Editor’s note: Whether you are the sole manager of a business or manage 50 window fashion decorators, this series of articles is intended to help you manage better and increase profitability. It is based on the author’s actual experience studying sales and financial information with hundreds of window fashions businesses.
The window covering and decorating industry is unique among American business. Many home products sales representatives—from carpeting to painting contractors, to remodelers and roofing vendors—visit a customer in his or her home to sell products or services. Yet, we are different from all of them. We alone have sales representatives who range from designers to product sales specialists.
Some window fashions representatives do not want to be known as salespeople and may charge the customer a design fee to make a presentation in her home. At the other extreme, some window coverings salespeople are proud of their sales skills and may brag about how many appointments they sell every day.
Most significantly, ours may be the only business that can turn one sales appointment a day into sales of $150,000 to more than $700,000 depending how we manage our business.
Our industry has a huge range in the number of customers served by each salesperson (whether the salesperson is an owner, designer or employee decorator). Some may go on only one new customer appointment per month. Others may go on five a day.
With this vast range of activity, how does a prudent business owner manage the business? What is the optimum range of activity for the best profitability?
START WITH BASICS: APPOINTMENTS, CLOSING AND AVERAGE SALE
Longtime readers know that years ago I introduced a simple formula that is still being discovered by good managers: Fundamentally, there are only three ways to increase sales:
• Increase appointments
• Increase closing ratio
• Increase the average customer sale
Since introducing this concept I have had the opportunity to study its results with hundreds of window covering business owners and salespeople. Some interesting truths have emerged.
Truth #1: More appointments is not the best way to increase sales. After reaching 15 appointments per month, closing ratios and increasing average customer sales should be higher priorities.
Truth #2: 50 appointments monthly is a weakness, not a strength. Salespeople who brag, “I go on five appointments a day,” do not understand the window fashions business. They are in the rat race fighting the commodity price war.
To them, the business is logical and functional: light control, privacy and price. They do not understand that their best customers—even customers with less money to spend—want a beautiful home that serves not only functional needs, but emotional needs as well.
Truth #3: A 100 percent closing ratio is a weakness, not a strength. Closing ratio is figured by taking the number of sales closed and dividing it by the number of presentations made. Seven customers sold from 10 presentations is a 70 percent closing ratio. Whenever closing ratio exceeds 85 percent, it means the salesperson is qualifying too hard on the phone, has too few advertising leads, is selling too cheap, or all three.
Truth #4: In-home appointments are too short. Salespeople brag about “getting in and getting out” of a customer’s home so they can dash off to the next appointment. They do not understand that taking time and building relationships in the home will result in more sales on the first appointment and far more repeat and referral sales in the future.
Truth #5: You can’t manage it if you can’t measure it. Window fashions owners could add thousands of dollars a year in added personal profit by keeping good records. But too many are “too busy” to keep records of appointments completed, sales closed and sales per customer transaction.
IS NOW THE TIME TO INCREASE YOUR PROFITS?
If not now, when? If not you, who? Today is the first day of the rest of your business. Today is the day to start making more money by managing window coverings sales performance.
If your sales are over $100,000 a year, you should expect 10 percent to 20 percent higher sales and 20 percent to 30 percent increased net profits. Read that statement again. Ask yourself how much more money you would have today if your net profits were 20 percent higher all of last year? Ask yourself what it would be like to have that money next year. You can have it. It is not hard to do.
If you want more money in your business, you will start managing sales performance today. Not tomorrow. Not next week. Now. The minute you put down this article schedule a time to count your new customer appointments for the last 60 days. Then count the customers you sold. When you divide customers sold by appointments completed you are on your way to increased profits. Next, divide total sales by the number of customers sold. Now you have benchmarks for growth.
Tune in next month to see how you rate with other professionals. Then we’ll tell you how to set your goals to be the Super Star I know you can be.
Benchmarks For Selling SuccessOne in-home appointment per working day—that’s 25 per month, 300 per year—may yield $150,000 in sales at a 50 percent closing ratio with $1,000 average sale or it can be more than $700,000 at a 80 percent closing ratio and $3,000 average sale.
1. Optimum monthly appointments—The best number of monthly in-home sales appointments is about one per working day, or about 25 per month. Sales will not increase when going on more than 35 per month. (eight per week, average). This is optimum for a salesperson who does not own the business. If the business owner is the head salesperson, about 20 appointments per month is optimum.
2. Optimum closing ratio—The best closing ratio is from 65 to 80 percent. The exact closing ratio will be determined by the skill of the salesperson and by the proportion of advertising leads to repeat and referral leads. Closing ratios higher than 85 percent indicate poor business judgment for many reasons.
3. Optimum average customer sale—The average customer sale offers the greatest potential for profit improvement. Beginners should average about $1,000. Experienced professionals will exceed $3,000. The difference is in the skill of the salesperson and the proportion of repeat and referral leads compared to media advertising leads.
Business owners who want the best profit will keep good records and set quarterly goals to improve.
Steven C. Bursten is the retired founder of Decorating Den Interiors and author of a how to book on new business start up, “Bootstrap Entrepreneur.” He is president of custEmers.com, specializing in affordable Internet marketing tools along with tried and true techniques. Bursten welcomes questions about marketing, sales and customer relationships. Request a free report: How to Improve Sales Performance for Yourself and Your Decorators. E-mail: selling.dwc@custEmers.com.