by David McMahon, PerformNOW Inc.
To compensate for the impact of declining traffic, retailers need to develop salespeople who can close more sales with fewer guests. Using guest productivity metrics is a proven way to do that.
Most retail furniture organizations are experiencing guest traffic decreases associated with double-digit percentage point drops in sales. However, those retailers who have continuously improved their systems and processes since 2021 are doing much better. That’s why, especially in the current economic environment, it’s important for home furnishings retailers to have a plan to make the most of every guest encounter. Maintaining face-to-face guest traffic is as critical now as it was during the housing recession in 2009.
Improving Sales Productivity
This article highlights effective methods to improve guest productivity with a focus on front-line employees. The folks who handle traffic in your operation—salespeople and designers—can make a huge difference in compensating for traffic declines. Here are three observations to keep in mind:
The sales performance of salespeople who have similar levels of experience and training varies widely, from marginal performers to high-earning sales superstars.
- Average salespeople can increase their performance if they are willing to change and can adapt to better systems and processes.
- Well-executed and innovative organizational leaders and focused managers always get better results from their sales teams.
Salespeople who are open to learning and implementing the practices of top salespeople generate more traffic and achieve higher close rates. The net result is greater customer face-to-face traffic, higher sales per guest, higher close rates and better overall sales. High-performing salespeople tend to be among the most successful writers year after year. That’s because they have found ways of working with guests (prospects and customers) that consistently produce results. Here are some commonalities of top writers:
Sales performance is a result, not a measure. That’s why average-performing people need to have access to guiding operational metrics other than just sales performance.”
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Top salespeople make their guests comfortable. Their welcome greeting is refined, genuine and accepted by the majority of the people they encounter.
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They help their guests solve challenges by asking the right questions, listening and understanding. Almost everyone who visits a furniture store is truly in the market to buy. The specific questions top writers ask directly move shoppers toward appropriate solutions. They use sketches, get information about shoppers’ budgets, how their rooms currently look and how their lifestyles will determine how a room is used. They also ask about style preferences and purchase timelines.
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These salespeople present options that are appropriate for each guest. Only by gaining a thorough understanding of a shopper’s situation do they earn the right to present options.
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When a guest accepts options presented by the salesperson, and the sale is closed, top performers explain the next steps. These can be to enter an order ticket or reserve inventory, schedule a delivery, submit a review, complete payment and go over any order status follow-up.
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If a guest is not ready to move forward,a top salesperson presents a different set of follow-up steps, such as scheduling an appointment to review other options, a home visit, or finalizing pricing.
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The best salespeople follow up appropriately with those who buy and those who do not. They do what they say they are going to do. This attribute creates positive word of mouth and generates be-back traffic leading to higher close rates and bigger tickets.
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They touch base with past customers routinely.
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They focus on learning and improving because, just like a business owner, they realize that it is through their efforts that they earn their living. In other words: “They sharpen their swords when not using them.”
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They keep score by knowing, without asking or being told by a manager, where they are in terms of sales for the month.
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Top salespeople are motivated by monetary rewards, recognition or helping people. Whatever the reason, they ARE motivated. It’s hard to teach this behavior.
Using Guest Productivity Ratio
Many top salespeople seem like they were born with selling skills in their blood. That said, average salespeople with good attitudes can become better when provided with proper training in leadership, systems and processes. Sales performance is a result, not a measure. That’s why average-performing people need access to guiding operational metrics other than sales performance. These can include sales per guest, average sale, close rate, be-back percent and one other— guest productivity ratio, which measures the degree to which a guest was served properly. Here’s the formula:
Guest productivity ratio = (# of guests that purchase + # of guests that do not purchase with agreed-upon follow-up) / # of guests greeted.
“For Dennis in the previous example, his guest failure rate is: 15 unsold guests without follow-up / 25 total guests greeted = 60%.”
Average Performer Example
If a salesperson, let’s call him Dennis, sells seven customers in a week and follows up with an additional three, he has 10 productive interactions for the week. However, if he also greets 15 other guests who receive no follow up, his guest productivity rate is poor, equaling seven guests sold + three guests with follow-up / 25 total guests greeted = 40%.
Another helpful metric is the guest failure ratio.
