The Hidden Cost of Bad Employee

retail iran

 

There is no doubt that everyone would agree that a bad employee in retail can cost you money. But do you know how much? Is it possible to calculate it? Well in a selling environment I think it is. 

 

While we can make the case of lost revenue from poor service or efficiency in operations from hard workers, let's focus on the numbers we do know. I write a lot about the Add-on sale or the accessory sale because it is so important to profitability of a retail store.

We can calculate the damage by comparing the results of our best performers and our worst performers. Think of it this way, in baseball, they send the player with the best hitting percentage against that pitcher to the plate. So, your top sales performer is your best hitter in this analogy. 

If your top sales performer had a 15% accessory rate (meaning 15% of her total revenue was in accessories) and your bottom person was at 5%, that's a huge swing in gross margin dollars per ticket. But consider an even more telling look at the difference. Compare the average ticket of your best salesperson to the rest of the team. Not the bottom just the average. If the top person had an average ticket of $100 and the rest of the store had an average of $75 per ticket, essentially that's $25 per customer better performance. 

The reason I say compare to the average is because you are more likely to get your average guy to perform at the higher standard than your bottom guy to become average.

Focus you training skills on the average members of your team to help them improve. And then focus your recruiting skills on the bottom one. (In other words, replace them.) 

So what does the math look like in our example? Consider this:

Average gain = $25 per ticket   (based on our two salespeople from above) 

Average tickets in a day = 20

Sales gain in a day = $500

Sales gain in a month = $15,000

Sales gain in a year = $180,000 (approximate) 

How can you not get excited about that? Here is the issue, millennials are flooding the workforce and they require more care and feeding than previous generations. They need more training. Implement a unified sales process in your store like the one from Retail Sales Bible. They need more transparency and data. Post all the sales results for your team. You will be amazed how much peer pressure and competition among you sales team can raise your numbers. Don't be afraid to let them know where they stand. For years, Nordstrom posted the rankings of the salespeople with a line drawn across it. If you were below the line, you were in danger of losing you job. Stay below the line for long and you did lose it. 

But training is the ultimate solution. What is your best sales person doing that your other salespeople can adopt and use? Granted, there is always personality in selling and that can account for some differences.

But selling is service and service is selling in today's retail environment. If you are not investing in training and development of your people you are leaving money on the table. Even if you paid for an online or in store training course from an outside company, you can easily justify the investment when you look at the numbers.

 

Compiled in Editorial Board of Retailiran

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