More isn’t More. What you can learn from Costco and Trader Joe’s. (Copy)
People don’t want more choices. They just want what they want!
I’ve been obsessed with reading about Trader Joe’s and Costco lately. We can learn a lot from these stellar companies, especially the way they so thoughtfully manage their product selection. The key to their success (and it’s not rocket science) is they offer what customers want to buy or at the very least, what customers think they want to buy (no one really needs a 25-pound tub of peanuts, right?)
The average Costco warehouse stocks only about 3700 SKU’s in a 144,000 square foot store. Just to give you an example of an extreme “more is more” mentality, I worked with a 3,000 square foot. toy store that stocked 4200 SKU’s! Visitors were so confused they just turned around and walked out.
Most examples of “more is more” aren’t this extreme but I see it all the time with my clients. An addition of a line here, a few new menu items there and none of it pays off in the end! The reason?
People don’t want more choices. They just want what they want!
Barry Schwartz, author of the Paradox of Choice, says too many choices can lead to decision-making paralysis, anxiety, and stress. By proudly offering a smartly curated collection of items that target your ideal customer avatar, Schwartz say you are claiming, “You can’t have everything but everything we’ve got is worth having.”
Are you guilty of the “more is more” mentality? If so, it probably a sign that either don’t know your customer as well as you should or don’t have confidence in your ability to purchase on their behalf.
But with a little research and a bit of confidence, you can get past this. And you really should. After all, your ability to purchase properly for your customer is the key to improved sales!
Here are a few tips to get started.
Pull POS reports of your top 20% sellers
Analyze them for 3-6 months. What do these items have in common
Were they in the same price range?
Were the majority sold to your best customers?
Regular customers?
Were they all displayed in the same area or the same way?
Are the similar in nature or pricing?
Were they mostly sold by the same person?
You get the idea. Do a forensic deep dive into what’s selling to whom, when and why.
Yes, it takes a little effort but this is your business!
Now take a look at your bottom sellers
Can you find commonality in the items that always end up on the sale rack or rarely move?
Put those bottom sellers on sale or take them off your menu! You don’t need them. They’re messing with cash flow and making your business less exciting. Going back to the toy store example, a sale- by- item report revealed only 1800 SKU’s had sold more than one in 6 months. That means more than half his stock never moved! His overbuying was killing his business.
Ask people what they want
I love the idea of doing short, in person surveys with customers and visitors. Just a few questions will get you a lot of information. Find out what types of items they like. The price points. How often they buy. How they use your products. Retail stores and restaurants are mini research labs. Every person that walks in can give you valuable feedback that will help you fine tune your selection to the point
Search for the unicorn
Once you’ve done the research and are more intimately connected with your customer avatar, look for one or two items that scream, “I know you and I know what you want.” In today’s retail environment, you have to find ways to distinguish yourself and the way to do that that is finding a few things that are exclusive to you and resonate beautifully with your tribe.
Take the time to go through the process. And don’t be afraid to offer less, especially when less can translate to improved sales and more loyal and emotionally connected customers. The last thing anybody needs is more stuff. They can go to Amazon for that!
Until next time remember….
You can do this!
Angel
Read more about Costco and Trader Joe’s.
https://www.businessinsider.com/trader-joes-how-gets-you-spend-money-psychologist-2019-1
https://thehustle.co/costco-membership-economics/amp/
Download my Customer Avatar Worksheet
How does your store make money?
One of the most common mistakes small retailers make is failing to properly analyze sales revenue.
One of the most common mistakes I see with small retailers is the failure to analyze sales revenue. They may know top line sales and bottom line profits, but don’t take the time to understand the exact composition of sales. Are you selling to new or existing customers? Do you sell more of item A or Item Z or items A and Z together? What is the average sale or sale per employee?
Ask the typical small store owner if they track Key Performance Indicators (KPI’s-see list below) and they answer, “It’s all in my head.” With this tracking method, they’re probably missing out on some extremely important -and easy- ways to increase revenue.
