Rethink and Retool Your Business - 08 Guide

Worried that the economy and the retail front are changing? Stop worrying, they’re always changing. Successful retailers are by nature top performers who welcome the challenge of succeeding in any market condition. They welcome change and the opportunities that come with it. 

The national housing slump has most flooring retailers complaining of a slowdown in their businesses. It seems there are fewer customers to go around, they say. That may be true, but one thing is for certain, you still have a business to run. You know you have to savor every customer, old and new, big spenders or small, and find ways to get and do better business. 

So, it’s back to business basics. Before you go out and load up on products, set up merchandising plans, train your salespeople and head to market, you need to get your businesses in order. You must examine the business as a whole, looking at all aspects so you know where you are and where you want to be. You need to get a firm hold on your numbers, operations and margins, know exactly where your business is coming from, pay better attention to and monitor the customers you want, then make adjustments for the prevailing economy. 

The following are strategies to thrive on that you can implement immediately for little to no cost, yet they will impact your business in a huge way. 

Identify your priorities 
Doing business and getting more customers needs to be Priority One. Many retailers are reporting that margins are actually up, which means better customers are shopping but store traffic is down. Although making more money on each sale is definitely a plus, losing customers may be the problem in the long run. Satisfied existing customers can bring you referrals, and the more satisfied customers you have the more referrals you get. Pay attention to your customers. Keep the current ones happy, maintain monthly activity reports and keep your customer database current—that’s your profitability lifeline. To truly make more money, a successful retailer needs to do more than try to boost the bottom line by increasing prices. It takes more sales, and that takes more customers.

Know what’s bringing customers into the store
It’s critical to analyze your customer base and know where customers—the faithful and the new—are coming from. Has the demographics for your area changed? Know the traffic count on the street in front of your store and the long term population projections, and study the business or community master plan. You can get valuable building permit information from your municipality. Put everyone on notice that you are actively seeking new customers and are willing to pay for them. If non-salespeople are bringing in customers, work out a commission structure with your salespeople so everyone wins. Consider a finders fee to any employee who brings in new business. 

Keep on top of your business
Knowing your break-even figures at least monthly will help you make changes quickly. Train yourself to think in real time. Make it a point to set a date every month when all business data are “put to paper.” That way, you will know not only your current situation, but also what your month to month trends are. You’ll also know where you are in terms of your forecasts. And you’ll become a more agile business decision-maker. Check your commission figures and determine if there’s more outside business to be done. When in doubt, put people on the road when it’s slow but not before brainstorming with your staff, which should help ferret out new customer opportunities. Check your traffic numbers daily and match them to your busy business hours and staffing patterns. If you’re not open on the weekend, consider putting someone on straight commission who’s willing to work a short day. It won’t increase your fixed costs and you may be surprised at the outcome.

Never underestimate the power of credit
Store financing, or private line credit, is bigger than ever with stores in all categories offering one, two and five year, same-as-cash/no-payment programs. Every customer who comes through your doors should be offered a special financing program. Describe financing as a way for customers to fulfill their dreams rather than a way to pay for their purchases. That distinction is important if your salespeople are going to build a profitable customer base when times are tight. Salespeople often present financing to customers who they think need it, not realizing that it’s not about need; it’s more about helping customers maximize their wants and selling more higher margin goods. Salespeople may have to change their mindset and stop stereotyping their customers.

There are also some mistaken opinions among salespeople about “losing” money when offering financing. Statistics still indicate that the store financed purchase is three times higher —that means the sale and commissions are three times greater —than a cash or revolving credit card purchase. No matter what the fee is for using the credit card, the salesperson should still benefit from a higher commission. Salespeople will have to retool their thinking to upgrading every customer and offering the financing as almost part of their introduction.

Put it this way: Would your salespeople prefer to make a $1,000 sale, taking into account the pennies they might lose, or a $3,000 sale using financing to leverage the bigger deal and bigger gross commission? In those terms, financing costs them nothing; it gets them more money. And even more when they come to realize the $3,000 customer is also the customer for profitable accessories, custom installations and repeat business.

Re-evaluate your niche
Softening economies are a good time to survey customers who are no longer buying from you or those who said they would but didn’t. Lost customers aren’t a true loss if you use them to evaluate where you’ve come from and where your customers are going. Knowing if or why they bought somewhere else will get your salespeople to put more effort into their follow ups. This might also be a time to bring in a panel of happy customers to evaluate what you’re doing right so your staff can do more of it. Once you have solid data on your customers, some targeted training is in order. What are other stores doing that you’re not? What best practices can you adopt to boost numbers? What can you do better than your competitors?

Good news! Shopping is here to stay! 
So, revamp your customer offering. Women still tend to be the primary buyers for flooring. As shoppers armed with Internet research, they can be as smart—or smarter—about flooring than the salesperson. To sell and sell best, listen to what the customer is telling you and what materials she’s collecting online or in magazines. Is she concerned about installation, more technical aspects of flooring, or is she fashion oriented?

Whichever it is, make whatever changes are necessary in your approach.

Copyright 2007 Floor Focus