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RetailWise Vol. 2 Issue 1
Customer Satisfaction is
the Ultimate Goal
http://www.dmsretail.com/
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Welcome to all of our new RetailWise
subscribers. We’d like to take this
opportunity to remind all of our
subscribers that comments, questions and
contributions are always welcome at
DMSRetail. We want to hear your thoughts
about this newsletter and any other retail
or customer service related topic.
Send us an email, anytime, at
info@dmsretail.com.
It is our sincere hope that RetailWise
will provide useful information to help
you serve, and satisfy, your customer
better. |
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Key Performance
Indicators (KPI’s) for Store Managers:
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Sales
compared to budget/target
Actual sales $
divided by budget/target sales $
Sales
compared to last year (or any other
period)
Actual sales $ for a
given period divided by actual sales $ for
the period you want to compare to
Wage Cost
Actual wage $ paid
for a given period divided by actual sales
$ achieved for the same period
Average Sale per Customer/Transaction
Total sales $ for a
given period divided by the number of
customers or transactions for the same
period
Units per
Customer/Transaction
Total number of
units sold in a given period divided by
the number of customers or transaction for
the same period
Conversion
rate
The number of
transactions in a given period divided by
the total number of customers who entered
the store during the same period
Sales per
Hour (for store or associate) –
selling hours only
Actual sales $ for
the store divided by the number of
selling* hours during the same period
*selling hours are
used here rather than total labor hours
Sales per
Hour (for store or associate) –
total labor hours
Actual sales $ for
the store divided by the number of labor
hours used during the same period
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The House
Account – A case for using it.
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House Account: The
number keyed into the POS system at time
of sale which does not attribute the sale
to a specific employee, but rather to the
store.
Retailers use
different methods to record and monitor
sales and to compensate their associates.
Some allow, and in fact insist on, the use
of a House Account and others forbid it.
The case against the
use of the House Account starts with the
fear that employees may use the House
Account to make their own KPI’s look
better. If an employee is compensated on
total personal sales, sales per hour AND
average sale per customer then there is
reason to believe that an associate may
try to attribute some very small sales to
the store rather than their own
identification number in order to keep
their average sale per customer high
without seriously affecting their overall
sales and sales per hour numbers.
The problem with NOT
using a House Account is that it is
incredibly unfair to associates in the
stores. Why should an associate get
penalized with the sale of one item at a
low price point if s/he did not stand a
chance of being able to influence the
buying decision? I can already hear the
skeptics…’well, the associate has to try
harder to make sure the customer doesn’t
buy just one, low priced item.’ I
understand that...I really do and, in the
vast majority of cases I would have to
agree. However, to those who just will not
give an inch on this one...
My response is get
real…it happens. Have you never walked
into a store and bought only what you
needed/wanted and it just so happened it
was only one item? Never? And, besides,
don’t you have anyone trustworthy in the
store (like the Manager?) to ensure that
everything is being done to sell to the
customers? Don’t you believe what they are
telling you? Didn’t you ever hear of
‘walk-up’ customers?
The case for the use
of a House Account is much more solid.
First of all it assumes that the retailer
is aware that some sales are made without
any interference from a sales associate.
In fact, the retailer should expect a
certain percentage of business (however
small) to come in that way. The customer
comes into the store to buy a white shirt
in size small (or a book or whatever) and
even if an associate has made an effort to
work with the customer she just picks up
the item and goes to the counter to pay
for it. The transaction is complete and
the customer leaves. No, she did not want
anything else. No, she did not want you to
show her the new pants that would go so
nicely with the shirt. No, she didn't want
to be bothered by the associate and if
you had not stopped trying she would have
left and bought the shirt elsewhere. The
end result could have been… no sale, no
happy return customer, no future sales.
You could have lost her and the ‘word of
mouth’ advertising that she could have
represented.
