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What changes are needed to make the work of sales staff and line managers more effective?
13.10.2020 3975

What changes are needed to make the work of sales staff and line managers more effective?

The results of shoe sales are now influenced by the factor of deferred demand: two and a half months of self-isolation is a very long period for buyers. Any market or consumption model of people on it is a system, and according to all properties of systems, they strive for a zone of comfort and stability, for self-preservation. If you take something away from people, and even for a long time, then as soon as the opportunity arises, they will try to make up for the loss. And now on the market there is just such a phase in the sales of footwear and accessories. Many business owners may mistakenly believe that demand has already recovered quickly, and nothing will need to be radically changed in the sales business model. But it is not so. SR expert on increasing footwear sales Evgeny Danchev tells by the example of cases from his practice how and what needs to be changed in the company in order to work effectively in the new economic conditions.

Evgeny Danchev Evgeny Danchev - Director of WConsulting, coach, retail consultant.
www.wconsulting.su

As you can imagine, everything in our life is not linear, and sooner or later demand will begin to fall, because after the phase of deferred demand, there will be a saturation phase, which will be characterized by economical spending of the family budget. The toughest times in the shoe retail business lie ahead, and we need to prepare for them. The unemployment rate will continue to rise in the coming months and the demand for footwear will fall.

How and what needs to be changed in the company to prepare it for effective work in the new economic conditions? If 10-15 years ago the availability of a good product was a key success factor, then in the last 3-5 years sales have largely depended on the qualifications of sales consultants. Now the management system in the company will come to the fore. Who is responsible for the efficient operation of the sales force? Of course, line managers, which include store directors and administrators. The work of these employees will determine the financial result of the business and its effectiveness. Today, the most successful on the market is the “sell more to one person” strategy, since customer traffic will only decrease, and you need to work as efficiently as possible with each customer in the store.

KPIs that determine the effectiveness of the store director / administrator:

  1. Fulfillment of the store sales plan.
  2. Sales funnel conversion.
  3. Complexity (the number of goods in one check).

What is the difference between a leader and a performer?

The leader knows how to shift the focus of his attention from what he does himself to what his subordinates do.

The task of the manager is to optimize, improve the performance of subordinates, and motivate them. And KPIs will be sensory criteria for assessing the effectiveness of their management model. If the indicators grow, or are kept at the proper level, then such management is effective. If they are declining, or do not grow for a long time, then a big question arises for the top manager: is this management or is it just creating the appearance of actions?

Two companies with which I now work as a consultant are actively introducing a new motivation system for salespeople and line managers. The leaders of these companies are well aware that now employees are mentally prepared for new requirements and standards of work with customers. Few people now can afford to say, as even 3-4 months ago: "It's easier for me to write a letter of resignation than to fulfill your requirements."

Examples of conversion KPIs:

Conversion - 7% (for example, we take this indicator as 100% and strive to achieve it by the end of the month):

  • if by the end of the month the conversion is 6%, then the percentage of KPI fulfillment is 85%;
  • if by the end of the month the conversion is 8%, then the percentage of KPI fulfillment is already 115%.

How to link conversion to sales plan fulfillment:

Let's say you pay the director 2% of the store's sales target. Then you can link the percentage of sales to the implementation of the conversion KPI. You just need to translate conversion rates into correction factors:

2 x 1 = 2 (1 is the standard ratio, since the conversion is correct)

2 x 0,85 = 1,7% (0,85 is a reduction factor, since the conversion is below normal)

2 x 1,15% = 2,3% (1,15 is a multiplier, since the conversion is higher than normal)

Suppose that the store's sales plan is 1 rubles, then the calculations for the payment of percent of sales will be as follows:

1 x 000% = 000 rubles.

1 x 000% = 000 rubles.

1 x 000% = 000 rubles.

Thus, depending on the indicator of the sales funnel, in this example, the manager's motivation will vary from 3 to 000 rubles.

When determining conversion, the question always arises, what conversion should you take for 100% in each month, so that its rate is fair? To do this, you need to look at the conversion rates in previous years, and gradually achieve their growth. It is also important to keep in mind that conversion rates can vary greatly across stores within the same chain. For those located in shopping centers, there may be one conversion, and for those with an entrance from the street - another, higher one, since the level of competition in them is lower.

Examples of complexity KPIs:

Complexity - 1,5 (for example, we take this indicator as 100% and strive to achieve it at the end of the month):

  • if at the end of the month the complexity is 1,2%, then the percentage of KPI fulfillment is 80%;
  • if at the end of the month the complexity is 1,8%, then the percentage of KPI fulfillment is 120%.

Further, by analogy with the sales funnel conversion rate, you can translate these numbers into correction factors and multiply by the percentage of the sales plan.

If to assess the KPI of the sales funnel you only need information from the permeability sensors, then for the KPI in terms of complexity, you need a sufficient range of related products (bags, cosmetics, belts, umbrellas, etc.). If the store does not have a sufficient assortment, or its supplies are unstable, then before introducing this indicator, of course, it is necessary to stabilize the supply of goods. Therefore, it is allowed to introduce one KPI indicator, and then connect the second.

If you know that your company is ready to change the motivation system and want to include both KPIs in it, then the calculation is done as follows:

Let's say your funnel conversion rate is 80% complete and your complexity metric is 90% complete

2 x 0,8 x 0,9 = 1,44% (where 2 is a percentage of sales)

If the store sales plan is 1 rubles:

1 x 000% = 000 rubles

Let's say your funnel conversion rate is 120% complete and your complexity metric is 110% complete

2 x 1,2 x 1,1 = 2,64 (where 2 is a percentage of sales)

If the store sales plan is 1 rubles:

1 x 000% = 000 rubles

In addition to the variable part, the manager must have a salary part. I recommend doing it within 50-60% of the total salary.

Why is this motivation scheme with KPI good? It just makes the leader shift the focus of his attention from what he does himself to what his subordinates do. The seller can sell one pair of shoes to the buyer, or he can additionally offer another product and increase the average check. There are always buyers who are ready to buy something else if the seller recommends it.

The uniqueness of the current market situation for employers lies in the sharp change in the balance between the number of vacancies in the market and the number of job seekers' resumes. Massive layoffs have led to the appearance on the labor market of a large number of sales consultants and managers, and there are now significantly fewer vacancies for them. And this temporary chance must be used in time. Now employees are ready for significant changes in their work and the system of motivation, since they understand all the risks and difficulties in the labor market.

What the implementation of KPI indicators gives:

  1. Reducing the company's dependence on the human factor.
  2. Monitoring the efficiency of the sales staff.
  3. Involvement of hidden resources that were previously invisible.
The results of shoe sales are now influenced by the factor of deferred demand: two and a half months of self-isolation is a very long period for buyers. Any market or consumption model of people on it is ...
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