How to Invest for High Dividends- Does Your Business Have a Finishing School?

Been to a sports game lately? I mean physically rather than watching on TV? I did recently on a visit to Melbourne and the whole experience reminded me of being in retail.

 

The infrastructure was terrific – the seats were comfortable, the playing surface excellent, the ambient temperature fine, the lighting and sound system let me get the most of the mood and excitement, the ticketing experience was easy and it was great to be able to tap and pay for a drink rather than having to fetch out and manage change. What else was there?

 

The players, of course.  And that’s where the comparison became really interesting. Because in this environment there were two teams competing for my immediate satisfaction and long-term loyalty. And whatever these players did the ultimate test was decided not by attempts at goal but by which team scored more goals than the other. It is all about finishing – it’s why top world teams pay tens of millions of dollars for players like Ronaldo and Messi who can finish from the most amazing situations.

 

What became obvious even before this game began was that one team had a better routine for warming up to gain the win. They were practicing their finishing, their shots at goal under pressure. And they won.

 

So here’s the equivalent in retail. You’ve spent a lot of money on rent, on display furniture, on fixtures and fittings, on advertising, on POS systems, on display merchandising. You’ve set the honey trap, now for the honey. How much in comparison have you invested in finishing school for your staff?

 

Benefits For You

 

I’ve mentioned in previous articles, there is a lot of money left on the table from retail staff not being able to convert Heidi as a visitor into a customer, and from not being able to follow through with companion selling.   How much money?

 

Let’s take some hypothetical’s:

 

Base Situation

 

Shop Visitors per day:                                                 50

Conversions to buyers:                                           20%

Average purchase Gross Profit:             Rp 250,000

Average daily gross of                           Rp 2.5 million

Monthly Gross                                          Rp 75 million

(50 x 20% x Rp 250k )

 

Improve Conversion Rate

 

What happens if you invest in staff training and as a consequence increase your conversion rate to 30%? It’s possible, I’ve done it.

 

Average daily gross                              Rp 3.75 million

Monthly Gross                                   Rp 112.5  million

Gross Increase:                                                          50%

(50 x 30% x Rp 250k)

 

Improve Companion Selling

 

Let’s add a bit more training so that your people can successfully conduct cross or companion selling. Let’s work on 30% additional sales (35% is usual) for the gross value of Rp 150k.

 

Average daily gross                           Rp 4.425 million

Monthly Gross                                 Rp 132.75  million

Gross Increase:                                                          77%

(50 x 30% x Rp 250k) plus (50 x 30% x 30% x 150k)

 

There you go, a 77% increase in your profit from a relatively small investment in a staff training program.   Think how much you would have to invest and slave at to achieve a similar profit increase from opening an additional retail outlet!

 

This is low-hanging fruit, people. It’s smart money, not hard money for you. These are additional sales from people such as Heidi who are already in your shop, just panting at the bit for someone to help them get their job done.

 

What to Do – Minimum Standards

 

Before you even start training you need to be very clear in yourself about what are the minimum standards you require for your staff to achieve the minimum pay packet each month. These are non-negotiable items such as dress standard, opening, and closing procedures, POS, complaint management procedures, cleanliness, display maintenance, honesty.

 

These requirements should be clearly defined in your staff manual and staff should be required to sign off on these regularly.

 

Re-Imagine Your Business

 

Let’s take the example of a sports equipment shop and re-imagine it in terms of jobs to be done:

 

  • Professional competition (income)
  • Skills improvement
  • Health and Fitness improvement
  • Social engagement
  • Feeling and looking good (emotional)
  • Combinations of these

 

The products and services in this shop should support these, and only these jobs.

 

Consider the outcomes that people like Heidi want from these jobs. (Each job has between 50 and 150 outcomes.)

 

What your sales staff need to know is all about these jobs and all about how what you sell helps Heidi achieve the outcomes she wants.

 

You need to spend some time on analyzing these because these are the key to your sales and profit growth.

 

What to Do – Training Elements

 

Your sales training manual needs to cover how your staff can help Heidi to choose the right products and services to help her get her job done. So your focus should not be on product knowledge but jobs knowledge.

 

Do you have a training manual?

 

Do you have selling guides?

 

Do suppliers help with product benefits and features training?

 

Greeting. At least some acknowledgment like a “Hi” as Heidi enters the store.

 

Conversation. An ability to relate to Heidi and begin the process of discovering and meeting her needs.

 

Understanding of Jobs and Outcomes. Your staff needs to understand all these jobs and outcomes, and preferably have experience in performing most of them so they appreciate gains and pains involved in achieving outcomes required.

 

Associated Jobs. There are emotional and social jobs involved in the purchase as well as functional jobs. Help your staff to recognize and relate to these.

 

Product / Service Knowledge.  Comparative benefits (not just features) of your products and services to achieve outcomes are important knowledge for your salespeople to be able to impart. And significantly better if your people have practical as well as theoretical knowledge so that they can talk on equal terms with Heidi. And it’s hard for your people to be enthusiastic about something when all they have is a theory.

 

Price Range. While some customers have a definite budget, many others are able to see value for what is offered if it is properly pointed out to them. Your staff needs to be able to discover and relate to these factors, including how to re-define a price in terms of time and other comparisons. This is not a suggestion to up-sell to something that over-does what Heidi needs to get the job done, but more a means of helping Heidi ensure she gets the right tool for the job.

 

Procedures.  Entering sales, handling cash and credit, warranties, policies, documents, complaints.

 

Sales Close.  Helping Heidi avoid buyer remorse, acknowledging the sale, checking for anything else.

 

Follow-Up.  Keeping promises, thank you system, survey, referrals.

 

What to Do – Management

 

  • Do you conduct quarterly refresher training?
  • Do you have a regular program of supplier update training?
  • Do you make a weekly walk-through audit of your retail business with a comprehensive checklist?
  • Do you have the tools to measure the right metrics? Visitors, sales, gross, companion selling, customer satisfaction?
  • Do you reward sales excellence? Do you provide staff bonus incentives to reinforce gross profit improvements?

 

Don’t you think the investment in finishing school for sales is well worth you’re taking that initiative?

 



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