Last week’s post was about consolidating around vendors and items that give you the best profitability. Unfortunately, that’s only half the equation.
Now we need to focus sales staff on selling the right items from the right vendors.
If your sales staff is paid via commission, they go where the money’s best. If you’ve negotiated a discount or aggressive quotes with a vendor, use some of that available margin to pay a higher commission for selling those items.
In my stores, we pay commissions based upon margin, so the quotes and discounts we negotiate on particular items are already built into the commission equation.
2. SHOWROOM DISPLAY
We’ve segmented our showrooms into three different zones depending upon the quality of the real-estate. We call the most visible and prominent areas in our showroom our “Boardwalk” areas. The mid-grade display areas are “Marvin Gardens” and the lowest visibility areas are “Baltic Avenue”.
With that segmentation in place, we make sure that our Dirty Thirty (see last week’s post) items and Dazzling Dozen vendors always occupy Boardwalk.
3. ITEM RANK & POSITIONING
If you’re using an electronic catalog it should be easy to move particular vendors up in rank for all product searches. Make sure you have your supporting vendors ranked highest.
Take that a step further by assigning an “attribute” to any items that you’ve been able to negotiate deep quotes on. Then rank that attribute to the absolute top position (and have a banner or label on those items like “recommended” or “most popular”). Let your sales staff know that if they sell any item with that banner – and they’ll always show up first in searches – they’ll get the highest commission.
4. TARGETED SPIFFS
Be careful not to let every vendor come in and throw a spiff around at your sales staff. Make sure that all spiffs are approved through you, and try to limit spiffs to those vendors that have given the best discounts and terms.
5. TALK, TALK, TALK
Meet monthly to talk about where you are with your target vendors, rent out a movie theater to have staff go to a movie together and have the reps for the supporting vendors come in to go through the catalog and perks before the movie, talk about your target vendors non-stop in staff meetings, send fresh ideas and “look at this cool fixture I found from our target vendor!” emails (and remind that they get paid extra for selling from the right vendors) as consistently as possible.
NOTE: I’m surprised by how often showrooms decide where to hang fixtures based mostly upon where there are holes to fill after a fixture sells from display. It’s worth being more strategic.
Jason Petersen owns Hansen Lighting Inc. a lighting company with multiple showrooms in Utah.
Jason acquired Hansen Lighting out of near-bankruptcy in 2004 and turned the company around by implementing outside-the-box systems and ideas. The company is now one of the fastest growing companies in America (#3087 on the Inc. 5000 Fastest Growing Companies list) and has been recognized as one of the most profitable privately-owned retailers in North America.
Jason is also the co-founder of XOLogic and Lit Living Inc.