SALES_Blog_1100x600

Retail executives tend to track sales figures as their most important metric, but in my experience, trying to maximise sales figures alone makes little sense. As in sport, focusing on the score won’t work on its own. Only good and consistent practice, combined with a commitment to continually improve skill and technique will deliver the desired results. The scoreboard simply reflects the results achieved in the more mundane variables.


On the retail scoreboard, sales figures for a period emerge from three elementary variables:

  • NUMBER OF ACTIVE CUSTOMERS multiplied by
  • FREQUENCY OF THEIR PURCHASES multiplied by
  • AVERAGE SALE TRANSACTION VALUE giving us
  • SALES

Like in sport, each of these elements needs to be mastered and driven hard if you want to increase the total. The total itself needs to be recognised as a mere aggregate – of interest to accountants but not really important for merchants and those involved in retail operations.

How can a retailer increase the number of active customers, encourage them to buy more frequently, and sell them more every time they make a purchase?

Getting new people to come through the door to look at what you have to offer can be done relatively easily with a good marketing campaign. The real challenge lies in making sure that once you’ve attracted new shoppers they don’t leave the store empty handed, and even more: come back at some stage. Ideally, their experience should also motivate them to tell their family and friends to try you out as well.

To achieve this you need a three-pronged approach:

  • Make sure you have stock. Customers usually walk away if you don’t have what you claim to sell. It makes no difference to them whether you don’t just have their size, colour, or the whole style. As a rule of thumb: if in doubt, having too much stock costs less than missing out on a sale. Just make sure you hoard good stock, not obsolescent duds.
  • Make sure you stock what people expect to buy from you. Retailers who analyse out-of-stocks routinely do so only in relation to their current range. Such a self-serving measure can be misleading, as customers will still be disappointed if you don’t have what they want – irrespective of whether you failed to replenish it correctly or whether you didn’t range it in the first place. Start by tracking what customers ask for that you don’t range. Also, periodically review your range at a category level to make sure you don’t lose sales by failing to range new or fashionable items.
  • Continually train your staff in sales techniques and add-on selling. But also make sure that you employ staff with the right attitude. People with friendly personalities will naturally make your customers feel more welcome and appreciated. This in itself will help add value to each purchase.

Don’t rush to get customers through the door

Resist the urge to boost your sales prematurely i.e. don’t promote your business until you can deliver well.  Otherwise, the money you spend will be wasted on attracting people only to disappoint them. Not a good idea.

Getting stock and service quality right needs to happen first, before you ask people to come in and check you out. If you follow this sequence, you will gain lasting value from attracting more customers; a good experience will motivate them to visit your store again.

Once you have a good story to tell, urge them to come

Reaching out to your existing customers will be the easiest. They’ve dealt with you before and just need a legitimate and appealing reason to shop again. New range, attractive promotion, promise of memorable service, enhanced store’s décor – these can all be given as a good reason for another visit.

Customers who have never bought from you fall into two categories. They either have never been to your store or they didn’t find anything they liked.  In a sense they deserted you before their first purchase.

Such ‘deserters’ can be attracted back if you admit your past ‘sins’ and show them that things have changed. But, only ask deserters for another chance if you’ve ascertained what the problem was and rectified it, otherwise your results with this group won’t change.

Attracting completely new customers requires an enticement, which must be attractive, to persuade these people to enter unknown territory. Understanding how customers perceive your business and what they want will make all the difference.  Surveys and focus groups can help in this space.

Obviously, one of the cheapest and most efficient ways to attract new customers relies on word of mouth, i.e. referrals from existing customers. This requires high customer satisfaction as a standard part of their shopping experience. For the retailer, it’s all about continuing improvement and the pursuit of excellence.

The tail can’t wag the dog

To summarise, I need to restate that retailers should avoid focusing on the end goal of sales figures.

Instead, retailers need to work hard to improve the underlying variables. They need to look to tools such as Net Promoter Score (NPS) and Total Quality Management. The latter will progressively strengthen and enhance their business, while NPS will reveal how successful these efforts have been.

Master the fundamentals – number of customers, how often they visit and how much they spend – and the sales scoreboard will show impressive results. Then you can sit back and enjoy the game.

Share :
ABOUT THE AUTHOR
Andrew Gorecki, MD of Retail Directions, has worked with the retail industry since 1985. Industry insiders appreciate his strategic advice and insights, as he lives and breathes for the industry. Andrew received a nomination for the Australian Entrepreneur of the Year Award in 2010.
Related Posts

TALK TO US