There’s an old saying about pioneers – they inevitably finish with arrows in their backs. This is a good metaphor for the power of competition, particularly when it comes to business. Those who are leaders are constantly having to look over their shoulder to see what the chasing crowd are doing, and those who follow get a birds-eye view of the minimum level of performance they need to be achieving.
Leaders set the benchmark for others to strive for. The space race during the 1960s between the Soviet Union and the US drove levels of achievement in space exploration that culminated in the moon landing within ten years. Had the Soviets not sent the first person into space the US may not have been stung into action as quickly. Roger Bannisters breaking of the four-minute mile led to a flurry of other athletes passing the target within an 18-month period. It’s likely the consistent achievement of four-minute miles wouldn’t have happened as quickly if an early leader hadn’t set the standard for others to follow.
The best thing about following the leader is you get a pretty accurate indication of what’s possible. This is true of performance both within your store and when compared to external competitors and colleagues. Having data for best practices can make all the difference. If other stores are achieving a higher margin, why can’t you? If some members of your sales staff can achieve an average sale of $200 why can’t the rest?
So how do you know what the best practice level of achievement is? You have this data at your fingertips daily through your reports. Let’s talk about your salespeople as an example.
Do a salesperson report. You should be able to arrow in on the performance of staff versus each other and the store average. The benefit of benchmarking to each other is it shows the ‘best practices’ being achieved by certain staff and hence what others can achieve also. What is your threshold for average retail sale achieved? How many of your staff are achieving above this level? Who are the staff members achieving less than this ideal average? These are the staff members who need training in this area.
What would happen if these staff members could achieve a level equal to the median average retail sale for your store? Your software may offer a ‘What if’ scenario which will show what your sales would improve by if your lower average sale staff managed to lift themselves to this median threshold. If not, you can work this out with a calculator.
What about discounting? If you have a situation where more than half your sales are made at a discount across the board this may reflect the number of reduced items instore or perhaps a cultural issue you have around discounting. If only some of your staff discount heavily and others don’t that is an issue that can be managed individually through training. Comparing the practices of your lowest discounters versus your highest will show what can be achieved.
Again, use your data to see who discounts more than the store average. What would your bottom line improve by if they improved this to the store average discount level? A staff member discounting by 5% more than your store average on $500,000 of annual sales will be taking $25,000 off your bottom line. Training for staff who discount more than is necessary could include dealing with discount pressure from customers or how to shy away from selling catalog or specialized items by substituting higher margin pieces.
If you’re losing $25,000 in profit from one person’s discounting compared to the average store discount, can you afford to train them in how to minimize this discounting? Can you afford not to may be more accurate!