|Retail Successentials September 2014:Maximizing productivity pays off in improved customer service|
|Written by Bill Nielsen|
|Monday, 11 August 2014 12:09 PM America/New_York|
Employ a simple data solution to make your store hum
Being productive is something everyone can agree on. But, truth is, many frontline operators do not track the all-important metric of retail productivity. Doing so, however, brings new accountability to how they schedule their staff and how they train and lead their team to sell.
In other words, retail productivity is the art and science of increasing the sales revenue you create for each man hour worked. Drive productivity too high and your customer service will suffer, which is sure to lead to lost sales opportunities. But if it is too low, you are spending too much on payroll and killing your profitability. So let’s review the ins and outs of retail productivity.
First and foremost, we need a clear definition of productivity, which is sales revenue divided by the number of man hours worked. You can either track all man hours worked or only man hours worked on the sales floor. The key is to pick one method and stick with it as your baseline.
Next, we need to make sure you are set up to capture clusters of productivity data. The ideal data set is to make sure you capture sales and man hours worked for every hour of every day. You also need to be able to see this data by store location and by employee. Viewing the data by hour helps you spot when you have too many or too few staff working. Viewing the data by store and/or by employee allows you to compare stores and employees to learn from the best and to help those on the low end grow.
Capturing the actual data is the next step. In order to manage this area of your business quickly and effectively, you must invest in technology. While larger companies will find the top-of-the-line analytics solutions from RetailNext or Trafsys the way to go, smaller retail stores that want 90% of the features in a cost-effective solution that is easy to install and use will appreciate a solution called SWARM, which is offered by CKsystem.com.
Solutions like SWARM can cost as little as $99 down and $69 per month. They not only help you measure and manage productivity, but also can tell you how many people walk by your store versus the number that come in to shop, enabling you to measure traffic and determine what percentage of “lookers” you convert to shoppers. They can even automatically send a message to lookers’ smartphones to give them a special offer or enroll them in your loyalty program.
Generally speaking, you get what you measure and you always deserve what you tolerate. When it comes to productivity, it is important to measure and compare the data to threshold (minimum acceptable metric), target (ideal metric) and peak (maximum acceptable metric) goals. Productivity goals for each business will vary. Specialty retailers often set their threshold metric and peak metrics at 80% and 120% of target, respectively. So, if you determine that you want each man hour worked to generate $150 in sales, that becomes your target. Threshold is then set at $112.50, and peak becomes $187.50.
How do you move the bar? Praise staff who excel. Any store and any employee delivering between $112.50 and $187.50 in sales for every hour they work is to be recognized and perhaps even rewarded.
Conversely, coach those who underperform. Those performing below $112.50 need to refresh their selling skills.
Also, don’t forget that you might be the culprit behind productivity that is too low or too high based on how and when you are scheduling your staff. To avoid this, run productivity reports by hour and by day. Then divide the hourly sales by $150 to determine how many employees you need to have scheduled to work. While creating an acceptable schedule will result in some hours having lower or higher productivity, you should not have any hour scheduled below your threshold or above your peak target metrics. You will likely find that you need fewer full-time employees and more part-time workers with flexible schedules.
Once your schedule is published, you are now set to focus on training and developing selling skills for each of your team members. Another important factor in productivity is to train your managers and/or shift leaders to adjust staffing as needed based on actual hourly sales achieved that day versus the forecast sales assumed in your schedule. Letting people go home early or calling others in to staff up is ideal. At a minimum, reviewing the results each day and then adjusting the next several days is a useful approach.
So, between the science of capturing the right data and the art of coaching, training and adjusting schedules to actual sales patterns, you will find that you are able to provide better service to your customers, maximize sales opportunities and make sure your payroll costs are managed well. The combination of higher sales and lower payroll equals greater profits for you.
NEXT ISSUE: We will focus on the topics of inventory management and improving inventory turn.