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Using labor data to increase retail sales
Last week: How labor management technology can help bring a company into the 21st century

by Stephen Hawley Martin
for Virginia Business
Oct. 31, 2006

An outdoor equipment retailer with headquarters in the northwestern United States and dozens of stores located across the county, sells recreational and extreme sports equipment such as hang gliding, skiing, cycling, camping, hiking, backpacking and mountain climbing gear. Not long ago the company's management team recognized a connection between individual store sales and staffing. So they decided to go to an automated time and attendance labor management system with the objective of increasing sales. The ability to use this new system was made a mandatory core competency of its store managers.

The management team of this outfit "knew what they knew." They knew their numbers and understood their customer traffic patterns and sales trends. They also had a good feel for the "soft side" of the sales process. Their marketing approach included employing sales people who enjoyed and participated in the outdoor sporting activities for which the equipment being sold was designed. So they hired guys who like to rock climb and rappel and hang-glide and put them in the department that sold these goods. They knew their customers were enthusiastic about such purchases and reacted positively to staff who shared their interests. A certain "match" existed between sales staff, the products, and the customers. When everything was aligned, the perfect "sales chemistry" was created. The goal was to create this chemistry and to staff at a level that would return the maximum ROI.

They also knew that customers eventually get tired of waiting for someone to help them and will go somewhere else if they don't get service within a reasonable length of time, which made the right number of sales personnel for the amount of traffic on a given day a must.

Along with knowledge about what made the cash registers ring was an appreciation for how difficult it was to create this perfect chemistry without assistance. The team also realized that not every store manager was a natural "chemist." Some were better than others at conjuring up this staffing magic. So they studied what the best managers did and figured out why they were successful.

In this way, the management team came up with its own "best practices" based on what had worked in the past. Coupling statistical data on customer traffic along with sales and best practices, they were able to build a model for staffing. They knew what types of workers to schedule during specific seasons and during special sales events. They viewed labor from the standpoint of supply and demand. The team could predict with a fair degree of accuracy what store traffic would be at different times of year and on different days of the week. For example, management knew what could be expected during a sales event such as a ski equipment sale, or a mountain climbing bonanza. And they knew which people and what the characteristics were of the people who sold the most of different types of goods.

This business tool became a part of the daily routine -- a front-end business driver. It became a tuning instrument to channel each store manger's use of labor through a system with built-in standards, allowing the company to institutionalize best practices and produce the desired sales results.

Not only did the company achieve success reaching operational goals, the technology also resulted in smarter, more cost effective use of labor resources. If they scheduled the "kayaking king" to work despite being paid a higher wage than the local novice, they expected better results. Better results meant more money, and enough more money meant more value for the labor dollars expended -- in other words, a better return on investment.

This may sound like rocket science, but it isn't. For example, ski enthusiasts who are passionate about the equipment they use are going to sell more skis and ski equipment than someone who has never been on the slopes. The key was to have the optimum number of such salespeople available to take customers by the hand during a sales event. Let's say a family is going skiing this year on spring break. The man of the house has found a pair of skis he likes, and he's talking with a sales rep about the skis and about the trip.

The salesman says, "Wow! You're going skiing for a week at Steamboat Springs? Fabulous! Snows practically every day there 'cause it's right next to the continental divide -- best powder in the Rockies -- 'champagne' powder they call it because it's so light and fluffy. Tell you what, you're going to need some powder skis in addition to those Salomons. Take a look at these. See, they're a lot wider. Otherwise, on a big powder day, you're going to sink up to your knees."

The management of this operation had its store managers match the right people in the right numbers to anticipated store traffic at the right time. They also wanted to get the supervisors and managers out of the back office -- away from doing scheduling and checking time cards -- and out on the floor where they, too, could sell.

And you know what? The strategy worked. The company is growing like kudzu and profits have never been better -- hard evidence that the collection and creative use of labor data can make a big difference even in the area of retail sales.

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Stephen Hawley Martin is a former principal of The Martin Agency in Richmond and the author of more than half a dozen books including his newest, Lean Enterprise Leader: How to Get Things Done Without Doing It All Yourself. He is editor and publisher of The Oaklea Press, a book publishing business dedicated primarily to helping business executives increase productivity.