of these people return again on the same project, your close ratio will be 60% or higher. Believe this – we all live on be-backs.
If you historically have a 20% close ratio on all customer traffic, getting only one more customer out of every ten to buy will increase your close ratio to 30% - a whopping 50% increase. This is how you make up for the 20% drop in traffic in these bad times. The way you get one more customer out of every ten (10 more out of every 100 customer opportunities who shop) is to get more of them to come back again on the same project. How? By understanding that your business is not just about furniture, it’s about rooms. So find ways to deal with rooms and help people solve problems when you engage them the first time. Provide them with more help than you have in the past (or than your competitors provide) and keep your salespeople attached to these non-buyers with follow up (See previous articles in this “Stay Alive” series posted to the sales management article archives on the furninfo.com website).
Get Sales Managers Out on the Floor
On the floor is where they belong. Our business, our “game” is one of individual performance by salespeople who are, in most stores, the only people who come face-to-face with customers. All of the information regarding our companies, our products, and our services passes to our customers through salespeople. All of us have special things we would say and do if we got to engage every customer who comes to us with a home decorating problem to solve.
More important is that if you are a typical store, all of your revenue is generated as the result of these customer/salesperson interactions. A curve of normal distribution, if you could make one for skill, motivation, communications skills, and intelligence, would show that your sales staff ranges all over the chart from great to awful. Knowing this should motivate you to be very specific in what you want salespeople to do with your customers. From scripting the words you want them to say regarding certain aspects of your business, your store and your products, to observing their behavior from the position of on-the-field coach, you need management presence on your floor – all the time. Another benefit is that customers like having management interaction in big-ticket, highly-considered purchases.
Keep Morale Up
Never forget that if your sales are down, your commissioned salespeople’s earnings are down. The same things suggested above relative to stores overall, also applies to them. This is another good reason to have management involvement on the selling floor because it’s important to place special emphasis on teamwork – all of us working to overcome this economic downturn. Remember this, too: People make your business go, so don’t let great people get away from you for the wrong reasons.
Get Better at Everything
If you’ve been selling pretty much the same way since around 1978, make the necessary changes in your thinking and execution of your selling strategy. Direct your efforts at dealing with rooms and generating be-backs. Measure everything, and use the information to manage better. Get involved on the selling floor – manage like a football coach, on the field, and remember that you have an advantage over the football coach – you can play, too.
Joe Capillo is a 41 year career veteran, experienced in managing and consulting with furniture retail operations. He is also a contributing editor for Furniture World Magazine. He is a contributing editor to FURNITURE WORLD and a frequent speaker at industry functions. See all of Joe’s articles on the furninfo.com website.
Read other articles by Joe Capillo