Home » Building Business » Page 3

Category: Building Business

The Right Measuring Cups

When the recipe calls for 1 cup Vegetable Oil do you reach for a teaspoon? When it says 16 ounces Sour Cream do you grab a scale? Of course not. Sure, you can get close with those tools, but it won’t be as accurate nor as handy.

Yet we do that in retail all the time. We use the wrong tools to measure our business.

For instance, most businesses look at Sales Growth as a barometer of their business health. If sales went up, business is good. If sales went down, business is bad.

The problem with that tool is that it doesn’t take into account what happened in your local marketplace. If your sales went up 5% but your market grew by 10%, then your business is not on the right path. If your sales were down 2% but your market shrunk by 5%, you captured a larger share of your market.

You have to know how to calculate Market Share to truly know the health of your business.

RECIPE FOR MARKET SHARE

Market Share: your percentage of the Market Potential for your trade area. Calculate Market Potential by finding the Annual Sales for your entire industry, divide that by the population of the United States and multiply that answer times your own trade area population. Then adjust for income levels. The math looks like this …

  • Industry Sales = $20.2 billion
  • US Population = 325 million people
  • Your Trade Area = 150,000 people
  • US Average Household Income = $59,039
  • Your Area Household Income = $63,026 (6.75% higher than US average)

$20.2 billion / 325 million = $62.15/person

$62.15 x 150,000 = $9.3 million

$9.3 million x 1.0675 = $9.9 million Market Potential

(Note: that number can be adjusted again for one other factor dependent on your industry. For instance, if you’re in the toy industry you can adjust for the number of children in your area compared to the national average. If you’re in the boat industry, look for something along the lines of percentage of boat owners nationally and in your area.)

Figure out your percentage or share of that market and whether it is growing or shrinking. That will be a more accurate measurement than your top line sales.

CUSTOMER SERVICE MEASUREMENT

How do you measure something as abstract as Customer Service? One tool is Units Per Transaction (UPT). While several factors can influence this number including your merchandising skill of impulse items and whether the items you’re selling have more or less accessories than last year, the largest influence on this number is your sales force. Are they taking care of the customer properly? Are they completing the sale? Are they making the customer feel welcome, comfortable, and happy? Are they building trust?

The calculation for UPT is simple. Take the total units sold during the year and divide that by the number of transactions.

75,000 units sold / 22,000 transactions = 3.4 Units Per Transaction

If that number is going up, your team is doing their job.

Another measuring tool that is slightly harder to quantify, but equally effective in telling the true tale of your customer service is Repeat and Referral Business.

Repeat Business is a sign of Good Customer Service. Referral Business is a sign of WOW Customer Service. Your service was so good they had to bring their friends back with them. If you’re tracking transactions by name in your POS, you’ll know your Repeat Business. You can also ask when you enter someone new into your POS how they heard of you. If they say “from a friend” mark them as Referral.

The ideal business has a majority of their customers as Repeat and Referral. The raw number of Repeat and Referral Customers should hopefully be growing and should be a larger percentage of your traffic. The larger, the better.

MARKETING AND ADVERTISING MEASUREMENT

Sure, you can run a coupon or a Call to Action in every ad to see how many people it drives to the store. But if you have been reading this blog or following the wisdom of people smarter than me like Roy H. Williams or Seth Godin, then you know that kind of advertisement leads to short term gain and long term pain.

One other way to measure the effectiveness of your advertising is from your Repeat and Referral Business. Add those two numbers together. The remainder of your traffic is your marketing-driven business.

Yes, some of that traffic is based purely on your location. Your location is part of your marketing. Your signs on your building are part of your marketing. Your parking situation is part of your marketing. Your advertising is also part of your marketing. If the raw numbers of people coming through your doors for the first time and not by Referral are growing, your marketing is working.

Which part of your marketing is working? That is a little bit harder to measure. As famed retailer John Wanamaker said, “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.”

At least you have a tool to see if it is working in general. (Check the Free Resources for Making Your Ads More Effective to figure out how to make all halves work.)

When you use the right measuring tool, you get a better result. That’s true for cooks, bakers, and small business owners. 

-Phil Wrzesinski
www.PhilsForum.com

PS Before you plan for 2019, you really need to know what happened in 2018. Even if your top line sales rocked the world and your bank account is fatter than usual, if your Market Share decreased or your Repeat and Referral Business fell off, you have important issues you need to address sooner rather than later. I’d love to help you address those issues.

