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Modern Ways To Increase GMROI - Part 2

Furniture World Magazine
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Part 2: Old school ways to increase this critical measure are just not enough anymore!

By David McMahon

Editor’s Note: In the last issue of FURNITURE WORLD Magazine, the first part of this series discussed ways to boost GMROI by applying technology to improve business at the point of sale, in purchasing and receiving. Part 2 will conclude this discussion by looking at additional GMROI boosting strategies.

Delivery & Pick Up

Delivery scheduling should be fast. Typically, operations rely on a delivery clerk or the salespeople to call when they “feel” it is time to call the customer. Or, worse, they wait for the customer to call them. Messages are left and phone tag is played. This is a waste of time for both customer and retailer. The process can be improved by using modern tools to manage the process more effectively.

The first tool is to implement automation software to proactively send your manager a list of customers that need to be contacted immediately for scheduling. Don’t wait for someone to print your “complete for delivery report” once a week. Have this important info sent without a thought. Take the people factor out of running major reports.

Once you have the information, email and call your customers. This is more professional, more convenient, traceable and a huge time saver. In the age of online shopping, Blackberry’s, and IPhones, your customers expect this. They feel more comfortable shopping with businesses that are technically “up with the times.”

Finally, the best retailers use routing systems so that they can fill trucks faster, maximize the number of stops per day, save on fuel, and wage costs, by taking an efficiently set route. Once the route has been established by the manager the data can be uploaded to GPS devices, or maps can be printed. This can result in a 20% delivery cost savings!

Customer Follow-up

One of the most pressing issues for home furnishings retailers is the customer follow-up process, especially on special order merchandise. Salespeople, on average, have poor follow-up skills. Whether it’s bad information, being afraid to call the customer, or just plain old laziness, follow-up rarely gets done professionally. Customers deserve better. They expect it.

Online purchasing has raised the expectation bar. Most of your customers are experienced internet shoppers. When they buy anything online, they immediately get an order acknowledgement with an ETA date, a receipt, and a thank you email. When the merchandise is shipped, they get another email so that they know exactly when to expect their order, along with a link to track its progress. Finally, after they receive the product, customer satisfaction surveys are emailed. This is done by the retailer online for a fraction of the cost and time of traditional calls and letters.

Guess what? This is the standard of proactive communications you should hold your business to. Proper execution will increase your GMROI by lowering cancellation rates. And – additional sales will be generated via positive word of mouth amongst your customer’s peers.

If you are a traditional brick and mortar store with a sizable customer direct mail data base, you will need to focus your efforts on adding emails as well. Similar to accessing your database for a direct mail campaign or with special order follow-up letters, you should be able to extract specific customer data to be used for email follow-up. By mapping your data to an online email marketing agency, you can now send special order updates, thank you’s and shipping notifications professionally via email.

Modern Website Usage

When you look at your retail Website, ask two questions: “What do I want my customer to do?” and “What do I need to change to do it?”
Most brick and mortar retailers want their customers to contact them or physically come into the store. A Website is meant to drive traffic to the store. To do this, think of your web pages as paths where customers gather information along the way. The paths must be easy to follow, if not... bye-bye. At the end of the path, it is always - you. Here are some components:

  • Easy and complete contact links.
  • An online room planner that can be saved and emailed to your designers.
  • Product by category, sub category, and item; updated fast.
  • Full item detail with all specs including price and warranty information.
  • Real time merchandise availability.
  • Designer profiles.
  • Room ideas: before and after projects.
  • Video of value added in home design process.
  • Contact links for appointment requests – in home or in store.
  • Real time Q&A and product support.
  • Clearance section to help move dogs.
  • Best seller section to highlight what other customers like.
  • New item section to test and track interest before buying
    commitment.
  • Online newsletter and special promo sign up via email.

It’s easy to see how utilizing these components can increase GMROI – if you focus on customer contact, you will increase ups and average sale. More gross margin dollars are produced via high turns. Winners are displayed. Dogs are moved faster. New items are tested.

Modern Ways to Advertise

Only three percent of furniture retail advertising budgets are spent on internet. Ask yourself this: “How much time do you, your family, and friends spend looking at a computer compared to looking at a TV?”; enough said.

Email marketing is the modern key to increasing your ROI on advertising. As previously mentioned, you can extract various customer follow-up information. Along with this you can establish traffic building campaigns through monthly value added newsletters and targeted special promotions.
It is very important to be professional in your email advertising as you do not want to alienate customers. Unlike direct mail, a customer can simply mark your emails as spam and they will never receive another from you. So, DO IT RIGHT. Use an e-Marketing agency (preferably one specializing in our industry) to act as your portal for distributing content to your customers. Agencies and e-Marketing portals are the easiest and most cost effective ways to send and track campaigns. This is basically how it works:

  • Decide on your traffic building marketing campaign. Some examples: monthly newsletter, next purchase follow-up, past purchase follow-up, private sale, special promo, customer appreciation, clearance sale.
  • Export and query your email database to an excel format.
  • Sign on to the agency’s e-Marketing portal and upload the email database.
  • Upload pictures, promotions, or newsletters. (with links to your web site).
  • Upload any text and contact information.
  • Edit prior to sending.
  • Send final product to your customers.
  • Track the results: use the e-Marketing portal to check the results of the email. You can see who opened it, what they liked (clicked on), who forwarded it to a friend and who opted out.
  • Develop targeted campaigns based on the results (for example, by product or zip code).

This can all be done for pennies per email and by working with an agency. You do not have to reinvent the wheel or add to your current staffing.

Cheaper – Faster – Better – Advertising is traceable and produces greater GMROI.

As I am writing this I just received newsletters from Crate and Barrel and FURNITURE WORLD Magazine. I choose to subscribe to these, because they are providing me with great ideas and valuable information. Do this for your customers and you will go ahead of your competition.
Today is the time to use the many new tools out there to help your business increase its GMROI. Embrace technology and use it for its intended purpose: to make your customer’s life, and your life, easier.


David McMahon, is a Business Coach for PROFITconsulting. PROFITconsulting assists retailers in increasing GMROI with traditional and modern methods.

Questions about the topics covered in this article or on any other operations management issue can be sent to David McMahon care of FURNITURE WORLD Magazine at davidm@furninfo.com.  Read all of David McMahon’s articles posted to the operations management article archives on the furninfo.com website.


David McMahon is a Certified Management Accountant and Consultant with PROFITconsulting, a Division of PROFITsystems. Questions about this article, or to request a similar analysis on your financial statements contact him at Davidm@furninfo.com or call 8oo-888-5565.

Read other articles by David McMahon

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