Revenue Per Up- The Magic Number For Furniture Retailers

Furniture World Magazine

RPU...THE MAGIC NUMBER FOR DRAMATIC REVENUE AND PROFIT IMPROVEMENT by Dave Mink, TRAXsales.com "Revenue Per Up" is easy to learn and is simply the Dollar Value of every opportunity who visits your company. When you understand this number you will realize it is the single most important management number you could ever use in your company. It is more important than GMROI, Inventory Turns, and even more important than any number on your income statement or balance sheet including bottom line profits. That's right, I am going to prove to you that RPU is the cause, or lack of profitability in your company. RPU is calculated by multiplying your closing ratio by your average sale. If your closing ratio is 20% and your average sale is $900 the average opportunity who visits your company is worth $180. With RPU, you have control of the benchmark that determines your true level of performance in your company and by understanding and using this measurement daily you WILL create immediate improvement on your sales floor and learn where the largest losses are occurring so you can fix them immediately. A sad but true story...SHOCKING REVELATION... "BUT LEARNED TOO LATE" The lawyers got em before they could react...An 80 store furniture chain had 2 locations where they measured their RPU close to the end of their demise. One store was in Orlando and the other identical location in Jacksonville. Both stores were the same size with the same number of salespeople and roughly had the same Average sale. The Orlando store was doing between 10-15% better in sales each month than Jacksonville. Wait till you hear what they learned when they started to measure RPU. The Orlando manager got all the praise and accolades and even (because of his slightly higher sales volume each month) GOT A TRIP ON THE CORPORATE JET to the company golf tournament in Atlanta. They learned when they began to measure traffic that the Jacksonville location was seeing approximately 2450 customers a month and DRUM ROLL PLEASE... Orlando was seeing 6200 customers each month. Wow...that's 2 and 1/2 times more traffic. SHOULD HAVE BEEN FIRED ... NOT PRAISED. This manager should not have been allowed to work at McDonalds. It is crystal clear that he was so understaffed he was causing his showroom to lose over $400,000 per month in gross sales. The RPU in Jacksonville was $345 and in Orlando it was $147 per opportunity. It's difficult to understand how a manager could allow this to happen until you realize the impact a strong sales team can have on a weak manager. When I owned my seven store chain in Houston I can not count how many times a salesperson would come up to me and say. Hey Dave...I know we are a little short handed but do you mind not hiring any more salespeople, so we can make same money. They would always say... we promise that we can handle any overflow. This is the kiss of death for many companies today. Its easy to see the salespersons point of view. They believe the pie is only so big, and if you bring in more salespeople you are taking customers away from them and food right out of their children's mouth. Trust me, they resent it. No wonder it's difficult to keep new people. The veterans hate newbie's...and sometimes sabotage their possibility for success. If not with deliberate actions, at least with a cold shoulder and absolutely no assistance (unless you're watching). Most salespeople don't realize how much money they are losing and that the company is losing every day if you are not properly staffed. Little do they know that RPU when measured by salesperson along with a staffing comparison to hourly traffic will permit management to identify where the bleeding is and how to stop it. DID YOU KNOW THAT YOUR BELOW AVERAGE SALESPEOPLE SOMETIMES TALK WITH THREE TIMES MORE PROSPECTIVE CUSTOMERS ON THE FLOOR THAN YOUR TOP PERFORMERS... I have seen even worse than a factor of three to one on high traffic floors. Your superstars when they engage a customer are very successful at getting to second base and developing a relationship with most of the people they meet. They spend more quality time with each customer and are very likely (when they give a customer a full presentation) will more often than not, write an order. Your below average performers can't get to first base so they don't give as many presentations but they talk with many times more customers. When you measure RPU by salesperson you learn so much about your company it may surprise you. There are only 2 ways to improve RPU. Increase the average sale or increase the closing ratio. These are the key benchmarks in determining the success or failure of a manager and are the primary focus of any successful manager. RPU is easy to learn and can be learned immediately and can open.your eyes this afternoon just by accurately counting opportunities by salesperson. If you haven't counted before, Get on the sales floor and find a comfortable chair where you can see the activity at the front door. Let everyone know that you don't want to be disturbed and just keep track yourself for a least several hours. If you can't do this, hire a high school kid and track the activity. I recommend for at least one solid weekend. After that you might want to consider a free trial of the TRAX Automatic UpBoard. There are many benefits of putting RPU into your arsenal of power tools most notably benchmarking performance by salesperson compared to everyone else and most importantly compared to your projections. Believe me, if you are saying things like...We need a __% sales increase and you are not providing your managers with an accurate RPU, then you are probably not even aware that you are on a dead end street to zero improvement. -How many Ups does each associate speak with each month? -What is their closing ratio? -What is their average sale? -Closing Ratio X Average Sale = RPU For a small amount of initial effort and almost zero cost to you or your company you might be amazed with the immediate benefits of this new tool.... Dave Mink is the founder and CEO of TRAXsales.com since 1996 and has been a retailer and manufacturer in the Home Furnishings Industry for over 26 years. TRAXsales provides traffic counter technology along with UpBoard software which measures sales missed and provides automatic follow-up with all customers. Call his company for a FREE 30 day trial. 888-646-5462 or visit www.TRAXsales.com for more info.