Looking Back at the “Top” Ten Blog Posts From 2018

Somewhere around the first of the year a lot of writers like to publish their “Top Ten” list of most viewed posts from the previous year. Wouldn’t it be smarter to post the least-viewed posts, the ones most people missed? Give people a second-chance to read your wisdom. As it is, just because a post is the most-viewed doesn’t make it the best.

This year I’m going to give you a variety pack of posts from 2018 and why you should read them (again).

The post you didn’t miss: Yes, I have Heard About Toys R Us. This was the post with the most views last year. I made a prediction in the PS of that post that has turned out to be right. Go read the post to see what I predicted.

The post you missed: Few Things Go as Planned. This was the post with the fewest views. I wrote this at the beginning of the year to remind you to plan, but to also understand that things don’t always work out the way you plan them and that you have to be able to adjust on the fly. Ask yourself, “Did 2018 happen the way you planned?” I’m betting right now your answer is No. Go read this post.

The milestone you didn’t know about: Christmas Quick Tip #3 – Sign ‘Em Up Before Checkout. This was post #1000. To some people, those numbers are kinda cool. I didn’t make a big deal about it then because it was the busy holiday season and those posts were designed to be short and sweet. by the way, this isn’t just a Christmas time tip. It is a smart business practice.

My favorite post of 2018: Five Proven Recipes. In this post I give you Paul Harvey’s recipe for a backyard mosquito spray, an all-natural weed-killer that works (if you spray regularly), and simple, tech-free recipes for raising the bar on your Hiring, Advertising, and Customer Service. Sometimes the simple ways are the best.

The post that got the most social media interest: So You Got a Bad Review? This post had the most comments on social media and was the first post of mine that was “shared” on LinkedIn (a new feature they’ve added). Best of all, it had no negative reviews, lol. If you’ve had a negative review, you might want to read this.

The best question you will ask your staff all year: How to Learn From the Best. This was actually the second least viewed post, yet the most telling about where you stand in your local retail marketplace and what you need to work on the most. Ask your staff this question and listen to their replies.

The post I wished you had commented on: This “Free” is Really Free. The site stats counter tells me I get hundreds of downloads of the different Free Resources each year. I’d love to know how you’re using them and what success you might be seeing because of them. Go ahead and leave some comments there (or here).

That’s your lucky seven posts you should have read (and hopefully did). I’m going to leave three more links in the PS below for the adventurous souls among you to round out the “Top Ten”.

Happy New Year!

-Phil Wrzesinski
www.PhilsForum.com

PS I triple dog dare you …

How to Use Humor in Your Advertising the Right Way

Quit Making it So Hard for People to Buy From You

“Customer Service” is Dead

Invest in Your Education

Yesterday I gave you seven things you could do with your money when you have a windfall because of a better-than-expected season. Here is one more thing to do with that extra cash …

Invest in Your Education.

Invest in making yourself and your team smarter and better. Invest in training to equip your team with better tools for selling. Invest in classes that teach you more about advertising and marketing. Invest in programs that help you better manage your money.

“Always invest in this thing (your brain).” Darius Foroux

If I were to put “Invest in Your Education” in the priority list from yesterday it would solidly be #3 right behind Cash Reserves and Pay Down Your Debt.

My real recommendation, though, is that this should be a fixed part of your yearly budget. You and your staff are simultaneously your largest asset and your biggest expense. Whether you look at this as the former or the latter will make the difference whether you are truly a customer-first business winning the race to the top or not.

If I were to prioritize where to spend the time and money on training, the list would look like this …

  1. Selling/Customer Service: You’ll reap the benefits of this right away because your staff starts converting more of your current traffic into sales.
  2. Hiring/Training: You’ll see quickly who is cut out to be a retail sales clerk and isn’t when you up their game. Next it is time to up your game and find better people.
  3. Marketing & Advertising: I’ve heard many business owners lament, “If only I had more traffic …” First learn how to better take care of the traffic you have. Then, when you spend your money to learn how to get more traffic, you’ll reap twice the rewards.
  4. Managing Your Money: Good sales and a growing market cover a lot of sins. Those sins get exposed at the first downturn. Make sure you are measuring and managing the right numbers to protect yourself for the long run.

In a few days the dust will settle on 2018. As you set your priorities for 2019, keep this list in mind. I’m sure you can probably think of a few retailers (cough, Sears) that didn’t (cough, Toys R Us) invest in (cough, Kmart) becoming better at (cough, Bon Ton) what they do.

-Phil Wrzesinski
www.PhilsForum.com

PS I will be rolling out some new training programs based on the list above. Last fall, if you recall, I launched The Ultimate Selling Workshop designed for working directly with you and your team. Next month I will have newly revised programs, some designed specifically for working with business owners, some to work with managers and assistant managers, and some to work with your whole team. The priorities you set for 2019 will dictate much of the success you reap this time next year.

