Most retail stores would agree that they can improve their sales performance. What I observe though, is that store mangers and sales managers often do not know how to get better performance from their staff as they do not not know what performance indicators to measure their staff with and coach them to improve.
To coach people to improve their performance, a standard is required against which they may be compared. The standards are usually ascribed by a performance indicator. An indicator may be in the form of an observable behaviour, or it may be a numeric or literal indicator.
Coaching retail sales people requires all three types. In my experience, a combination of the following performance indicators generates enough data to coach sales people.
Behavioural indicators may include:
Adherence to a Code of Conduct
Adherence to the organisation’s business values as encapsulated in a documented code of conduct. The code of conduct should require adherence to policies and procedures and describe the appropriate interaction between sales people, customers and one another.
Behaviours which go against the code of conduct on the shop floor have a deleterious impact on customer perceptions and on staff morale. They should not be tolerated.
Personal Development is comprised of two indicators:
Attendance at Training Courses
- The percentage of training courses attended by a sales person of the training courses recommended for the same sales person over a certain period.
Progress Towards Coaching Targets
- The sales person’s progress in achieving their coaching targets (for numerical targets) and/or changed behaviour (for behavioural targets).
Store managers may also be coached against leadership indicators.
Leadership comprises four elements:
- Completion of coaching sessions with sales people
- Completion of customer service calls (follow-ups and telesales)
- Sales people’s adherence to the code of conduct
- Sales people’s attendance at training; the percentage of courses attended during a period of the courses recommended over the same period
Literal indicators may include:
Shop Presentation and Merchandising
Shop presentation and merchandising comprises two elements:
- The number of advertising hero lines represented amongst floor stock.
- Adherence to the store merchandising checklist.
Numeric indicators comprise two groups; the overall sales result and sales effectiveness.
Overall sales result
The $ value of sales booked (i.e. accrued income), over a certain period of time.
The crudest indicator of a sales team or sales individual’s results. It gives little information about how effective a sales person is. It is usually required, however, for headline comparison.
Meeting expense targets within budget for a given period.
This is an indicator for the store manager. It gives some information on how efficient the store is when it is expressed as a percentage of sales booked, as well as a straight number.
Gross profit (sales revenue minus sales costs) divided by sales revenue.
Variations against a target value for product categories reveals information about the tendency to offer discounts to get the sale. If the sales booked number is very good, a low number here may be tolerated. If the sales booked number does not meet the target and this number is low, then some coaching of sales staff is warranted.
Sales by Hours Worked
The $ value of sales booked over a period divided by the number of hours worked over the same period.
This indicator ascribes an individual’s ability to sell. Care needs to be taken to set different targets for individuals with varied levels of experience and ability. Do not set everyone the same target.
Items per Transaction
The number of line items sold over a period divided by the number of transactions occurring over the same period.
This indicator gives an indication of the sales person’s ability to cross-sell.
Average Sale Value
The $ value of sales booked over a period divided by the number of transactions occurring over the same period.
This indicator gives an indication of the sales person’s ability to up-sell.
The number of transactions recorded in a period divided by the total number of customers who entered the store in the same period.
This indicator is the strongest indicator of sales ability. It requires a store traffic counting system. The simple ones are cheap and should be used. Properly set up, their accuracy is within the 2 to 3% range. The more sophisticated versions enable indicative conversion rates to be determined for an individual sales person.
When this indicator is combined with items per transaction, the average sale value and the gross margin indicator, any store manager should be able to coach a sales person on their effectiveness.
The number of extended warranty sales made over a period, divided by the number of transactions over the same period.
When the sales item is a physical good capable of carrying a warranty, this is a simple indicator of add-on sales effectiveness.
Retail selling appears at times to be an art rather than a behaviour or skill. It is not. It can be coached. To coach any behaviour or skill there must be an appropriate standard to reach and an indicator to measure progress towards the standard.
Utilising a combination of behavioural, numeric and literal indicators related to performance standards, sales people can be coached to improve their performance.