Stores that provide leadership & training attract and retain better salespeople
Recently I was reading an article in a national financial magazine. The subject was the abundance of good jobs awaiting this year's college graduates. The focus was on those graduates with liberal arts degrees, which at one time were considered not to be the best entryway to business. Now, it seems, as many as 40% of these graduates start in jobs they're satisfied with at $25,000 to $35,000, and 10% more start at twice that. One study places the average starting salary for this year's graduates at $28,875, up 6.5% from last year.
While the unemployment rate nationally is at around 4.7%, for college grads it's as low as 1.9%. All of this leads me to my main point. In the financial magazine's article there was a startling statement that went something like sure, there'll always be the occasional furniture-store clerk job, but most of these graduates have jobs they're satisfied with. The author picked furniture stores out specifically as an example of unsatisfactory employment.
I was on an airplane, so I had time to think about how he could have come to this conclusion. Then it hit me, he probably actually worked in a furniture store at some time in his life and knows, first hand, just what the situation really is.
I'll concentrate here on sales positions, which are where retailers always claim to have the most difficulty recruiting and hiring qualified people. Think about what it means to be a "qualified" candidate for a sales position in the typical furniture store.
An acceptable candidate needs strong communications skills, an appealing personality, the ability to learn quickly and to retain thousands of details regarding all of the products in the store. Sales candidates need to be internally motivated to succeed and should understand that your customers are assets for which they are accountable. In many stores, salespeople must have design skills, or at least an understanding of colors and style, to deal effectively with customer needs and to provide complete solutions. Also, most salespeople must have or be willing to learn to deal with complicated, sometimes user-unfriendly systems.
We expect that salespeople will be able to maintain their customer portfolio in a professional manner, and we often make them responsible for following a customer's order from start to delivery and beyond. All of these are qualities a "good" candidate should bring to the job. Some of these skills can be developed through training, but some, such as interpersonal skills and motivation, must be inherent. The salesperson's role as the store's (and the industry's) point of contact with consumers makes all of these attributes necessary for success.
Our opportunities to hire high quality people are often limited by our desire to hire people with experience. However, the truly top-producing salespeople are rarely looking to change stores. That means that the pool of experienced people consists mostly of mediocre performers - people who couldn't make it in your competitors' stores and who bring their questionable skills and motivations to your store.
We also expect that candidates will accept what is, in reality, a dead-end job. Unless you are a multi-store company with many avenues for personal and professional growth, sales has to be viewed by the candidate as a career position.
Quality of Life
As the reward for all these many skills and attributes, the salesperson will be required to work every weekend, all holidays and some evenings to earn the kind of money, (or, in many cases, less) that is being offered to new college graduates to start their careers. This quality-of-life issue is one of the key reasons that our business is not looked upon as more desirable by job seekers. People, who possess all of the attributes listed previously, do not have to accept the quality of life offered by our industry at the retail level. There are other options that don't require these kinds of lifestyle sacrifices.
Fear of Commission
How many good quality people have turned down job offers you've made because of the uncertainty surrounding commissions paid on delivered sales? What has been your response to this? Too often I find retailers making strange concessions and special deals to hire a person they feel is a good candidate, only to suffer for it later on.
Many salespeople in our industry earn far more than these comparative starting salaries, but my experience tells me that the majority of salespeople are failing to achieve their own personal income goals and are performing below the average performance levels in their stores.
Building Quality Work Environments
To attract and retain quality people, it is necessary to provide working environments where people can enjoy job satisfaction and can achieve their personal and professional goals. Facilitating these objectives should be the key role of ownership and the management team, but it is too often ignored and misunderstood.
There are some key points to keep in mind when seeking to create high-quality, high-performance working environments, but there is one thing that underlies them all - leadership. Leadership is not management; it takes on a far more central role in the nature of the overall environment of your store. It's hard to teach and is more a personal art than a learned skill, but there are some things you can do to provide leadership to counteract the objections people have to working in our industry.
Providing Clear Income Tracks
When I ask new salespeople how much they're being paid, I usually get answers such as "5%". When I ask how much money they'll make this year, the most typical answer is: "Well, they told me I could earn $40,000". When I press further and ask about their plan for getting there, I am met with questioning eyes and blank stares. No one seems to care enough about these people to help them develop a clear plan to achieve their goals and to understand how their performance levels will determine what happens.