KPI’s provide POWERFUL insight that can help determine targeted marketing solutions, pricing strategies, hiring needs, new revenue opportunities and a host of other strategies that can result in increased revenue and decreased expenses.
KPI’s are easy to track with point of sale software by simply inputting correct and detailed information for each customer and learning to pull the appropriate reports daily, weekly and monthly. I find many retailers don’t take the time to learn the capabilities of these systems. For those retailers that don’t have a POS system, I recommend tracking sales manually to get a grasp on the when/what of sales. It takes some effort but can pay off big in the long run.
How can KPI’s help grow business? Here are just a few examples:
Average Sale/Sale by Category
I worked with a coffee shop that needed to increase revenues by 10 percent which represented an increase in sales of about $2000 per month. She was going to invest $6000 in advertising to increase traffic to achieve her revenue goal. By knowing her average sale, which was $3.95, we were able to bundle two items as a special at $ 4.75. Just by upselling her regular customers, she was able to increase revenues without spending a dime or giving up any profitability.
Sales by Day of Week/Daypart
By knowing when you are selling (or not selling) you can create a strategy to improve business during peak and non-peak times. For example, a pizza restaurant offered a daily lunch discount each weekday Upon analyzing his day/daypart numbers, we found that Thursday and Friday lunches were triple the volume of Monday through Wednesday. Since business was so good later inthe week, there was no need to continue offering a discount on those days. The owner was able to increase profits during the peak sales days and offer steeper discounts to lure customers during the off days.
New vs. existing clients
A beauty salon client did not track new vs. existing clients or client retention. Once they analyzed their numbers, it was clear they were getting plenty of new clients; they just weren’t retaining them. By understanding that, they were able to implement a two-fold strategy that included customer service training for the stylists to insure greater customer satisfaction- and ultimately their return -as well as a new customer welcome program that offered new clients discounts for pre-booking their next appointment.
Customer profile/demos
Take the simplest customer demo – the zip code. I recently worked with a franchisee for whom the franchisor did a quarterly mailing. In comparing the zip codes of the mailing to the actual client zip codes, we saw that the franchisor mailing list did not match the current client base. Armed with this information, the client was able to inform the franchisor so they could create a more geographically accurate mailing list and thus, better results from the marketing dollars spent.
These are just a few examples of how understanding the nuances of revenue can help a small business owner create better – and sometimes very easy – strategies to grow business.
Key Performance Indicators
While not all are applicable to each business, here’s a list:
Sales per employee
New clients per week vs. repeat clients
Sales per square foot
Average check
Sales by category
Merchandise vs. service
Lead sources
Sales by day of week/day part
Sales conversion rates
Customer profile
Which work for you? Start tracking them today. Learning how you make your money is the first step to making more!
Until next time remember,
You can do this!
Angel
How to get your staff into the spirit of selling more this holiday!
Looking for ways to get your staff pumped this holiday season? I know one surefire way to light a fire under them….and that’s pay them!
Looking for ways to get your staff pumped this holiday season? I know one surefire way to light a fire under them….and that’s pay them!
Even if money is tight, there are ways to incentivize your staff to sell more without it being a drain on cashflow or margins.
Even if you don’t ordinarily have a bonus program, there’s no reason not to implement one this holiday season.
Most retailers earn 20-30 percent- or more- of their annual revenue during the holidays. This is the time of year you want to maximize every single sales opportunity! And incentives are a great way to motivate staff.
Here are some DO’S and DONT’S for setting up a successful bonus program.
DO
Understand what motivates your staff. What makes them drool? Depending on their age and tenure, it might be time off or perks like gifts or gift certificates. It doesn’t always have to be money.
DON’T
Just offer a reward on a blanket sales goal. A bonus program needs to work on both sides. That means your employees get incentivized for meeting their goals – and yours!
