Getting Beyond Your Numbers
Volume 144 NO.4 July/August
Furniture World Magazine
Over twenty years ago Tom Peters (In Search of Excellence) told our industry that our problem was that we sold too much furniture and not enough dreams. We didn’t listen. He also said that we don’t do better because we set our goals too low. We didn’t listen. Around that same time, Steven Covey told us all that “Sometimes, the way we see the problem, is the problem.” (Seven Habits of Highly Effective People). We didn’t care.
By Joe Capillo
Around that same time I was doing a lot of research about how people buy furniture, but was stymied (because there was none) until around 1997 when a study funded by Lexington Brands helped me understand what was happening in our business and explained why we suffer from 20% conversion rates. I always wondered what happens to those 80% (or so) who don’t buy and finally figured it out after studying retail furniture store sales metrics for an extended period.
A friend of mine used to say to salespeople: “The be-back bus doesn’t stop here.” This was in response to salespeople’s response when asked about their customer who just left without buying – “Oh, they’ll be back.” We didn’t listen – but we should have.
I began tracking customer traffic by salesperson in 1976 in Norwalk Connecticut because Nathan Ancell, the founder of Ethan Allen, told me that, as a store sales manager I had only two things to worry about: Close Ratio and Average Sale. He said: “We’ll take care of everything else.” And, they did.
Way back then, we built our business on high-service selling. Our main selling purpose was to sell house calls and room design to our customers. The early Ethan Allen Gallery stores were set up in room settings. Bedrooms looked like bedrooms, dining rooms like dining rooms, and living rooms like living rooms. There were few “lineups” and a lot of walls. Our customers loved it because they could “see” how their room might look all decorated up.
What Does Our Furniture Customer Want?
We knew something then that has woven through all my subsequent work. There’s one thing she wants in the end: A beautiful home. And, along the way, beautiful rooms – one room at a time. This hasn’t changed since then, this foundational need for feeling good about their home, their “nest’, their family place, or even just their personal place, and their ability to make it happen.
What Does She Want From Us? Simple: Help getting there. But first, there has to be a common, shared understanding of those goals, those needs.
What Do We Do? We mostly try to connect shoppers to products. “Oh great, a new bedroom set! We have lots of them for you to look at. Do you have a particular style in mind? Blah… blah… blah…”
The result is that many customers tell us they want to “browse” or will say “I’m just looking for ideas” and, in many cases, that’s the end of the interaction between the salesperson and the prospective customer.
In other cases, there is a higher-level interaction involving product presentations, that still don’t result in a sale. They result in things like: “Well, I have to think about it” And “Thanks, we’ll be back.”
For the most part, we deal with trying to connect people to products. What we should be doing is connecting ourselves to their projects and to them as people first – then helping them get what they really want: a beautiful room!
Forty years ago we learned that the “problem” wasn’t in our store or in our products. The problem was in the room – in her home, and if we didn’t have any knowledge of that room, we were flying blind. Our customer knew everything about her room, and we knew nothing – so, we had to find a way to get the “picture in her mind” out of her mind and into ours. This led to my favorite selling tool – sketching the room – which allowed us to connect to both the person and to the room (the project) where the “problem” really lies. Then, we can achieve our “noble purpose” of helping our customers achieve their goals for beautiful rooms and homes that make them feel good.”
Today, with the availability of room planning software, it’s possible to take the idea of sketching the room to a new level and to involve customers in the process, thereby enhancing the interpersonal relationship and “connection” to the customer in the role of “problem solver” or partner in achieving the final goal – that Noble Purpose: Enhancing our customers’ quality of life.
The Idea of A Noble Purpose For Furniture Stores
I have now encountered the work of Lisa Earle McLeod whose idea regarding the importance of basing all selling initiatives on your Noble Purpose instead of only “the numbers” and I can put all of my work experience into connecting the past to the present. In short, the Noble Purpose that lies inherently, but usually unacknowledged, in your company culture should become the focus of your company’s customer engagement strategy.
McLeod shows how the Noble Purpose gives salespeople some things you don’t give them – the realization that:
• Their work matters to their customers.
• There is something beyond the numbers to be acknowledged.
• Salespeople add value to their customer’s lives by offering products and sales services.
The outcome is that when you concentrate on something other than sales and profits, you get more sales and profits. The other good outcome for salespeople is that when they sell more, they earn more and the quality of their work, and their lives, improves.
Dealing with the Sales Metrics
This has been my “thing” for over 40 years: measure everything and use the numbers to help you know what to do. This goes back to that early assessment by Mr. Ancell regarding close ratio and average sale. I knew that in order to “manage” those things, I had to know their values, and guessing wouldn’t help me make the right decisions. I also knew that, as a retailer in a one-to-one personal selling environment, I had to know all these metrics by individual salesperson – because virtually all my revenue passed through them on the top line on its way to the bottom line.
There are many ways available today to track this data including some very sophisticated software, but even if you have to do it by hand, it’s worth doing. Here are some reasons why for you to consider:
- Every group of salespeople has a range-of-performance among the salespeople in the important metrics: number of customers, close ratio, average sale, and revenue-per-customer served. In my experience with groups of 6 or more people, there is a 15% improvement in revenue by simply bringing your below average performers to the average level in each of the two metrics: close ratio and average sale.
- If you have a salesperson with a 30% close ratio and another with an 18% close ratio with a similar variance in average sale, are the customers you provide to the lower performer receiving the same level of service as those who work with higher performer?
These are just two good reasons to use your metrics to manage your business, but this only has to do with our Noble Purpose insofar as they affect the level and nature of service provided to every customer.
Elevate your thinking and your vision to truly include the things your salespeople actually do for your customers when they help them have more beautiful homes, and rooms, and build stronger, more long-lasting relationships. You’re going to need this going forward.
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