Sales force automation can help you squeeze more profit out of your company.
"To survive in a competitive market you must have efficient ways of running your company, important information at your finger tips to make quick decisions and ways to cut costs to squeeze more profit out of your company." You have heard this litany sung for years. It has been sung in banking, education, insurance, architecture, manufacturing, almost every industry. It has even been sung in furniture retailing.
What exactly is stopping you from improving your efficiency, utilizing information and maximizing profits? Are you satisfied with your 1% percent return on sales when other stores make 6% or even 10%?
Could it be that you are not sure what can be done? There are many reliable and reputable sources of information in the retail industry. Consider these thoughts from the experts; they are from ONE issue ( May 1998) of retail IDEAS® (paraphrased).
- In an environment where everyone has the same product lines and promotional strategies, stores can differentiate themselves with superior customer service (Rick Stark p.12, Dennis Conforto p.15).
- Superior customer service creates long term customer relationships that make stores more profitable (Tom Edmonds p.6).
- Sales training and sales skills are critical to managing customer relationships (Cathey Manley p.8, Edmonds ).
- Training needs to change behavior and the effectiveness of the change must be measured (Ted Zehelian p.7).
- The training must emphasize the importance of follow up (Stark, Ted Shepherd p.8).
- Sales people need tools and support to help them manage their customer relationships (Stark).
- The sales environment must have clearly defined and consistently applied rules (Shepherd).
- Performance must be measured, published and rewarded ( Conforto).
Everyone does this, right? Most stores have some combination of training programs, UP systems, tickler files, incentive payments and recognition programs. So why do most stores make I% and not 6% or more? What makes the difference between the systems that work and the systems that don't? There are many causes, but the one we want to highlight today is consistency,
When a delivery is late, an order is wrong, or a key employee is out, it is easy to skip today's follow up or not record your UP. Solving today's crisis always replaces today's routine. The unintended message to those responsible for the routine is, " It's not that important." That's the difference between 1 % and 6%. One sure way to improve consistency is automation.
Automation helps in three ways:
- Computerization supports customer relationships.
- Helps manage the sales force.
- Provides data to evaluate promotional strategies.
Let's consider each one in turn.
Supporting customer relationships- If we follow the advice of the experts we should:
- Find out about our prospects, their circumstances and needs.
- Follow up with both non buyers and buyers.
- Maintain a history of sales and contacts with customers.
Today, simple software is in use that provides database capability to track customers, prospects, contacts and sales. The software also provides mail merge capability, prepackaged letters and the ability to customize them. The only missing ingredient is consistent use. Entering an UP takes less than a minute, follow up letters can be developed by sales people or clerical staff. Tickler files provide follow up lists and reports whenever you want. Training materials come with an extensive list of ways to collect data from non buyers.
Sales Management-The experts advise:
- Training
- Measuring training effectiveness
- Measuring the effectiveness of sales representatives
Effective sales management requires information about sales people, their average sale, their close rates and their success by product, customer and category. Software can track the history of contacts with customers, so applying commission splitting rules and the like is simple. A variety of rotation rules can be supported. You can see what every rep is doing whenever you choose. Information on close rates, average ticket sizes, and category sales provide the data you need to determine where training is needed. Continuing to track performance by sales rep helps you evaluate the training that was successful and the reps that got the most from the training. Sales staff are treated equitably because UPs are allocated and commissions determined on consistently implemented rules and not whim.
Promotional strategies-The experts advise:
- Learning about your customers as people; what brought them to your store, what their circumstances and needs might be.
- Learning why people bought or did not buy from you.
- Developing strategies to bring customers back to the store for future sales.
No software can substitute for the rapport needed between prospect and sales person but once that rapport is established, software is the only way to consistently collect and analyze the reasons people came to the store. Was it a recent promotion, a follow up letter, or a walk in? Have they seen the newspaper ad or heard the radio spot? How are you sure the sales people have asked all their UPs the right questions? Are you sure your sales people's suggestions for new promotions aren't based on only one or two customers? How do you plan for the future needs of your customers? Software is the only way to develop the demographic profiles of your customers and their needs so product positioning and promotional strategies become clear. Without consistency derived from entering every transaction, the data is a crap shoot. Few people are capable of remembering all the relevant information about every customer and then producing easy to understand reports from that information.
The bottom line: Software permits systematic, consistent application of rules for managing sales people and sales floors. Software makes it easy to maintain contact with buyers and non-buyers. Software permits routine evaluation of different promotions, product lines and sales people. Software is easy to use, easy to install, and cost effective. A package with all the functionality above costs less than a the typical store spends in one week on advertising and comes with a money back guarantee. Why spend the money when you have a card file and smart sales people? No card file is used all the time. No sales person, no matter how smart, remembers every thing you need to know to make crucial product line and advertising decisions.
Software works because the simple act of entering the UP and sales data when the sale is made provides all the benefits outlined above without additional work. Card systems might work for collecting data and may work for tracking information about one customer on a case by case basis, but they never work for producing reports on key trends across different customer groupings. Once the system is installed, the on going operation requires little routine maintenance and all the reports can be generated at whatever interval you desire. With automation, sales people and sales managers are free to improve sales.
Our test store has increased its sales revenue approximately 40% over last year for the same time period. Other stores may be doing well in this economy, up perhaps 8 %-l 0%. What's different? The requirement that sales people use the software. How hard was it to implement? Almost all sales people saw the immediate advantages of the tickler and follow up system. Those who did not were quickly persuaded when the store started a policy of paying commissions on the lower of what the accounting system showed or what the customer relations system showed. All it took was the owner's commitment to make the system work. He found that his employees were computer literate, waiting and excited to take this step. He had been standing in his own way and did not know it.
We began with a quote. The article where we found the quote went on to say, "The truth is computer technology has developed so much in the past few years making computers so "user friendly" that it has never been easier or less expensive to utilize a computer to improve your business and improve your life." Here's the punch line: that article was written seven years ago in 1991 for tailors who were in the custom suit making business (Brian Amaral in Custom Tailor). If tailors, doing a small amount of custom business, have realized for seven years that their ability to compete and excel has depended on computerization, what is stopping furniture retailers? Can you, a furniture retailer, really afford not to take full advantage of the power of automation when the cost is low and you may be the only thing holding up improved sales and greater profits. Automation is the key to employees consistently doing the things that the experts and you know are necessary to make money.
So are you standing in your own way? Are you cutting comers when it comes to consistent and persistent application of your systems? Are you reluctant to automate because your management act isn't together? If you don't consistently apply the proven techniques outlined by the experts, you ARE standing in your own way. If you have not automated your customer relations function you ARE leaving money on the table, lots of it.
Bill Anderson is President of AAAA Development, LLC.. He holds an MBA from the Dartmouth School of Business and is a Professor of Business Administration at Saint Michael's College in Vermont, where he has taught business and computer science for the last twenty four years.Questions can be addressed to FURNITURE WORLD MAGAZINE at editor@furninfo.com.