ARE YOUR SALES PEOPLE DRIVING BUSINESS
 – OR JUST ALONG FOR THE RIDE?

By: James Hallman

Which drives business most – People or Inventory?

Sure, you buy great looking merchandise.

But, assuming you purchased your merchandise at the right price, the right amount for each classification and the right delivery time, your sales process is just getting started. There are few secrets in retail. Your competitors probably have very similar merchandise. Fortunately, 80% of the reasons someone will shop in your store is because of other factors. The key is to develop the other 80%.
A big chunk of that other 80% is your salespeople.

Chances are, unless you are a popular-price mass merchant, you have people on the payroll who were hired in as salespeople, not clerks. Just as no specialty store owner today can open the door and wait with arms folded for customers to walk in, neither can we afford salespeople who do not generate business. The salesperson who only serves customers who walk into the store are like taxi drivers who only carry you part of the way to your destination.

The role of the salesperson today has changed from communicating value to the customer to creating value for the customer. (And that doesn’t mean giving unauthorized discounts!) It means finding out what it is that customers value, and then creating ways to provide it through the store and its products.

If your customers value TIME, the winning salesperson will find a way to save them time.
If your customers value RELATIONSHIPS, the winning salesperson will develop and maintain a relationship with them.
If your customers value CONVENIENCE, the winning salesperson will find ways to make it more convenient for them to do business with the store.

Winning salespeople also constantly look for ways to improve their personal professional performance

They constantly track their percentage of sales to walkouts; items per transaction; and average $ customer sale. They are always “prospecting” for new customers – they hang out where their prospective customers hang out; join networking groups and attend Chamber of Commerce and Merchants Association meetings. They have a “can do – will do” attitude.

A wonderful example is “JP”, a salesperson for one of the country’s leading bicycle retailers. JP was on a ride with a local Women’s Riding Club and was injured in a spill from her bike. The result was a nasty gash in her thigh that required about 23 stitches. The doctor told her to stay off her feet for a few days to give the wound time to heal.

Laying around and doing nothing isn’t JP’s style.

She asked the owners of the store if she could have a list of the customers who had bought bikes over the last 90 days so she could call them from home and invite them to come in to the store for their free 90 day safety inspection and adjustment.

All of them appreciated the follow-up, and most did bring their bikes in. A majority asked when JP expected to be back at work, and they waited to come in after she returned, so that she could work with them personally. Quite a few happily bought additional items while they were in – generating over $2300 in additional business!

Since that particular store has been a client of mine for several years, I know JP and the rest of the team pretty well.

 When JP won my “Team Member of the Year Award” a few months ago, she wrote me a letter, thanking me for the award. In it, she made the following comment: “I thank God every day for my wonderful job, and for the people I am surrounded by.”
So, how do you know who the star sales performers are? Or the weak ones?

The most common way is to track their individual sales and measure their productivity.

Productivity is measured by dividing their earnings by their sales.

For example, a salesperson earning $35,000 per year, with annual sales of $350,000 is producing $10 in sales for each $1 paid. That person costs you 10% of their sales.

A salesperson earning $2000 per month, and producing $15,000 per month in personal sales, is costing you 13.3% ($2000/$15000).

A “rule of thumb” for most types of retail operations is a salesperson should cost you no more than 10%. In other words, they should be producing sales on a 10 to 1 ratio to their pay.

• Salespeople who are costing you 7.5% or less should probably be raised, either in base pay or in commission rate.
• Those costing you 7.5% to 10% are average producers, earning their paycheck.
  
• Those costing you 10.1% to 14.5% need to improve their skills. You should consider coaching and additional sales training for them.
  
• All other things being equal, any salesperson costing you more than 15% should be replaced.

ABOUT THE AUTHOR: James Hallman has over 40 years in retail management, both corporate and entrepreneurial. For the last 18+ years, he has operated The Hallman Company, a retail consultant agency based in Atlanta, Georgia. The Hallman Company specializes in bringing best-of-class services to best-of-class specialty retailers. Services include inventory planning with pre-calculated open to buy, and team management training.

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