This magnifies the fear many good sales candidates have regarding commission selling. It all appears to be a crapshoot and they soon learn that for every $40,000 earner in the store there are five people in the low twenties.
To earn $40,000 in a store where the commission rate is 5%, a person would have to generate $800,000 in delivered volume. If your cancellation rate is 5%, this person would have to write $842,000 to net $800,000 in deliveries.
If the average sale in your store is $1,000, 842 sales would have to be written, and if the close ratio is 25%, 3,368 customers would have to be seen annually. This would be an average of 280 per month.
If this represents the actual traffic per salesperson in your store, you have a realistic formula that you can show your salespeople who want to earn $40,000. If the traffic is less than this on average, close ratio and/or average sale will have to go up. The point is that this is calculable for every situation - if you have the numbers. New salespeople can be shown an exact path, based on real, existing performance levels, to achieve their goals.
Using individual historical measurements for the number of customer opportunities (Ups), close ratio and average sale, you can develop goals with them and show them clearly what has to be done to achieve those goals. This is a leadership issue first, and a management issue second.
Develop a Training & Learning Culture
If the training entry on your income statement shows a number less than the trash-collection entry, your priorities are out of line. Training is one of the most important things quality people seek when choosing an employer. They want to learn everything they can to help them achieve their goals and succeed.
Training should be part of your selling culture and should provide both salespeople and sales managers with a coachable process. When performance slips, they should know exactly what to look for and how to identify and then fix the problem. Divide your training program into three parts:
1. Systems & procedures
2. Product & service
3. Selling to customers
Put your entire management team to work as the faculty and develop written training programs for group classes and one-on-one tutoring.
Provide a Coach
With a performance track in place and with training as part of your culture, someone must be there in support of the process every day. Done correctly, sales management is a full-time job, but it is not management that people need. They need help, and this is the role of coaching in the sales management equation. Coaches watch the game being played, provide feedback, measure performance against standards and expectations and provide training where needed. The whole purpose is to reach the goal.
Develop a Culture of Accountability
Make each salesperson and sales manager accountable for the revenue per customer seen. We call this measure the Performance Index and it is, simply, total volume divided by total traffic. Measured by individual, this will provide owners and managers with a clear view of true effectiveness. Monitoring this statistic will maintain the focus on performance necessary for any organization to prosper, grow and attract quality people.
Case Study-Sprintz Furniture Training Manual Pays Big Dividends
At Sprintz Furniture Galleries in Nashville, Tennessee, Charles Sprintz says, "We used to just throw people on the sales floor and hoped they learned by osmosis."
But because the company's turnover rate was uncomfortably high, Sprintz was open to a suggestion from the Shepherd Management Group. The consulting firm wanted Sprintz to develop an employee manual and institute a training program for all new sales associates.
Four years ago, Sprintz put Diane Pearce on the job of compiling a manual and developing a training course, and he says the move has been nothing but positive.
Pearce had to start from ground zero to compile the employee manual because, like so many independent furniture retailers, Sprintz
was an entrepreneurial company that had not paid much attention to documenting its policies andprocedures. "It can seem overwhelming to start this, but if you use a little common sense, it's not all that difficult," she says.
Pearce interviewed the store's department heads for an overview of their work and to understand how the departments interact. She also collected all existing business forms while writing down all of the company's procedures, it's approved methods for taking care of daily business.
She put together a 150-plus page manual that covers everything from attitude and beliefs to order forms and delivery schedules. But this manual is a living document that Pearce updates any time Sprintz changes its internal business rules. That's why she puts it together in
three-ring binders. "Once you've got it in a format that's easily changeable, it's easy to update," she says.The manual is the cornerstone of the four-week training program that Pearce leads new sales through. "You can talk at people all day long, but unless you give them a teaching aid, particularly designers who are usually visual people, it's just going to bounce off them," Pearce says. "Most adults learn by doing."
As a result of all this, new hires at Sprintz stay with the company at least one year, and if they do leave, it's not because of confusion about company policy or direction.
"It's been a tremendous help to us," says Sprintz. "The people coming on our floor now are knowledgeable, trained and ready to make money."