By Kevin Cundiff, Fortegra
Whether a VP, store manager, or regional chief, your resources and time are limited. And, like most in retail, you’re looking at the bottom of ranking lists for determining how to assign those resources and your availability. After all, low performers need a helping hand, right?
A normal response to the question about resource allocation is to help those that are in need of the most help, and as part of the retail industry, you may often think ‘If I could just help Store/Rep A to sell more like Store/Rep C, our figures would really jump!”
It’s natural behavior to push someone that’s lagging behind, but is really that efficient? Is spending your limited time and resources with the bottom of the roster truly the sensible way for boosting your bottom line?
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Introducing Retail Moneyball
Similar to the Oscar-nominated film (without Brad Pitt) Retail Moneyball takes a fresh approach to analyzing retail statistics for maximizing your bottom line.
Retail Moneyball is about finding a balance between your existing sales and opportunities and those opportunities that could measured by metrics (foot traffic, conversion, door swings, etc). And because numbers tell a story, it’s about taking a realistic look at analytics, so your decisions are based on data and not just your gut feeling, or conventional wisdom. It’s still about “getting on base” and “scoring runs,” but for retailers do so best by identifying the stores, reps and locations that show the greatest opportunities, rather than those with highest or lowest sales figures.
Yes, there are situations when your greatest opportunities will line up with your lowest performers. But, more often those larger opportunities exist at the top of middle of the organization where, often, resources are not allotted. Once you’ve come to terms with the fact that your best changes are with your top performers, you are ready to win big with Retail Moneyball. So, what’s next?
1. Performance EvaluationAs a busy retail leader, your focus should be assigned primarily to those stores and reps that can provide the best results to scale. For high opportunity performers, bumping up the sales on-base percentage one or two points results in more revenue when compared to moving lower performers the same amount.
Example A – Attaching Widgets
For this example let’s assume your business sells furniture as its primary revenue source but earns additional revenue from selling protection plans. You realize your stores are leaving money on the table by not attaching more protection plans to each sale, so you start working with the ones with lowest attachment rate. Smart strategy?
You know it’s nearly impossible to make huge jumps, but in the limited time you have you feel you can get 3% lift out of three stores. So, which would you pick?
Conventional wisdom would have you choose the three highlighted in yellow. Those have the lowest attachment rates and, in this situation, would have produced an additional 137 protection plans sold.
Now take a look at the stores highlighted in green. Moving the needle just three points in high performing stores produces 204 additional protection plan sales. Focusing efforts on high producers generated more results with fewer resources.
By assigning location and rep support around top performers, you can minimize resource waste and maximize efficiency.
2. Teaching vs. Training
Teaching = imparting knowledge Training = imparting skills
Many companies mistake teaching for training. Often the focus is on “refresher courses” that teach sales teams knowledge they already have, as opposed to proper training that arms them with skills to execute what they already know. Example B – A Line In The Sand
Ok…now it’s your turn. Where would you place the following three topics? 1. Compliance/regulatory guidelines
2. Closing a sale
3. Following up post-sale
While we do suggest a knowledge check at the beginning of any training to ensure the group doesn’t need to be taught, gaps should be plugged within the first few minutes. But once those gaps are filled, it’s time to build some skills.
3. Setting Standards
You’ve built up those skills; now it’s time to set some new expectations. Establish your new Key Performance Indicators (KPIs), but limit them to key growth areas so reps can focus on what really matters to the business, not just what’s important at that moment.
Accelerate earnings for top performers, those who maximize the opportunities presented by Retail Moneyball. And hey, you can motivate the back of the roster as well. Compensate those that charge into the newfound space and incentivize them to reach your new standards. A rising tide lifts all boats.
But don’t stop there. Once the majority of the organization meets the new standard, continue to raise the bar and let them charge into the opportunity again. And be sure to be a stickler about reporting. By following through and consistently updating your team on key measures and performance progress, you can build confidence and inspire even greater performance. Remember: if you can measure it, you can move it.
Example C – Setting Proper Goals
Typical commission structure practices reward higher performing sales reps with tiered incentives. In this example, a higher attachment rate delivers a higher commission.
With such a high percentage of reps already achieving the ‘Medium’ tier, and a decent number already hitting the “High” tier, it’s time for this sales organization to up their tiers.
If you’ll notice, we did see a slight drop in sales reps reaching the ‘Low’ tier. But the increase of 15% more reps moving into the 40% attachment tier means more sales for your stores. We even added a $15 bonus for reps that reach the newly established ‘High’ tier. With the percentages in good balance, management can leave the tiers where they are for awhile.
Eighteen months in and we’ve already had to add a “Peak” tier into the structure. Although few have reached it at this point, it’s provided the 25% of the staff that’s moved into the “High” category something to really strive for. Also, over the 18 months we had an additional 45% of the sales staff reach a 40% attachment rate, helping them earn some serious cash and giving you a huge boost in overall revenue.
It’s Important To Note: The Retail Moneyball concept is a process, not a magic pill. And like any process it takes effort over time. Support your top performers, make most of your efforts, and we’re certain that success will follow.
Kevin Cundiff serves as the VP of Warranty Retail, leading customer experience and partner relationships in Fortegra’s Warranty division (wireless, furniture, appliance, and jewelry). Utilizing his more than 16 years of experience working with both carriers and dealers in the wireless industry, Cundiff focuses on data- driven analysis, team member growth, and the overall development of the Fortegra Warranty Division.