Let’s say for example, last year your sales were $100,000 during the holiday season and your goal is to increase that number by 20 percent this year to $120k. Your staff incentives would be based on achieving or exceeding this year’s goal. That way any additional commission or bonus you’re awarding is coming out of new revenue.
DO
Consider segmenting. Let’s say you’d like to grow sales for a new line or service. Perhaps you’d like to increase average sale. You can create a bonus program around any specific segment of business or goal you’d like!
DO
Tier the bonus structure. Add an even more delicious opportunity for your staff after they’ve hit the goal. Using the example above with a goal of $120k, add an additional incentive if you reach $130k. In sales, we call that a BHAG (Big Hairy Audacious Goal.) You’d be amazed at the enthusiasm you can generate around a big, fat opportunity.
DO
Train. Train. Train.
Just implementing a program isn’t enough. You need to host regular training to you’re your staff achieve their goals.
DON’T
Be afraid to instill a little competition among your staff. Most owners I work with are afraid that competition is divisive but it can create a ton of energy and ultimately, great results!
DO
Make sure your goals are reasonable and achievable. Goals should be a stretch but not so stratospheric that they can’t possibly be met. If your goals are excessive, it will have the opposite effect of motivating your staff…it will discourage them.
Good luck in putting together your bonus program! If you have any questions, email me at success@angelcicerone.com
Until next time remember,
You can do this!
Angel
More isn’t More. What you can learn from Costco and Trader Joe’s.
People don’t want more choices. They just want what they want!
I’ve been obsessed with reading about Trader Joe’s and Costco lately. We can learn a lot from these stellar companies, especially the way they so thoughtfully manage their product selection. The key to their success (and it’s not rocket science) is they offer what customers want to buy or at the very least, what customers think they want to buy (no one really needs a 25-pound tub of peanuts, right?)
The average Costco warehouse stocks only about 3700 SKU’s in a 144,000 square foot store. Just to give you an example of an extreme “more is more” mentality, I worked with a 3,000 square foot. toy store that stocked 4200 SKU’s! Visitors were so confused they just turned around and walked out.
Most examples of “more is more” aren’t this extreme but I see it all the time with my clients. An addition of a line here, a few new menu items there and none of it pays off in the end! The reason?
People don’t want more choices. They just want what they want!
Barry Schwartz, author of the Paradox of Choice, says too many choices can lead to decision-making paralysis, anxiety, and stress. By proudly offering a smartly curated collection of items that target your ideal customer avatar, Schwartz say you are claiming, “You can’t have everything but everything we’ve got is worth having.”
Are you guilty of the “more is more” mentality? If so, it probably a sign that either don’t know your customer as well as you should or don’t have confidence in your ability to purchase on their behalf.
But with a little research and a bit of confidence, you can get past this. And you really should. After all, your ability to purchase properly for your customer is the key to improved sales!
Here are a few tips to get started.
Pull POS reports of your top 20% sellers
Analyze them for 3-6 months. What do these items have in common
Were they in the same price range?
Were the majority sold to your best customers?
Regular customers?
Were they all displayed in the same area or the same way?
Are the similar in nature or pricing?
Were they mostly sold by the same person?
You get the idea. Do a forensic deep dive into what’s selling to whom, when and why.
Yes, it takes a little effort but this is your business!
Now take a look at your bottom sellers
Can you find commonality in the items that always end up on the sale rack or rarely move?
Put those bottom sellers on sale or take them off your menu! You don’t need them. They’re messing with cash flow and making your business less exciting. Going back to the toy store example, a sale- by- item report revealed only 1800 SKU’s had sold more than one in 6 months. That means more than half his stock never moved! His overbuying was killing his business.
Ask people what they want
I love the idea of doing short, in person surveys with customers and visitors. Just a few questions will get you a lot of information. Find out what types of items they like. The price points. How often they buy. How they use your products. Retail stores and restaurants are mini research labs. Every person that walks in can give you valuable feedback that will help you fine tune your selection to the point
Search for the unicorn
Once you’ve done the research and are more intimately connected with your customer avatar, look for one or two items that scream, “I know you and I know what you want.” In today’s retail environment, you have to find ways to distinguish yourself and the way to do that that is finding a few things that are exclusive to you and resonate beautifully with your tribe.
