It’s the #1 thing furniture salespeople should be doing that they’re not doing... and it costs our industry millions.
Retail Management by Joe Capillo
Building personal clientele. That’s it. That’s the one thing salespeople in the furniture industry aren’t doing that they should be doing, and it’s costing our industry millions upon millions of sales and profit dollars all the time, not to mention the commission earnings that are lost to salespeople who are paid this way.
In my 15-year career in sales management consulting I encountered a small handful of truly professional salespeople who possessed the inner drive required to make six-figure incomes selling furniture. They didn’t have much support either, because few owners and managers understand that this important aspect of professional selling should be a mainstay of their selling and customer retention strategy. These salespeople who live well from their own personal client base are viewed almost as freaks of nature, and their methods are considered so purely personal and unique to them, that they cannot be taught or managed in a scalable system that is applied by all salespeople.
How can I say that this one single issue is costing our industry millions of dollars every day? Because research and experience shows it to be the case. Consider our notoriously low closing ratios on customer store visits. This is always an arguable issue, but few people have more experience in measuring closing rates than I do, and here is what I’ve found: close ratios are in the low to mid teens for most branded stores when all true customer shopping visits are counted. For high-service, design oriented stores, close rates are in the low 20% range with salesperson performance that varies from the mid-teens for the least effective people, to around 30% for the most effective.
For high-traffic, high-volume, big-boxes, close rates are practically immeasurable because traffic is usually not counted. Since sales and profits are generally high, and many of these stores are in the real estate business anyway, owners don’t care about counting traffic. One such company claims to have a 40% close ratio, but conveniently forgets to mention that the drop-out rate between written and actual delivered sales is typically 35%. That puts their real close ratio at 25% - right in the range of expectation. The NHFA annual operating results report noted that close rates for responding stores are 30%, but they don’t say how traffic was counted or how close ratios were calculated, so the number is suspect at best.
Whether the actual number is 15% or 30% is unimportant anyway. That’s because people visit our stores every day, all year, year after year, and as many as 85% of these customer shopping visits don’t result in a sale. What happens to all these customers? If 70% to 85% of them don’t buy, why were they shopping?
Lexington Furniture published a report that contained some excellent insights into the mental process that people (mostly women) go through when making a change in their homes. The report breaks down this mental process into five stages and notes that a single project can take years to complete. That’s because the options are countless, and information about quality, style, price and value are difficult to obtain and digest. Also, many consumers cannot put rooms together by themselves. When the end result is important to a consumer, the thought of making a costly, long-lasting mistake is daunting enough to stop the process cold. Most stores offer their customers inadequate assistance, and that is the one thing they need more than any other; more than a sale price (though that’s nice), more than long-term financing (also helpful), and more than gigantic selections of furniture which are more often than not, confusing and overwhelming. When it comes to the kind of help customers really need, they’re pretty much on their own.
Consumers need help, and highly consultative selling is required for home furnishings retailers that want to reach their full potential. It is a shame that most owners, managers and salespeople act as if they are selling commodities. If you think you are in a commodity business, you’ll treat the product as “the thing”, when in fact, “the room” is the thing. We sell consumer durable goods, and it’s the word durable that makes us different from sellers of consumable goods. This kind of retailing isn’t like any other. There are so many ways to design a room that will WOW a customer, and so many product options, and so much redundancy from store to store, that our customers become confused and irritated. This is why many more shoppers don’t buy than do buy. Here’s a universal truth I’ve discovered in observing thousands of interactions between salespeople and shoppers: They’re not looking for anything “in particular”. They’re looking for solutions to problems.
More customers don’t buy than do, and the responsibility for bringing them back into our stores rests solidly on the shoulders of salespeople and managers alike. When we let customers go home without buying, and don’t stay connected to both our customer and the project they’re involved in, we make a terrible mistake. Once we lose contact, we have to spend more money on promotions and advertising to bring them back again.
The One-To-One World
One-to-one marketing is used by today’s most sophisticated consumer product companies to increase their sales and advertising efficiency. We receive targeted messages, coupons, special pages, and collateral publications (catalogs) every day that reflect our personal consumption habits. We’ve never personally met the people who send us these materials and may never have purchased products from them or visited their stores. In spite of this fact, one-to-one marketing materials are highly effective.
We actually meet each and every one of our customers face-to-face, and they are willing to share their needs with us. This is a tremendous advantage. Yet, when we can’t fill their need today, we fail to stay connected to them on this very personal level. This is our problem; we give them up to our competitors as though they’ll never have another home furnishings need. We allow our commissioned salespeople to let them walk without even thinking about how they can follow-up to help them with their future needs.
The best, most professional salespeople in our industry do see this need, and capitalize on it. One of these people who started his career in Chicago as a warehouse employee, generates over $2 million per year from his personal client base developed over the past 20 years. Another exceptional salesperson moved from the insurance industry to home furnishings, and in less than three years accumulated more than 1,200 customer contacts. She generates over half of her total sales revenue from these contacts – without taking any turns at the door. She’s the top person on a staff of 15, with sales over the $1 million mark. This is one-to-one marketing at its most potent. It is proof positive that customers will respond to one-to-one help offered by salespeople they already know, trust and who truly care about them.
Customer loyalty has to be earned, and the way to earn it in our business is to stay connected to the customers, their decorating projects and their needs. You have to earn this loyalty by exhibiting a caring approach to problem solving in the store. You must also understand that it’s not all about the product, but, rather, about solutions. You have to offer them the one thing most of them need in order to commit to a purchase – more help!
Role Of Owners And Managers
Owners and managers who want to do better, need to support this approach by providing useful systems and effective follow-up methods. There are many systems-based methods that can be used to take advantage of this huge opportunity, including such simple things as index cards and file boxes. Many retailers make Outlook from Microsoft available to salespeople, but relatively few ever use it to great advantage. There are also furniture industry oriented software systems that can automate the whole process.
For most retailers, what is missing is the will to institutionalize this kind of a program on a company-wide basis. Whatever costs may be involved should come right out of the advertising budget and be channeled into the one-to-one marketing budget. The payoff measured in traffic is far superior to anything a costly discount offer or financing offer can generate.
Salespeople who work in stores where there is good door traffic have generally become so dependent on the door opening again, that they see no need to maintain active client files. It’s simply too much work. Meanwhile, owners continue to pour money down the advertising drain to provide more foot traffic as fodder for a 20% (or so) closing rate. In the same vein, merchandisers are always seeking the “right new stuff” that will cause more consumers to buy, but the fact is that the merchandise doesn’t help raise close ratios.
In the June/July issue of FURNITURE WORLD Magazine (article posted to the article archives section on www.furninfo.com) I discussed the importance of generating “be-back” customers. These customers that return to the store a second time on the same project are closed at much higher rates. The same holds true for personal customers who are included in a salesperson’s personal client base. These are the loyal ones. They are happy to have a friend in the business, and respond to the one-on-one efforts of a salesperson who cares enough, and works hard enough to stay connected for the customer’s benefit as well as their own.
Commissioned salespeople are told by owners and trainers that they’re in business for themselves; that they need to sell in order to earn, and that their destiny is in their own hands. Yet when it comes to this one aspect of business, generating traffic, salespeople allow themselves to be totally dependent on owners for providing it. They meet new customers with homes to furnish every single day. They let unfinished business walk out the door every day, and never think to ask permission to stay connected. We all need to change the way we think about this problem, because the way we think about it is the problem.
Developing a client base, and keeping it active and up-to-date is the one, key activity that can help our salespeople to earn higher incomes. That’s why it is imperative for retail managers and salespeople to take responsibility for pursuing a one-to-one marketing strategy.