By the time you’re reading this article, the 2014 Sochi Winter Olympics committee will have awarded its last trio of medals. The athletes will have boarded planes back to their respective home countries, and only the elite few will have cemented their places in Olympic history.
On a worldwide competitive stage like this one, the difference between immortality and obscurity is often a matter of microseconds. Events are won or lost by hundredths of a percentage point. And the single factor that separates the winners from the losers is precise and consistent measurement. Without it, the whole system falls apart at the seams.
So what does this have to do with retail?
Well, the stakes may not be as high for the average sales associate, but the parallels to performance visibility and measurement are hard to ignore.
Let’s imagine our salespeople are downhill skiers competing to qualify for an Olympic squad:
If all the conditions are equal (the wind speed and temperature are constant, everyone’s skis are equally fast, they all ski the same route, etc.), more often than not, the best skier wins out. Picking the right Olympic team is as easy as clocking each competitor’s time.
But if the conditions aren’t equal — say, if skiers individually submit their times from all over the country — a poor skier with ideal conditions and perfectly waxed skis may appear to be the best performer, when in actuality the star athlete’s time was artificially deflated by challenging conditions and slower skis, effectively obscuring his or her natural ability.
Until we zero out those variables, choosing the true top performer is next to impossible — or at the very least, a matter of guesswork.
This is why all the hopefuls gather in one place at one time for Olympic trials. Once the external influences are eliminated, it’s easy to pinpoint the most talented racers with accuracy and select the best team.
Now let’s apply this logic to a retail sales team.
Since we can’t gather all our associates in one place for an ultimate sales trial jamboree and crown the champions, we have to find some other way to reduce variability and measure success.
Let’s examine two associates in two different stores: Sonia at the Forest Mall location, and Ivan at the Wicker Park standalone store.
Sonia averages $310k in annual sales, while Ivan only posts $92k per year. At first glance, Sonia would appear to be the superior salesperson, and you might be inclined to pay her more and assign her more hours. Not so fast.
With some added visibility, we’ll find that the building blocks that make up these net sales figures tell a different story. It turns out that Sonia works at a dramatically higher traffic location than Ivan; Sonia is full time while Ivan only works weekends; and Sonia consistently works her store’s busiest hours, while Ivan is left with the lowest traffic shifts.
What we’ll learn from this additional data is that Ivan is converting far more of his store’s limited visitors than Sonia, and he boasts a significantly higher average dollars-per-transaction. Clearly, Ivan is doing more with less, and Sonia isn’t taking full advantage of the opportunity she’s been given.
Wouldn’t it make more sense, then, to give Ivan the advantages that have been afforded to Sonia? Even if he performs at a fraction of the level he’s operating now, he would still outsell Sonia in nearly every category, and the ROI both from his hourly paycheck and the costs associated with running his store would be dramatically improved.
Let’s take a step back and look at this from 30,000 feet.
Every store has good performers and bad ones, but it’s nearly impossible to identify them without the right metrics. An associate like Sonia could be hitting huge sales numbers, but we’ll never know if her success is a product of good old-fashioned sales aptitude or some other collection of variables that influence her bottom line.
This presents us with two important questions:
- Why do companies look at individual net sales (or Sales per Hour – SPH) as benchmarks for employee success, when there are so many other factors muddying the waters?
- Store team members obviously have a range of abilities, so why do we so often treat them all the same?
The short answer to both is: expediency. Most retailers view sales force behavior as inherently uneven and too difficult to quantify, so they assign hours and make payroll decisions with a “set it and forget it” mentality. But that’s a fundamentally limited approach.
To find a better approach, we need to look more deeply at retail at its core.
Physically, a customer walks in the front door, has a positive or negative experience, and either purchases (whether one item or a cart-load of goods) or leaves empty-handed. That interaction gets repeated hundreds of millions of times every single year for any sizable retailer.
If we don’t have a repetitive process to measure that experience (down to the individual team member level), how can we optimize our staffing decisions with any degree of accuracy?
It’s impossible. There are elements of the buyer/seller relationship that need to be standardized, and there are elements that need to be improvised, but the challenge is to know which is which.
And at the root of that knowledge is a thorough understanding of what’s going on inside our stores at a molecular level. If we are using net sales as the sole criteria for gauging individual performance, we are all but guessing at whom our most efficient salespeople are, and the natural reaction is to start twisting dials aimlessly without the ability to appropriately measure their outcomes.
But if we drill far enough down into our store operations and start to understand the factors that contribute to success (for example, measuring sales revenue against customer visits rather than as an isolated figure), we not only begin to twist the right dials, but we get a real-time look at the needle we’re moving to ensure that we’re twisting in the right increments.
Luckily, there is an abundance of new data, metrics, and insights (I’ll explore those in my next article) that allow this optimization strategy to take root. With them, retailers can open up a clear window to monitor store performance in real time, accurately measure and reward team member success, and craft a structurally sound blueprint from the top of the organization down.
With over 25 years of experience partnering with today’s leading brands, The Yacobian Group has developed a platform to help you shed this type of light on your sales force and harness its full potential. Toni loves talking with like-minded, forward-thinking retailers. You can reach her here: firstname.lastname@example.org, 978.758.2281 (mobile), 978.461.4501 (office).