Understanding Sales Metrics - Part 4
Furniture World Magazine
By Joe Capillo
Part 4: Calculations that retailers should use to understand patterns of performance and foster continuous sales improvement.
Editor’s Note: This important series on sales performance metrics began in the February/ March issue with information on how to calculate the retail sales equation, revenue per UP and related issues. The second installment (also posted to the sales management index on www.furninfo.com) looked at specific ways to use sales metrics to encourage continuous sales improvement. The June/July article discussed additional measures and began to outline a system for using metrics to improve the sales performance of your team over time. This final article offers more practical advice on making continuous sales performance improvement a reality for your store.
Understanding Patterns of Performance
Metrics help shine the light of understanding on specific performance issues. As you build your metrics file of individual performance measurements you’ll likely begin to see patterns of performance for each salesperson. Those at the top will always be top performers and likewise for those at the bottom of the performance range. These data patterns are the direct result of individual sales behaviors. It is these patterns of behavior that you have to change in order to boost performance.
When observing the selling and work behaviors of most top performing salespeople the following common attributes are usually seen:
•They possess excellent customer engagement skills.
- They greet warmly and happily.
- They handle “I’m just looking” well.
- They possess excellent product knowledge.
- They connect with customers on a personal level.
- They connect to both spouses and to children.
- They develop high levels of trust.
- They deal with customer issues first, not store issues.
- There is a lot of smiling and “ease” in the relationships they build with customers.
- They know how to listen with the intent to
- They keep the customer focused on the right things.
- They always ask for the order.
- They have no trouble getting names, addresses and phone numbers.
- They are always working on something related to customers.
- They show up on time.
- They enjoy the work.
- They always do their follow-up.
- They have few customer service issues resulting from their errors.
- They have a loyal following.
- They have the highest number of be-backs or personal customers.
- They are willing to try new methods.
- They are serious about their income goals.
Likewise, when observing the selling and work behaviors of low performing people, some or all of the following attributes will be seen:
- Their customer greeting usually is: “How are you?” or “How are you doing?”
- They do not smile during the greeting.
- They talk about store things before customer things.
- They ask if the customer is looking for “something in particular”.
- They talk more about features than about how the product will work for the customer.
- They are poor at handling objections.
- They often do not ask for the order.
- They are not successful at getting names or contact information.
- They are UP more than the top performers.
- They do little follow up.
- They have the least number of be-backs and personal customers.
- They show up late for work.
- They are never working at their desks.
- They have a high level of service issues.
- They usually cannot define their income goals in terms of performance.
- They do the same things all the time, every time.
Not all high performers exhibit all of the attributes shown and neither do the low performers, but you will see patterns of behavior that are defined by each of the above statements.
Patterns of behavior lead to patterns of results. Changing old patterns to new patterns of behavior is one of the ongoing challenges for sales managers. It is impossible to achieve this change without a clear set of performance standards for people to follow, and this is the key purpose of both training and coaching – to provide clear standards of behavior to change behavior on the floor.
People Disconnect Results From Behavior
Many salespeople do not understand the connection between the things they do and the outcomes they generate. They look outside themselves for reasons and excuses for their low performance, but fail to understand that they work in the same environment as the top performers. You’ll hear excuses such as:
- “She gets all the good UPS.”
- “That customer didn’t know what she wanted.”
- “We don’t have what they want.”
- “They’ll be back” (just ask when).
- “They’re just wasting time.”
- “They’re just tire-kickers.”
- “They didn’t want any help.”
Metrics provide you with a way to help people make the connection between their behavior and the results they achieve. They assist you in the difficult task of coaching individuals toward their goals and helping them achieve the most they can achieve for themselves, for your customers, and for your entire company.
Establishing Baseline Performance
Performance improvement begins with understanding where you are now. All metrics from the highest level (net profit) to the smallest measurable factors on your organization’s financial statement can only be improved when you know your starting point.
Micro-Managing is Necessary
When dealing with the sales metrics we’ve discussed, you will achieve the greatest success if you deal with each person separately. Individual salespeople can become disconnected from the results of their actions and most are committed to a way of working that keeps them comfortable and steady.
If you attempt to bring new ideas and ways of working to the sales group as a whole (by just giving them a book to read, for example), each person will think that you are directing your suggestions to other people in the group and will continue working in the same old way. You will also probably encounter some “don’t rock the boat” thinking from all sides. And, without strong daily coaching of desired new behaviors, change will not occur.
Well, real boats rock, and it will be necessary to mix things up to foster meaningful performance improvement. Measure everything and use these measurements to improve the performance of the store and each person in it. You’ve got to work on the individual level. No one likes to have their performance measured. Particularly in the absence of a clear standard of performance, there will be a lot of fear when you begin this process if you choose to make too much out of it.
The actual purpose of your measuring is to determine where everyone is, so you can help them to do better. You want them to do this for themselves first by achieving their most aggressive goals, then for the company, but you can be sure they won’t see it that way at first. Remember the caution above: This is management information and, for now, is not to be shared with salespeople or even discussed. That will come later.
Key Baseline Elements
To start the process you will need to collect not less than 60 days of customer contact data for baseline performance. This should account for around 150 customer contacts per salesperson.
You’ll want to know all of the following by salesperson and for the store:
- Number of UPS by month.
- Number of UPS by week.
- Average number of UPS per day.
- Close Ratio.
- Total sales volume written.
- Average sale.
- PIN number.
Only then can you begin to set goals for performance improvement for the store and for individuals. You will also use this baseline data to help your salespeople better understand the effect of their way of working on their own goals.
This requires a lot of coaching on your part so that they will understand how all this information can help them make more money and have more fun at work. Future articles will discuss specific ways for you to do this.
When you are satisfied that your baseline performance metrics are a true reflection of both individual and store performance levels and you’ve identified the baseline for each of the critical elements in your store’s selling equation, you are on your way to using metrics to drive sales performance improvement.
Joe Capillo is a 41 year career veteran, experienced in managing and consulting with furniture retail operations. He is also a contributing editor for Furniture World Magazine. He is a contributing editor to FURNITURE WORLD and a frequent speaker at industry functions. See all of Joe’s articles on the furninfo.com website.
Read other articles by Joe Capillo