Making business decisions without using data can be like rowing with only one oar: your business might still be moving forward, but you won’t be any closer to growing your profitability and will likely exhaust yourself going in circles, writes Adam Joy.
By regularly collating data from your business, such as how quickly different stock turns over, which periods are the busiest, how much time people spend in store, what margins are made on different products and how your foot traffic in store compares to the number of people walking past – you can make better decisions to improve your business and save money.
However, this does not mean that you need a degree in statistics or a full-time analyst in order to gather and consider data for your business.
It means that you should build checks and measures into your day-to-day systems that you simply include as you go. This has the potential to totally transform your business!
Here are some common areas of your business that benefit from data:
If you know what times, days and months are the busiest, you can ensure you have the right number of staff at different times. This saves you having too many employees at quiet times, and equally means you won’t be understaffed at peak times.
Use your point-of-sale system to pull reports that show your sales per hour. Then use this data to roster not only for the correct number of staff, but the staff with the right skill sets.
For example, if you have 312 transactions on a Tuesday between 1pm and 4pm and 85 per cent of these transactions are giftware, you want to ensure you have adequately trained staff to assist in the gift selection, but also in the upsell of greeting cards and gift wrap.
Increasing your customer’s spending
Analyse your sales transactions for patterns, and ask some key questions around these patterns, such as:
Do customers usually only purchase one item? If so, look at your in-store marketing and store layout to encourage the purchase of multiple items.
What are your biggest sellers? Could you increase your margin on these items, or move them to a different part of the store so they see your other stock at the same time?
By measuring how much time your customers spend browsing in-store (or on your online store), you can compare this with averages and set benchmarks for various improvements.
For example, you can reduce purchasing wait times, see if customers are having a difficult time finding what they are looking for (spend a long time in-store but only purchase one item), or encourage people to spend more time browsing to hopefully purchase more.
This data can be as detailed and technical as you want it to be, and there are some great technologies that make this easy and accurate.
I am always amazed at the number of businesses that do not analyse their stock turnover.
The stock management facilities built into most POS systems are the mainstay of sound retail management, and as a business owner, you need detailed knowledge of the stock in your business if you are to make successful decisions.
This includes knowing which stock turns over the fastest, which stock has the highest margins, which stock performs best at different times of year, and ideally what products attract the most repeat purchases.
You also need commanding control over your stock in order to implement those decisions and grow your business. It is impossible to sell stock that is not on your shelf, and you need to understand what is not selling so you can quit this stock and replace it with stock that will generate profit.
Many retailers are looking at how they reduce their footprint to maintain or grow their sales; this is an area many newsagents are addressing at present, with the number of magazine and greeting card pockets required to achieve optimum range sales and profitability.
Do you know how much of your customers is a result of repeat business? It is important to keep an eye on this so you can track any changes.
Then, as you make improvements in customer service, run in-store promotions, create loyalty programs, tweak how you market to existing customers, and offer sales incentives, you can measure its success and make updates accordingly.
Truly understanding your business gives you a map for navigating through challenges and heading in the right direction.
Using your Point of Sale system and consumer analytics systems empowers you to regularly make decisions in your business that save money, increase your margins, drive traffic into your store and also ensure that you retain consumers for a deeper and longer engagement.
Adam Joy is the chief executive officer of the Australian Lottery and Newsagents’ Association (ALNA). He holds a Masters in Leadership and is a member of the Australian Institute of Company Directors.