Take the time to go through the process. And don’t be afraid to offer less, especially when less can translate to improved sales and more loyal and emotionally connected customers. The last thing anybody needs is more stuff. They can go to Amazon for that!
Until next time remember….
You can do this!
Angel
Read more about Costco and Trader Joe’s.
https://www.businessinsider.com/trader-joes-how-gets-you-spend-money-psychologist-2019-1
https://thehustle.co/costco-membership-economics/amp/
Download my Customer Avatar Worksheet
Take a hot minute to figure out why you don't have enough time!
When you tell me “I don’t have time,” I get a little nuts.
Warning! This blog contains tough love.
When you tell me “I don’t have time,” I get a little nuts.
I don’t have time to implement new ideas.
I don’t have time to study my POS reports.
I don’t have time to map out a social media strategy.
I don’t have time to run my business correctly!
WTH?
I’m not completely insensitive. I get that you’re busy. And overwhelmed. And perhaps confused about which step to take first. So here are my best pieces of advice to help you dig out of the time spiral.
1. Put on your CEO hat.
Remember, you are the only one with the power – and the responsibility – to turn your business into everything you want it to be.
If you’re inundated with details and non-revenue producing tasks, it’s time to recalibrate. Your job is to steer the high level thinking that produce maximum sales results. This is a non-negotiable.
2. Stop.
Now, take a hot minute and figure out how you are spending your time. Keep a running daily calendar of tasks for about a week. How much time are you on the sales floor? Doing administrative work? Ordering? Paying bills? Scheduling? Training? What is eating up your time? (BTW, serving your customers shouldn’t be considered a time suck. That’s kind of why you’re in business, isn’t it?)
3. Figure out what you like doing.
What made you want to get into business in the first place? You are, after all the CEO of your company and running it shouldn’t be torture. You should be able to do the things you like and enjoy — and are good at!
4. Get creative about finding help.
How can you offload operational tasks and the duties you hate or aren’t great at when you can’t afford extra help?
Utilize current employees.
Most stores and restaurants have slow times and you can schedule certain tasks during those hours. Get your employees on board with a list of operational duties. Just 30 minutes per employee can make a huge difference! They can do everything from prepare weekly schedules to taking photos for social media posts to merchandising and reviewing POS reports for trends and opportunities.
If you need more help and can’t afford it, start small.
For example, maybe you can’t afford a social media consultant or visual designer, but you can afford to give one of your employees an extra two hours on the schedule each week to free up your time to do this. Use the time to attend a networking breakfast plan your marketing for the next quarter or create your social media posts. That’s certain worth an extra $20 or $30!
Hire a virtual assistant
For about $25 and hour, you can have a remote assistant a couple of hours per week to handle routine and recurring tasks.
Even if money is tight, don’t let a $50 or $100 investment get in the way of y moving your business forward. You have to shake the tree a bit to create change.
Small expenditures can have a domino effect – to help increase sales and then, in turn, afford additional help.
5. Calendar essential tasks
Now that you’re paying for some help, take full advantage of that extra time. Paying an employee an extra two hours? Be sure to calendar those hours for yourself. Use them to work on the CEO tasks you’ve identified. Make that commitment so you don’t get sucked into the menial again, defeating the purpose.
6. Commit to making the short term sacrifices.
If your business is failing or flailing, you have to work right now, this minute, to improve it. There is no time to waste or complain about not having time! Doing the same thing over and over again isn’t going to affect change!
Make that full court press to improve business…and make it quickly. It may take a few sleepless nights or some really busy weeks but the results will be worth it. Not prepared to make the sacrifice? Well, then you should probably reevaluate being a business owner because there will always be cycles of ups and downs that will make extraordinary demands on you. It’s the nature of the beast.