So, then, perhaps
retailers should concede that some sales,
or more accurately, purchases, will be
made by the customers themselves. In a
case like this, using the House Account is
the only reasonable thing to do. The
associates do not receive credit or get
penalized for sales they did not make.
Retailers need to
determine what percentage of store
sales could reasonably be expected to fall
under the
'walk-up' category.
Once that is established it is very easy
to monitor. If it is determined that
approximately 15% of customers will
‘walk-up’ to the counter with their
purchase without allowing any assistance
from associates, and if the sales in the
House Account are at 10%, it may mean
associates are taking House Account sales
as their own. If the sales in the House
Account are at 20% it may mean that
associates are dumping undesirable sales
into the House Account. You can
investigate further to find out what is
really going on.
My point is that the
House Account does not have to be the kind
of place that so many retailers fear…that
place where no one is accountable and no
monitoring can be done and employees can
take advantage. In fact, not allowing the
use of the House Account, when
compensation is based on those things
mentioned above, is unfair and will make
employees lose faith in their employer.
Do your homework and
come up with the right percentage for your
business and then educate your associates
as to how/when the House Account is to be
used. It will certainly show that you are
reasonable in your expectations and that
you trust your people.
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Retail Math
Basics for Store Personnel
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Weeks of Stock
Inventory (at
retail) divided by average weekly sales
for a given period of time.
So, if you have
$8,000.00 worth of inventory in one
commodity, and your total sales of that
commodity for the past 6 weeks is
$12,000.00 the calculation would look like
this:
$12,000.00 divided
by 6 = average weekly sales of $2,000.00
$8,000.00 divided by
$2,000.00 = 4
This means that if
you did not replenish your inventory and
sales continued at the same pace, you
would deplete your inventory of that
commodity to zero within 4 weeks.
Next issue:
Cost of Goods Sold and Gross Margin
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The Creative Retailer:
A
retailer was dismayed when a
competitor selling the same type
of product opened next-door to
him, displaying a large sign
proclaiming "Best Deals."
Not
long after that, he was horrified
to find yet another competitor
move in next door, on the other
side of his store. It's large sign
was even more disturbing—"Lowest
Prices."
After
his initial panic, and concern
that he would be driven out of
business, he looked for a way to
turn the situation to his
marketing advantage. Finally, an
idea came to him. Next day, he
proudly unveiled a new and huge
sign over his front door. It read,
"Main Entrance!" |
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Don’t Let This Happen in Your
Store!
The
setting: A busy clothing store.
The Store Manager is serving a
customer. A mature, part-time
employee who has been with the
company for several years comes to
the cash desk with her customer.
The
background: The customer was
making a return of merchandise she
had purchased at another store.
The part-time employee spent a few
minutes assisting the customer –
showing her merchandise. She
successfully turned the return
into an exchange for a different
item. So far, so good.
But
now…
The
comment from the part-time
employee to the Manager: “This
return is from another store…how
do I ring this in so I get credit
for the sale? I’m the one who
spent time with this customer.”
What was she thinking?
The
question was appropriate but the
timing certainly was not. Most
retail employees, whose
compensation is somewhat tied to
their personal sales and
productivity, would want to ensure
that their transactions are
accurately recorded. That is
understandable and, in fact,
expected. The Store Manager
absolutely must ensure that
employees 1) are aware of how to
process transactions correctly and
2) realize that
questions/discussions of this
nature are for store employees
ears only.
The
point to be made here is this:
Make sure your employees
understand that discussions in
front of the customer must never,
never, never include any reference
to employee commissions, bonuses,
rewards, incentives, ‘credit for
the sale’ or anything similar. The
internal operations of the
company/store should never be
discussed in front of customers.
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| From the Cash Desk:
When a
customers' credit or debit card is
'not authorized' or 'declined'
always use diplomacy when advising
the customer. It is possible that
the customers' account is, in
fact, in good standing and the
problem is actually being created
by the 'system'. Whatever the case
may be, avoid embarrassment to
your customer. |
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Here's to
great sales.
Enjoy retail! |
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