Christmas Quick Tip #10 – Move Stuff Around

For the holiday season I am keeping these posts short and simple. You’re busy. I’m busy.

Here is tip #10 …

MOVE STUFF AROUND

By now you’ve had a pretty good taste of what people want. You already know the slow movers, the stuff you had high hopes for but haven’t seen the sales. Now is the time to move it.

Here is how you sell that merchandise without heavy discounts …

  • Move it around
  • Put it in a better location
  • Give it a spotlight and a sign
  • Treat it like it is special
  • Talk it up to your customers
  • Talk it up to your staff
  • Give your staff a spiff for selling it

It is better to mark it down a little and move it now while you have a lot of customers than try to move it in January at really deep discounts when you don’t have the traffic.

You have from now until Friday to identify those slow movers and relocate them in the store. (On Friday the men start their Christmas shopping.)

Go!

-Phil Wrzesinski
www.PhilsForum.com

PS Remerchandising should already be the busiest thing on your schedule as you constantly shift inventory to make the store look full.

Christmas Quick Tip #9 – Empty Her Hands

This month’s blog posts are short and simple because you’re busy. They are also reminders of tips, techniques, and tools you can use to increase sales, increase profits, and increase customer delight. This tip does all three.

Here is tip #9

EMPTY HER HANDS

If you don’t have shopping carts or baskets, your customers are limited to buy only what they can carry. Therefore, it should be a mission for all of your team to help unburden your customers whenever their hands are full.

Offer to take her items up to the checkout station.

This is good for two reasons. First, it frees up her hands to shop for more items. Second, it helps close the sale because when she agrees to your request to take the items up front she is giving her implicit acknowledgement that she has decided to buy those items.

When her hands are free she will shop longer, buy more, and be happier.

Don’t believe me? Believe Paco Underhill. He researched it for decades and chronicled it in his book Why We Buy. If you haven’t read it, ask Santa to bring you a copy.

-Phil Wrzesinski
www.PhilsForum.com

PS Come up with a system for your team when they bring items up front—put a sticky note with a name on the pile and/or have a designated place for piles—something that helps you keep piles organized so that the wrong items don’t go home with the wrong people.

Christmas Quick Tip #7 – Lead with the Best

Of all the Christmas Quick Tips I will give you, this one will be the hardest to master and quite possibly the most rewarding when you and your team do master it …

Here is tip #7

LEAD WITH THE BEST

Your customer is looking for solutions. Yes, at this time of year we call them gifts, but at the end of the day, they are really solutions to problems.

When you offer suggestions, unless the customer has given you a price range right up front, ignore price altogether and start by showing the best solution you have.

It doesn’t have to be the most expensive. It just has to make the most sense.

The tendency of most retail salespeople is to sell from your own pocketbook and start by offering the cheapest solution. That doesn’t win hearts (or build profits). You can use the cheapest solution as the fallback when they balk at the price of the best solution, but always lead with the best.

A customer will expand his or her budget if the product offered truly fits her needs.

You are a solution provider. Your job is to provide the best possible solution first. Then the customer can decide what she’s willing to compromise to fit her budget.

Teach your team that goal number one is to solve the problem in the best way possible. Always lead with the best.

-Phil Wrzesinski
www.PhilsForum.com

PS Never open with the question, “What’s your budget?” First, they almost always lowball you well below what they would actually spend for the right product. Second, it pigeonholes you and often keeps you from showing her the right product. She’ll tell you when it’s out of her league, and you can adjust your offerings from there.

PPS Some of my favorite stores have successfully talked me into buying a more expensive item than I planned. I love those stores because in each case the solution was worth the expenditure. On the flip side, there are stores I won’t visit again because they tried to upsell me something that wasn’t the best solution to my problem. Always lead with the BEST.

Christmas Quick Tip #6 – Coins First!

Keeping it short and sweet, here is another simple, easy tip you and your team can do to make the holiday experience a better one for your customers.

Tip #6

GIVE THE COINS BACK FIRST

If you’re a regular, you know this is a HUGE pet peeve of mine. It shows both a lack of caring and a lack of training when the cashier hands me the bills first and then dumps the loose change onto my already occupied hand. The coins inevitably spill and now I’m wasting time on my hands a knees for a couple dimes.

Ugh!

The best thing you can do is teach your staff to “Count Back” the change.

The second best thing you can do is to at least have them place the coins in the customer’s hands first, followed by the bills.