7. Ask yourself every day, “ What did I do today to move my business forward?”
When you look at your daily ”to do” list, start with the items that have the potential to improve your business. It’s that simple. At the end of the day, as long as you’ve done something that builds on your business potential, you’re good!
Owning a business is hard work. So now you have two choices. The first is to make the time to dig in and get it done. The second choice is far less appealing.
Until next time, remember…
You can do this!
Angel
How does your store make money?
One of the most common mistakes I see with small retailers is the failure to analyze sales revenue. They may know top line sales and bottom line profits, but don’t take the time to understand the exact composition of sales. Learn how tracking Key Performance Indicators can help you find extremely important -and easy- ways to increase revenue.
One of the most common mistakes I see with small retailers is the failure to analyze sales revenue. They may know top line sales and bottom line profits, but don’t take the time to understand the exact composition of sales. Are you selling to new or existing customers? Do you sell more of item A or Item Z or items A and Z together? What is the average sale or sale per employee?
Ask the typical small store owner if they track Key Performance Indicators (KPI’s-see list below) and they answer, “It’s all in my head.” With this tracking method, they’re probably missing out on some extremely important -and easy- ways to increase revenue.
KPI’s provide POWERFUL insight that can help determine targeted marketing solutions, pricing strategies, hiring needs, new revenue opportunities and a host of other strategies that can result in increased revenue and decreased expenses.
KPI’s are easy to track with point of sale software by simply inputting correct and detailed information for each customer and learning to pull the appropriate reports daily, weekly and monthly. I find many retailers don’t take the time to learn the capabilities of these systems. For those retailers that don’t have a POS system, I recommend tracking sales manually to get a grasp on the when/what of sales. It takes some effort but can pay off big in the long run.
How can KPI’s help grow business? Here are just a few examples:
Average Sale/Sale by Category
I worked with a coffee shop that needed to increase revenues by 10 percent which represented an increase in sales of about $2000 per month. She was going to invest $6000 in advertising to increase traffic to achieve her revenue goal. By knowing her average sale, which was $3.95, we were able to bundle two items as a special at $ 4.75. Just by upselling her regular customers, she was able to increase revenues without spending a dime or giving up any profitability.
Sales by Day of Week/Daypart
By knowing when you are selling (or not selling) you can create a strategy to improve business during peak and non-peak times. For example, a pizza restaurant offered a daily lunch discount each weekday Upon analyzing his day/daypart numbers, we found that Thursday and Friday lunches were triple the volume of Monday through Wednesday. Since business was so good later inthe week, there was no need to continue offering a discount on those days. The owner was able to increase profits during the peak sales days and offer steeper discounts to lure customers during the off days.
New vs. existing clients
A beauty salon client did not track new vs. existing clients or client retention. Once they analyzed their numbers, it was clear they were getting plenty of new clients; they just weren’t retaining them. By understanding that, they were able to implement a two-fold strategy that included customer service training for the stylists to insure greater customer satisfaction- and ultimately their return -as well as a new customer welcome program that offered new clients discounts for pre-booking their next appointment.
Customer profile/demos
Take the simplest customer demo – the zip code. I recently worked with a franchisee for whom the franchisor did a quarterly mailing. In comparing the zip codes of the mailing to the actual client zip codes, we saw that the franchisor mailing list did not match the current client base. Armed with this information, the client was able to inform the franchisor so they could create a more geographically accurate mailing list and thus, better results from the marketing dollars spent.
These are just a few examples of how understanding the nuances of revenue can help a small business owner create better – and sometimes very easy – strategies to grow business.
Key Performance Indicators
While not all are applicable to each business, here’s a list:
Sales per employee
New clients per week vs. repeat clients
Sales per square foot
Average check
Sales by category
Merchandise vs. service
Lead sources
Sales by day of week/day part
Sales conversion rates
Customer profile
Which work for you? Start tracking them today. Learning how you make your money is the first step to making more!
Until next time remember,
You can do this!
Angel