Increase Retail Sales KPIs by Ditching Being Passive
One quick look around the mall reveals that retailers are looking to increase their revenues through some very dramatic sales.
However, sales can mask the death of many stores…passive workers.
Let me tell you…
A lot of merchandise is often sold at a loss even though it generates revenue. This is often due to passive Selling.
To get its full price, it takes active marketing of merchandise
The product was reduced because the employees were not active and did not sell merchandise.
To sell the merchandise, the price tag was increased.
This begs the question:
How would you rate your salespeople?
Are your KPIs (key performance indicator) the highest revenue-generating or highest income generators? While both can generate profit for your store, one is more active than the other. Passive employees can be costly.
Here’s an example
Let’s suppose that A sells 10 sales widgets valued at $1000 each week. This is $10,000 in revenue. (But the widgets on sale sold themselves anyway.
Salesperson B sells five of the same sale widgets, and upsells each customer a full-priced item for $350. This generates $6750 in revenue.
Salesperson A’s net profit is $100 per unit ($1000 revenue + $900 cost-of-goods) divided by 10 units. That’s $1000 profit.
The net profit of Salesperson B to the company is $100/unit multiplied by 5 units = $500. Because she was providing an unique experience for the customer, she sold the entire solution easily with the additional item that yielded $170 profit per item. $170 x 5 = $850 This is $500 plus $850 for Salesperson A = $1350 net profit.
Salesperson B generated more profit with less revenue and spent less time dealing with customers.
Employees who are good at upselling can achieve more with less effort. This includes less needing to talk to strangers, less need to find out their needs and less running around trying to sell.
Why this matters
It is possible to see how many salespeople were selling per hour. This indicator of performance gives an idea of the overall performance of the person, but doesn’t give a clear picture about what was lost. Salesperson A generated 30% more profit, but had to deal with fewer customers in a shorter time.
Imagine how big that difference could be in a single month, a whole year, or even a season.
An example: Recently, I bought an Armani suit for sale. After having the suit fitted by the tailor, the salesperson went to the register to call me. She didn’t suggest any obvious additions, such as shirts, ties, or shoes. She was content with crumbs and didn’t consider the feast. I was able to spend a little on a sale item, but not enough on full-priced items when I got home.
Salespeople, not clerks
Anybody can sit at a counter, and ring other.
In some cases, they may even be able to generate good revenue. It takes professional retail sales skills to understand the customer and build a relationship with them, then sell them a complete package. This is reflected in profit and not in total revenue.
To ensure that a retailer is financially successful, it takes a coordinated effort from all departments. If everyone is on the same page, it’s possible to drive profits and revenue.
UPIs and Key Performance Indicators
Although you won’t be able know every sale’s profit margin, you can gauge if they are a sales star by the number of transactions per unit. They will be more likely to suggestively sell more products in the store if they are rated based on this key performance indicator.
Your employees must deliver balanced sales to increase retail sales. You can’t have great employees selling items that don’t require much convincing, while the more expensive ones sit.
What to do
To help your employees understand that add-ons can be a necessity, refocus on balanced sales. The store is not only for the customer but also for the store.
This will lead to increased margins, higher profits, and a greater number of employees who are actively involved in getting more merchandise to customers.