Please, please, please teach and do this. Not only will you avoid those awkward hands-and-knees moments, you’ll subconsciously make your customer’s day (or in my case, you would consciously make my day and I would probably let out a rebel yell of joy!)

-Phil Wrzesinski
www.PhilsForum.com

PS Yes, I do think it is a big deal. There are little things that have bigger meaning. This is one of training and caring. A cashier taught the right way instills far more confidence than one who is bumbling around and making you drop stuff.

Christmas Quick Tip #5 – Start Closing at Closing Time

Since your time is tight, now through December 21st I’m keeping these blog posts short and simple with tips, tools, and techniques that make a difference.

Here is tip #5

START CLOSING AT CLOSING TIME 

Not before.

Yes, you’re tired. Yes, these are long days and you want to go home. Yes, waiting until closing time to wash the counters, count the change, empty the wastebaskets, etc. will make you have to stay a few minutes later.

Yes, your last customer of the day deserves the same enthusiasm as your first customer of the day.

Make it taboo for anyone on your team to mention how tired they are. This is your moment to make hay. This is what your whole year has been built around. You’re supposed to be tired at the end of the day. Just don’t let it show.

Treat the last customers with the same enthusiasm as the first customers. Don’t go around the store closing things down and making them feel unwelcome. Instead think of them as the icing on your sales cake and give them the red carpet treatment.

Even if you have to fake it.

It not only pays now with bigger sales at the end of the day, it pays down the road as a customer treated well is more likely to come back than a customer treated like a nuisance.

-Phil Wrzesinski
www.PhilsForum.com

PS I was guilty of this far too often. It is the one mistake I wish I could go back in time to fix. Yes, they are long days for you. Have you ever considered it has also been a long day for your customer? Treat her with kindness and enthusiasm and not only do you get the sale, you just might make her day.

Christmas Quick Tip #4 – Never Say No

For the rest of the Christmas season I am keeping these blogs short and simple with one tip, tool, or technique you and your team can use to make this season rock!

Here is tip #4 …

NEVER SAY NO

You are going to be asked quite often for products you don’t have. Either you’re out-of-stock or you don’t carry that product (or maybe you’ve never heard of it). 

When the store is busy and you have other customers waiting to be helped, it is easy to simply say No and move on to a customer you can help.

Resist the urge.

Train yourself and your staff to Never Say No. Try out these phrases instead …

  • I have some coming in soon. Can I arrange to have it sent to you as soon as it comes in?
  • Are you looking for that particular item, or can I show you something similar?
  • We prefer this brand instead (be direct)
  • What are you hoping to do with that item? (if you know this isn’t just meant to be a gift)
  • Can you show me what it is? (if you’ve never heard of the item)

All of these phrases are conversation starters. Often a customer is looking for a specific item because she doesn’t know alternatives exist or she has an idea in her head and can only think of one solution. When you start the conversation, sometimes you find better solutions than the one she asked for.

If all you do is say No, they often quit asking.

-Phil Wrzesinski
www.PhilsForum.com

PS Here’s another tool I stole from a fellow toy store owner. Create a “No List.” Put it on a clipboard up front. Every time an employee gets asked for a product you don’t have or a service you don’t offer, write it on the No List. If one thing ends up on that No List several times, you should consider selling that item or offering that service. Your customers already think you would.

Christmas Quick Tip #3 – Sign ‘Em Up Before Checkout

You’re busy. I’m busy. Our customers are busy. So in the interest of time, I’m keeping all the posts from now through Christmas short and sweet.

Here is tip #3

SIGN THEM UP BEFORE CHECKOUT

If you have a loyalty program, birthday club, or email list that you normally ask customers to join, you need to get in the habit of doing that long before they get to check out.

By the time the customer gets to checkout, they are in a hurry to leave. Anything you do then to slow down the line is an aggravation and leaves a bad taste in their mouth. They are not in a sharing mood then.

The best time to sign someone up is during the sales process. Not only are they in a friendlier mood, they are in less of a hurry and more willing to say yes.

Once you get them to say yes to your program, you make closing the sale that much easier.

Now is a good time to farm for your lists. Hire a seasonal person to wander your store with a tablet and/or clipboard and sign people up for your loyalty/birthday/email list. You’ll get more takers, close more sales, and keep your registers humming at optimal speed.

-Phil Wrzesinski
www.PhilsForum.com

PS If you don’t have enough salespeople to have them all doing this job as part of their sales process, hiring a seasonal person for this will more than pay for itself down the road. Plus it gives you one more person on the floor to direct customers where to go and deter shoplifters.