"Lean Retail", Sales Efficiency and Print

Counter intuitively it turns out that the most sustainable business is retail. By retail I mean the sale to ultimate consumers. The logic of 21st century business is the relentless focus on the ultimate consumer. In that specific sense the winning firms are all in the retail business.

It's a much longer story, but for now, I hope it helps you understand why I think the article in yesterday's Wall Street Journal should be interesting and how it might apply to selling Print. The title of the story is Retailers Reprogram Workers in Efficiency Push. The date is Monday September 10 and the author is Vannessa O'Connel. It starts on page one, then jumps to A11. Here's some of what Ms O'Connel has to say

Retailers have a new tool to turn up the heat on their salespeople: computer programs that dictate which employees should work when, and for how long.. . .(the computer program) displays (the sales person's) 'performance metrics': average sales per hour, units sold, and dollars per transaction. The system schedules the most productive sellers to work the busiest hours.
. . .
Such workforce-management systems are sweeping the industry as retailers fight to improve productivity and cut payroll costs.
. . .
The systems stand to have a broad impact on the work lives of Americans. Some 15 million people work in the U.S. retail industry, making it the nation's third largest private sector employer.
. . .
Wal Mart Sores, Inc. just completed a year long roll out of a computerized scheduling system for 1.3 million workers. It cited 12% labor productivity gains as a key reason for improved results in in its fiscal quarter ended Jan. 31
. . .
AnnTaylor spokeswoman Maria Sceppaguercio says the company's goal was 'having the right people in the stores at the right time, and about being more productive with the store labor hours. It was not about cutting the payroll.
. . .
Because the system awards more-productive salespeople with favorable hours, it gives employees an incentive to persuade shopper to buy things.

Here's the payoff in changing the culture on the selling floor:

In the Langhorne store, after sales-per-hour figures became the determining factor in scheduling, the atmosphere changed dramatically, current and former employees say. When a customer entered the store, employees would angle to get credit for a sale, and thus boost their sale-per-hour numbers.

There's more about the size of the "human-capital management" industry, how it generates savings that go to the bottom line and many other details.

Now consider this scenario:
Mr and Mrs ABeeCee were looking at the cost of getting new customers (customer-acquisition costs) for ABC Printing. They were getting about about 300 estimate requests a month, but only converting about 6%. It seemed like a lot of wasted time and effort. Were their prices too high or were these the wrong customers? They didn't know.

Plus they had some salespeople who were great at opening, but couldn't close. Others who loved the hunt and hated the follow up. Others who loved to farm their book of business. Meanwhile, the sales people always seemed busy and often whined about how slow the market is. This just wasn't working for anybody.

Given that it was broken, they decided to try a different approach. They analyzed the strengths of each sales person. They set up a bunch of easy to calculate performance metrics to get some view of the right bin for the right salesperson. The three bins were hunters, farmers and high value CSRs (those who loved to manage the relationship, but hated hunting or farming).

Then , every other day at the 10:00 coffee break all the customer interactions were evaluated by a team - made up of Mrs ABeeCee and two of the top producers. At first the two producers complained that this would cut into their sales time. But eventually they were convinced that getting a very close look at ongoing customer interactions was the worth the time invested. Plus they got extra gas mileage allowances for each meeting they attended.

Every customer interaction -face to face meetings, estimate request, first job and couple of jobs was looked at every other day. It only took a couple of minutes on each one to decide the best next step for this potential customer . . . give them to a hunter, are they ready for a farmer, or do they need a customer relationship manager? Based on the team's collective judgment and past performance, the right person was given to the right customer at the right time.

While the experienced productive pros could do it all, the less productive could only do one thing really well. Mr and Mrs ABC figured out a way to fairly compensate everyone involved with the customer. The normal commission was broken down between the hunter, the gatherer and the CSR. That, and getting the sales people to share their information about a customer, was the really hard part. It was a voluntary system, but if a salesperson decided not to play, they didn't get a piece of this new action.

At first the sales people whined and complained. But after a couple of months every one was focused on the part of the sales process they liked to do. Amazingly, they all made more money with less stress with a relentless focus on what they were great at. And felt secure about handing off the part they were not great at.

AnnTaylor spokeswoman Maria Sceppaguercio says the company's goal was 'having the right people in the stores at the right time, and about being more productive with the store labor hours. It was not about cutting the payroll.

Mrs ABeeCee says the company's goal was 'having the right people interact with the customer at the right time, and about being more productive with the people on their selling staff. It was not about cutting payroll costs, it was about generating more revenue for everyone.