Guest failure ratio = # of guests without purchases or agreed-upon follow-up /
# of guests greeted.
For Dennis in the previous example, his guest failure rate is: 15 unsold guests without follow-up / 25 total guests greeted = 60%.
Assuming Dennis has an average sale of $2,000, his metrics expressed in dollars are:
His weekly sales
= 7 x $2,000 = $14,000
His weekly potential sales
= 3 x $2,000 = $6,000
His weekly lost sales
= 15 x $2,000 = $30,000
These numbers are typical for an average salesperson in the furniture industry.
Elevating Your Sales Game
So how can you use this information to help your average producers become more effective and possibly achieve results closer to top writers? Answering this question is the pathway to gold.
With guest ratios in mind, some ways average salespeople can elevate their game are:
Selling Approach: Require associates to use and practice your organization’s selling approach, which specifies how guests should be greeted, sold and followed-up with. Only the very best managers require their entire sales force to do this day in and day out. Almost anyone can create or copy a selling approach. Execution separates the best from the rest.
Innovative Systems: Use innovative systems to enhance and propel your selling approach. Whether your organization has just a few or hundreds of people interacting with guests, technology has proven to add value by ensuring close touch with prospects and customers. Without technology, it is impossible to ensure that all non-sold guests receive a timely follow-up message. It is also impossible to ensure that customers get sent relevant and timely thank you, order status, delivery scheduling, accident protection and past purchase follow-up reminders. Consider using data-integrated CRM automation to automatically send messages from salespeople to their guests.
Systems Processes: Implement processes around your systems. When using automation, salespeople need to be aware of the messages that are being sent out on their behalf. Processes need to be in place for personalized follow-ups of value. For example, if a guest does not buy right away, but there is agreed-upon follow-up, the process could look like this:
- Salesperson enters customer data into the system, for example, full customer name, email, mobile number, photo or scan of a sketch, other images, address, quote, notes on the potential project, reasons not purchasing and guest lifestyle information.
The more data entered, the better the chance to provide relevant and successful follow-up.
- An automated thank you is sent via email and or text.
- The salesperson gets an automated reminder to contact the prospect with a value proposition within three days.
- The salesperson suggests a booking date and time to revisit with the guest using a digital calendar.
- Calendar automation confirms the appointment and keeps track of it for both the guest and the salesperson.
- The prospect returns to the store and makes a purchase.
- The sales manager routinely reviews follow-ups completed, not completed, appointments made and the results.
Inspect What You Expect
If you like the idea of using the guest productivity ratio, you must measure it every day, every week, and every month. To use it effectively, your sales force will need to live by it. If you feel that you cannot sustain this level of tracking, it will be unlikely to work for you. However, those who use it properly perform better than their competitors with the guests that they engage.
Using guest productivity ratio, “XYZ Furniture” achieves systematic follow-up resulting in additional be-back traffic, a higher close rate and higher average sale. Using the same weekly example from the average salesperson named Dennis in the previous example, here is what could happen:
Dennis ups his game. This time he sells seven new customers over the period of a week and three additional guests who returned to purchase on their second visit. That’s 10 productive sales interactions for the week.
He has agreed to follow-up with an additional five guests and has 13 unsold guests who do not receive any follow-up.
Using an average sale of $2,000 for new guests and $2,500 for be-backs, here are his results:
His weekly sales from new guests = 7 x $2,000 = $14,000
His weekly sales from returning guests = 3 x $2,500 = $7,500
His weekly total sales = $21,500
His weekly potential sales = 5 x $2,000 = $10,000
His weekly lost sales = 13 x $2,000 = $26,000
His guest productivity rate is: 10 guests sold + 5 guests with follow-up /28 total guests greeted = 53.6%.
His guest failure rate is: 13 unsold guests without follow-up /28 total guests greeted = 46.4%. This is a sizable improvement; however, top businesses are setting the bar much higher, reaching for greater than 65% guest productivity and less than 35% guest failure rates.
Coincidentally, this second example is in line with how million-dollar writers in retail furniture store operations typically perform. They generate more returning traffic using follow-up systems and processes.
Conclusion
To reduce the impact of declining traffic, retailers need to find and develop salespeople who can close more sales with fewer guests. This can be accomplished by using innovative metrics, technologies and follow-up processes. Success also depends on having a management team that champions innovation, leads people and holds them accountable.